S-4/A

As filed with the Securities and Exchange Commission on December 6, 2010

Registration No. 333-170376

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 1

to

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

AMERICAN RENAL HOLDINGS INC.

(Exact name of Registrant as specified in its charter)

SEE TABLE OF ADDITIONAL REGISTRANTS

Delaware	8090	04-3477845
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

66 Cherry Hill Drive,

Beverly, Massachusetts 01915

(978) 922-3080

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Michael R. Costa

Vice President and General Counsel

American Renal Holdings Inc.

66 Cherry Hill Drive,

Beverly, Massachusetts 01915

(978) 922-3080

(Name, address, including zip code, and telephone number, including area code, of agent for service)

With a copy to:

Stephan J. Feder, Esq.

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York 10017

(212) 455-2000

Approximate date of commencement of proposed exchange offers: As soon as practicable after this Registration Statement is declared 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.  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨		Accelerated filer	¨
Non-accelerated filer	x	(Do not check if a smaller reporting company)	Smaller reporting company	¨

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ¨

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)  ¨

CALCULATION OF REGISTRATION FEE

Title of each class of securities to be registered	Amount to be registered	Proposed maximum offering price per unit (1)	Proposed maximum aggregate offering price (1)	Amount of registration fee
8.375% Senior Secured Notes due 2018	$250,000,000	100%	$250,000,000	$17,825(2)
Guarantees of 8.375% Senior Secured Notes due 2018 (3)	N/A	N/A	N/A	N/A(4)

(1) Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(f) under the Securities Act of 1933, as amended (the “Securities Act”).

(2) Previously paid.

(3) See inside facing page for table of registrant guarantors.

(4) Pursuant to Rule 457(n) under the Securities Act, no separate filing fee is required for the guarantees.

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 this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

TABLE OF ADDITIONAL REGISTRANT GUARANTORS

Exact Name of Registrant Guarantor as Specified in its Charter (or Other Organizational Document)	State or Other Jurisdiction of Incorporation or Organization	I.R.S. Employer Identification Number		Address and Telephone Number
C.P. Atlas Intermediate Holdings, LLC	Delaware		27-2170865	375 Park Avenue 12th Floor, New York, NY 10152, (212) 672-5000
American Renal Associates LLC	Delaware		84-1694930	66 Cherry Hill Drive, Beverly, Massachusetts 01915, (978) 922-3080.
American Renal Management LLC	Delaware		04-3527505	66 Cherry Hill Drive, Beverly, Massachusetts 01915, (978) 922-3080.
AKC Holding LLC	Delaware		01-0833124	66 Cherry Hill Drive, Beverly, Massachusetts 01915, (978) 922-3080.
JKC Holding LLC	Delaware		01-0833133	66 Cherry Hill Drive, Beverly, Massachusetts 01915, (978) 922-3080.
ARA-Boca Raton Holding LLC	Delaware		55-0885438	1905 Clint Moore Road, Boca Raton, FL 33496, (561) 893-6878
ARA-Ohio Holdings LLC	Delaware		88-0519793	66 Cherry Hill Drive, Beverly, Massachusetts 01915, (978) 922-3080.
ARA-Rhode Island Dialysis II LLC	Delaware		05-0598781	66 Cherry Hill Drive, Beverly, Massachusetts 01915, (978) 922-3080.
Texas-ARA LLC	Delaware		04-3537394	66 Cherry Hill Drive, Beverly, Massachusetts 01915, (978) 922-3080.
American Renal Texas L.P.	Texas		04-3535002	66 Cherry Hill Drive, Beverly, Massachusetts 01915, (978) 922-3080.
American Renal Texas II, L.P.	Texas		83-0438331	66 Cherry Hill Drive, Beverly, Massachusetts 01915, (978) 922-3080.
Acute Dialysis Services-ARA LLC	Delaware		26-1148649	66 Cherry Hill Drive, Beverly, Massachusetts 01915, (978) 922-3080.

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 DECEMBER 6, 2010

PRELIMINARY PROSPECTUS

$250,000,000

American Renal Holdings Inc.

Offer to Exchange all outstanding $250,000,000 8.375% Senior Secured Notes due 2018 (the “outstanding notes”) for an equal amount of 8.375% Senior Secured Notes due 2018, which have been registered under the Securities Act of 1933, as amended (the “exchange notes”).

We are conducting the exchange offer in order to provide you with an opportunity to exchange your unregistered notes for freely tradable notes that have been registered under the Securities Act of 1933, as amended.

The Exchange Offer

• We will exchange all outstanding notes that are validly tendered and not validly withdrawn for an equal principal amount of exchange notes that are freely tradable.

• You may withdraw tenders of outstanding notes at any time prior to the expiration date of the exchange offer.

• The exchange offer expires at 11:59 p.m., New York City time, on                     , 2010, unless extended. We do not currently intend to extend the expiration date.

• The exchange of outstanding notes for exchange notes in the exchange offer will not be a taxable event for U.S. federal income tax purposes.

• We will not receive any proceeds from the exchange offer.

The Exchange Notes

• The exchange notes are being offered in order to satisfy certain of our obligations under the registration rights agreement entered into in connection with the placement of the outstanding notes.

• The terms of the exchange notes to be issued in the exchange offer are substantially identical to the outstanding notes, except that the exchange notes will be freely tradable.

• The parent and certain subsidiaries of American Renal Holdings Inc. initially jointly and severally, irrevocably and unconditionally guaranteed, on a secured senior basis, the performance and full and punctual payment when due, whether at maturity, by acceleration or otherwise, of all obligations of American Renal Holdings Inc. under the outstanding notes, exchange notes and the indenture governing the notes.

Resales of Exchange Notes

• The exchange notes may be sold in the over-the-counter market, in negotiated transactions or through a combination of such methods. We do not plan to list the exchange notes on a national market.

All untendered outstanding notes will continue to be subject to the restrictions on transfer set forth in the outstanding notes and in the indenture. In general, the outstanding notes may not be offered or sold, unless registered under the Securities Act of 1933, as amended, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act of 1933, as amended, and applicable state securities laws. Other than in connection with the exchange offer, we do not currently anticipate that we will register the outstanding notes under the Securities Act of 1933, as amended.

You should consider carefully the risk factors beginning on page 21 of this prospectus before participating in the exchange offer.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the exchange notes to be distributed in the exchange offer or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is                     , 2010.

TABLE OF CONTENTS

	Page
TRADEMARKS		ii
MARKET AND INDUSTRY DATA		ii
SUMMARY		1
RISK FACTORS		21
FORWARD-LOOKING STATEMENTS		44
USE OF PROCEEDS		45
CAPITALIZATION		46
THE TRANSACTIONS		47
SELECTED CONSOLIDATED FINANCIAL DATA		49
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA		51
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		56
BUSINESS		84
MANAGEMENT AND BOARD OF DIRECTORS		103
EXECUTIVE COMPENSATION		107
DIRECTOR COMPENSATION		118
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT		119
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS		120
DESCRIPTION OF OTHER INDEBTEDNESS		122
THE EXCHANGE OFFER		124
REGISTRATION RIGHTS		134
DESCRIPTION OF THE EXCHANGE NOTES		135
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER		200
CERTAIN ERISA CONSIDERATIONS		201
PLAN OF DISTRIBUTION		203
LEGAL MATTERS		204
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		204
AVAILABLE INFORMATION		204
INDEX TO FINANCIAL STATEMENTS		F-1

This prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any exchange notes offered hereby in any jurisdiction where, or to any person to whom, it is unlawful to make such offer or solicitation. The information contained in this prospectus speaks only as of the date of this prospectus unless the information specifically indicates that another date applies. No dealer, salesperson or other person has been authorized to give any information or to make any representations other than those contained in this prospectus in connection with the offer contained herein and, if given or made, such information or representations must not be relied upon as having been authorized by American Renal Holdings Inc. Neither the delivery of this prospectus nor any sales made hereunder shall under any circumstances create an implication that there has been no change in our affairs or that of our subsidiaries since the date hereof.

i

TRADEMARKS

AmericanRenal, American Renal Associates, ARA^®, the American Renal Associates logo and other trademarks or service marks of American Renal appearing in this prospectus are our property. All trade names, trademarks and service marks of other companies appearing in this prospectus are the property of the respective holders.

MARKET AND INDUSTRY DATA

Certain market data and other statistical information used throughout this prospectus are based on the 2009 Annual Data Report prepared by the United States Renal Data System (“USRDS”) and information from the Centers for Medicare and Medicaid Services (“CMS”). Some data are also based on our good faith estimates, which are derived from management’s review of internal data and information, as well as the independent sources such as independent industry publications, government publications, reports by market research firms or other published independent sources. Although we believe these sources are reliable, we have not independently verified the information contained therein and cannot guarantee its accuracy and completeness.

ii

SUMMARY

This summary highlights information contained elsewhere in this prospectus. This summary is not complete and may not contain all of the information that you should consider to make your decisions regarding the exchange offer. You should carefully read the entire prospectus, including the section entitled “Risk Factors.”

Unless the context otherwise requires it or as otherwise indicated, “we,” “us,” “our” and similar terms, as well as references to the “Company,” “American Renal” and “ARA” refer to C.P. Atlas Intermediate Holdings, LLC and its consolidated subsidiaries.

The financial and performance information throughout this prospectus includes amounts derived from our non-guarantor joint venture subsidiaries. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates,” Note Q of “Audited Financial Statements for the years December 31, 2009, 2008 and 2007—Notes to Consolidated Financial Statements” and Note K of “Unaudited Financial Statements for the periods ended September 30, 2010 and 2009—Notes to Unaudited Consolidated Financial Statements.”

Our Company

We are a national provider of kidney dialysis services for patients suffering from chronic kidney failure, also known as end stage renal disease, or ESRD. As of September 30, 2010, we owned and operated 88 dialysis clinics treating more than 6,100 patients in 17 states and the District of Columbia. Our operating model is based on shared ownership of our facilities with physicians, known as nephrologists, who specialize in kidney-related diseases in the local market served by the clinic. Each clinic is maintained as a separate joint venture, or JV, in which we own a controlling interest and our local nephrologist partners own noncontrolling interests.

We believe we are the largest dialysis services provider in the United States founded and operating exclusively on a joint venture model. We have invested significantly in the development of our senior and field level core management function and operating procedures, and we believe we are well-positioned to continue to realize the benefits of platform scalability, which will allow us to add clinics without significant incremental operating costs. As a result, our revenue and earnings growth will be driven primarily by the growth in the number of our JV clinics and treatment growth at our existing clinics. Since our founding, we have opened 66 new clinics (“de novo clinics”) and have acquired 22 clinics from third parties (“acquired clinics”) that we subsequently converted to our JV model. In 2009 we opened 10 clinics, seven of which are de novo clinics and three are acquired clinics. We plan to continue the expansion of our operations with the use of the JV model primarily through the redeployment of free cash flow to create de novo clinics, to expand existing clinics and to selectively acquire clinics.

We believe our JV model is attractive to the nephrologist community because it provides a platform for favorable clinical outcomes and superior financial results while enabling our nephrologist partners to focus on providing the highest quality of patient care rather than the administration of corporate-directed treatments and protocols. Through our wholly-owned subsidiary, American Renal Management, LLC (“ARM”), we provide our nephrologist partners with the managerial, accounting, financial, technological and administrative support necessary to operate our clinics. In particular, our management services focus on critical revenue cycle management for each patient, which encompasses patient registration, insurance and benefit verification, medical treatment documentation and coding, bill preparation and collections. In addition, our corporate clinical advisory team, which includes our National Medical Director and clinical and regulatory advisors, assists our nephrologist partners in establishing clinical objectives, while our operating model allocates to our nephrologist partners autonomy over the clinical protocols used to achieve those objectives.

According to the United States Renal Data System, or USRDS, the number of dialysis patients in the U.S. is expected to continue growing faster than increases in the general population, primarily due to an aging

1

population with increased life expectancies. As a result, we believe there will be an increasing need for dialysis clinics. In addition, we believe that the JV model will continue to be one of the fastest growing operating models for dialysis clinics and will represent an increasing percentage of the dialysis clinic industry. We believe that our JV model, with its clinic level autonomy for the physician, together with the comprehensive management services that we have developed, enhance the clinical and operating performance of our clinics and make us a preferred dialysis partner for nephrologists. We believe this will lead to additional JV opportunities with nephrologists seeking the corporate support we provide.

Dialysis Services Industry Overview

End Stage Renal Disease, or ESRD, is characterized by the loss of kidney functionality and is normally irreversible and fatal unless treated. ESRD most commonly results from complications associated with diabetes, hypertension, renal and hereditary diseases, old age and a combination of other risk factors. ESRD requires continued dialysis treatments or a kidney transplant to sustain life. Absent transplantation, the average life expectancy for an ESRD patient on dialysis is approximately five years following diagnosis, according to the USRDS. Scarcity of compatible kidneys has limited the option for transplants, causing most patients suffering from ESRD to rely on dialysis. Dialysis is the removal of toxins and fluids from the blood of ESRD patients by artificial means. Patients suffering from ESRD generally require dialysis at least three times per week, amounting to approximately 156 treatments per year, for the remainder of their lives.

There are two primary methods of dialysis commonly used today, hemodialysis and peritoneal dialysis. Hemodialysis, or the removal of toxins and fluid from the blood through a specially designed filter, is the most common form of ESRD treatment and represented approximately 92% of all dialysis treatments in the United States in 2007. Hemodialysis is typically performed in outpatient dialysis clinics and lasts approximately 3.5 hours per treatment. Treatments are usually performed by teams of licensed nurses and trained technicians pursuant to a physician’s instructions. Almost all patients receive hemodialysis in our outpatient dialysis clinics as their primary ESRD treatment, although we also provide such services in the home. Peritoneal dialysis uses the patient’s peritoneal, or abdominal, cavity to eliminate fluid and toxins. A patient generally performs peritoneal dialysis at home. We also provide peritoneal dialysis services to patients who prefer and are able to receive that form of treatment.

Large, Growing Market for Outpatient Dialysis Services

The total annual cost of providing healthcare services to ESRD patients in the U.S. in 2007 has been estimated by the USRDS to be approximately $35 billion, of which we believe approximately $18 billion represents our currently addressable market. According to the most recent report by the USRDS, there were approximately 527,000 ESRD patients in the United States as of December 31, 2007, with the number of ESRD patients expected to grow at an annual rate consistent with the historical rate of 3-4%, outpacing general population growth. Aside from a relatively small number of individuals who qualify for and successfully undergo kidney transplants, the vast majority of ESRD patients require three dialysis treatments per week, on average, for the remainder of their lives. USRDS data indicates that the prevalence rate in patients ages 65 to 74 increased 24% from 2000 to 2007; while, in patients ages 75 and older the prevalence rate increased 28% over the same period.

According to the USRDS, the increasing percentage of the U.S. population afflicted with ESRD has been primarily caused by:

• aging of the general population;

• improved treatment and increased survival rate of patients with diabetes, hypertension and other illnesses that lead to ESRD;

2

• growth rates of minority populations with higher than average incidence rates of ESRD; and

• improved dialysis technology, that has enabled older patients and those who previously could not tolerate dialysis due to other illnesses, to benefit from this treatment.

Reimbursement Environment

A majority of reimbursement for dialysis services is provided by the federal government’s Medicare ESRD program based on rates established by the Centers for Medicare and Medicaid Services, or CMS. The coverage criteria for dialysis centers under Medicare are well defined and, as a result, Medicare reimbursement for dialysis services has historically been more predictable than reimbursements for most other services and procedures. ESRD has been classified as a chronic disability since 1972 and patients are entitled to treatment and Medicare benefits regardless of age or financial circumstances. Generally, if a patient does not have employer-sponsored health coverage, Medicare becomes the primary payor either immediately or after a three-month waiting period. For a patient with employer-sponsored health coverage, Medicare generally becomes the primary payor after 33 months, which includes a three-month coordination of benefits period, or earlier if the patient’s employer-sponsored health coverage terminates. Additional sources of reimbursement for dialysis services include other government agencies such as state Medicaid programs as well as private pay options.

Currently, Medicare reimburses dialysis providers separately for treatments and ancillaries. Recently approved Medicare legislation, however, will establish a “bundled” Medicare rate for dialysis reimbursement, starting in 2011. This new bundled rate will combine the current payments for composite rate and the separately billable dialysis services into a single base rate. This rate will include all services such as certain drugs and laboratory tests which are currently billed separately. The initial 2011 bundled rate will be set based on a 2% reduction in the payment rate that providers would have received under the historical fee for service payment methodology and based on the lowest average industry pharmaceutical utilization from 2007 to 2009. Beginning in 2012, the new single bundled payment base rate will be adjusted annually for inflation based upon a market basket index, less a productivity adjustment based on a 10-year moving average of productivity as projected by the Secretary of Health and Human Services. The bundled payment rate will be determined by the Secretary of Health and Human Services, who will have discretion to determine the base payment rate based on the goods and services included in the bundled rate. Dialysis providers, including us, will have the option to move fully to the bundled payment system in 2011 or to phase in the payment system over four years on a facility by facility basis. We believe that the move to bundled payment, together with the introduction of automatic annual rate increases, will result in greater predictability of rates and stability of revenue for the Company. The Congressional Budget Office estimates that these changes will result in an additional $1.5 billion in government payments to the dialysis industry over the next 10 years.

Before Medicare becomes the primary payor, a patient’s commercial insurance plan, if any, is responsible for payment of the dialysis services provided. Although commercial payment rates vary significantly, average commercial payment rates are generally significantly higher than Medicare rates and often include price increases. Payment methods from commercial payors include a single lump-sum per treatment, referred to as bundled rates, and separate payments for ancillary treatments and pharmaceuticals, if used as part of the dialysis treatment, referred to as fee for service rates. We believe commercial payors are generally sensitive to the special circumstances and challenges faced by ESRD patients, particularly because they are responsible for primary coverage for a relatively limited number of ESRD patients for a finite 30-month period of time. We also believe commercial payors are incentivized to facilitate quality dialysis care because patients who do not regularly receive dialysis treatment typically require hospitalization and other more costly acute care treatment. For the year ended December 31, 2009, we derived approximately 43% of our net operating revenues from commercial payors, which represented approximately 14% of the treatments performed. The source of the balance of our treatments and net operating revenues come from Medicare and other governmental payors.

3

Our Competitive Strengths

Focus On Core Values Leading to Patient Satisfaction and Strong Patient Base

We believe our core values, including our focus on patient satisfaction, have contributed to our loyal patient base, which is the key to stable and dependable revenues. Our values state our commitment to excellent patient care, providing the nephrologists autonomy to make decisions and practice as he/she deems appropriate and treating our clinic staff members as a critical and valuable asset. We believe the satisfaction of our employees encourages them to provide a comfortable environment and better treatment for patients. We also maintain a strong focus on revenue cycle management so that patients may maximize insurance coverage. We believe we provide value to patients by assisting them in navigating the complex healthcare reimbursement climate, and through our knowledge and application of health insurance rules, to consistently obtain high quality insurance coverage for patients.

Differentiated Business Model Attracts Nephrologists, Aligns Interests and Enhances Clinic Level Performance

We seek to partner with leading nephrologists within their local community. To date, none of our nephrologist partners has sought our consent to divest his or her joint venture ownership interest. We believe that our JV business model aligns the interests of the clinic owners with that of the patients and physicians better than the more traditional model of wholly-owned corporate ownership of a clinic. By having an investment in the clinics where their patients are treated, our nephrologist partners have a vested stake in the quality, reputation and performance of the clinics. Through ARM, we provide operational and managerial support to our clinics with rigorous individual patient focus. We strive to maintain the high quality of these support services through the development and implementation of patient care policies and procedures, education, mentoring and audits at each of our clinics. We also invest in state-of-the-art facilities, equipment, and amenities at our clinics. We believe that these management services substantially ease the burden of back-office responsibilities and enable our nephrologist partners to focus on providing the highest quality of patient care, which in turn drives high levels of patient satisfaction and financial performance.

Disciplined Approach to Maintaining Efficient Operations

We maintain a disciplined approach to enhancing performance in key areas such as revenue cycle management. We work to improve our processes with regard to patient registration, facilitation and verification of insurance, payor interaction and arrangements, and billing and collections in an effort to maximize our revenue per treatment. We believe our efforts have resulted in strong revenue per treatment rates, as well as low days’ sales outstanding and bad debt expense. In addition, we believe the rigorous management policies and procedures that we have consistently put in place at each clinic that we own and operate have resulted in operating expenses per treatment that are among the lowest in the industry as well as low general and administrative expenses per treatment.

Experience in Establishing De Novo Clinics and Selectively Completing Acquisitions

Our de novo clinic strategy encompasses all facets of development, from site review to personnel hiring. We have never had a survey deficiency delay Medicare certification for one of our de novo clinics, and we typically achieve EBITDA positive operations within 12 months of opening a de novo clinic. We believe our established de novo clinic model offers turnkey solutions to nephrologist partners who are interested in establishing de novo clinics with us.

In addition, we selectively pursue acquisitions of existing dialysis clinics which we restructure as JVs. Although acquisition costs for an existing dialysis clinic are typically much higher than the cost to develop a de novo clinic, we believe our management policies and procedures for acquiring clinics have allowed us to achieve

4

significant improvements in key operating metrics in a relatively short period of time. We believe that as a result of our experience with acquiring and restructuring existing dialysis clinics, those clinics have enjoyed improved clinical outcomes and financial performance.

Consistent Financial Performance and Strong Free Cash Flow Generation

We believe our favorable revenue per treatment rates and our focus on efficiency of operations in a stable and growing industry has resulted in consistent, strong financial performance. From 2005 to 2009, we have achieved compound annual net revenue growth of 26%. In addition, from 2007 to 2009, our non-guarantor joint venture subsidiaries achieved compound annual net revenue growth of 24%. As a result, our free cash flow generation has been strong. During 2005 to 2009, we had on average non-acquired treatment growth of approximately 19% annually. We have also been able to increase our Adjusted EBITDA margin to 26% of net sales. We believe this increase in margin illustrates the benefits that are achieved by growing our portfolio of dialysis clinics on our management services platform. In addition, our existing clinics typically require minimal maintenance capital expenditure consisting of less than 2% of net revenues in 2009. In the year ended December 31, 2009, the Company generated $51.3 million in cash flows from operating activities, primarily from distributions from JV shares and management services fees, $13.3 million of which was derived from the issuer and its subsidiary guarantors, and the remaining $38.0 million of which was derived from our non-guarantor joint venture subsidiaries.

Experienced Management Team Supported by Strong Equity Sponsorship

Most of our executive and senior management team has held multiple positions with one or more of our competitors and have strong contacts throughout the dialysis services industry with providers, clinical staff, payors, vendors and other parties. One of our three founding executives and the Chairman of our Board of Directors, Christopher T. Ford, is also the current chairman of the Kidney Care Council. We believe this breadth and depth of experience gives our leadership team the knowledge and resources to manage more effectively relations with our nephrologist partners and other personnel, enhance operating results and promote growth.

We benefit from the sponsorship of Centerbridge Capital Partners, L.P., our majority investor following the close of the Transactions, as described below. Centerbridge Partners, L.P., a private investment firm with over $11 billion of capital under management in Centerbridge Capital Partners, L.P. and certain affiliated entities (“Centerbridge”), is focused on making value-oriented investments in select industries in partnership with strong management teams.

Our Business Strategy

Key components of our business strategy include:

Continued Focus on Achieving Superior Clinical Outcomes

We believe our reputation for providing quality care is a key factor in attracting patients and physicians and in securing contracts with healthcare plans. Our clinical team works routinely with individual physicians, clinic managers and dieticians, and our corporate management team promotes a patient- and physician-focused corporate culture in order to optimize clinical outcomes, improve operating performance, and ensure compliance with applicable laws and regulations. In addition, we engage in organized and systematic efforts through our quality of care management programs to monitor and improve the quality of services we deliver. These efforts include the development and implementation of patient care policies and procedures, clinical education and training programs, education and mentoring related to our clinical guidelines and protocols and audits of the quality of services rendered at each of our centers.

Recruitment and Retention of Leading Physicians

Our effective recruitment of leading nephrologist partners is critical to achieving our growth objectives. We believe we enjoy a strong and growing reputation among the nephrologist community, ensuring that nephrologists who contemplate a migration to the shared-ownership model strongly consider us. We will continue to leverage our market position and reputation to identify, screen and recruit experienced nephrologists.

5

We enjoy strong retention rates. We believe this is due in large part to nephrologist partner satisfaction with our JV model, which gives nephrologists autonomy over clinical protocols and allows them to focus on providing high quality patient care. Since inception, none of our nephrologist partners have asked for our consent to a transfer of their ownership interests in our clinics. Further, although certain of our nephrologist partners had the option of requiring us to purchase their equity interests as a result of the Transactions, none chose to do so. We believe our existing network of nephrologist partners will be a key resource for us in creating future JVs with nephrologists who are not currently associated with us.

Further Implementation of Rigorous Management Services

A critical component of our business strategy is to enable our nephrologist partners to focus on providing superior individual patient care while we manage the daily operations of the clinic in support of the nephrologist partners. As dialysis clinics begin to implement the new bundled payment rate and other procedures to be adopted pursuant to recently passed healthcare legislation, we believe the administrative services that we provide to our nephrologist partners will be of even greater value. By offering the management services of a large corporation combined with the responsiveness of an entrepreneurial enterprise, we believe we help our clinics achieve desirable clinical outcomes, growth and profitability. These management services are provided under long-term renewable management services agreements and include, among others, operations management, negotiating pricing of products from vendors, coordinating outsourced clinical laboratory testing services, reporting and benchmarking of clinical outcomes, implementing revenue cycle management practices, training and education for our staff, performing back-office finance, accounting and payroll functions, managing compliance programs, and administering human resources support.

Utilization of Internally Generated Cash Flow to Support Expansion

We intend to leverage our JV model and our reputation in the nephrology community to continue the development of de novo clinics in the U.S., both in new and existing markets. Our streamlined approach to opening de novo clinics delivers attractive financial returns to us and our nephrologist partners. Our substantial free cash flow generation provides for a significant portion of the funding for continued expansion. Additionally, nephrologist partners have reinvested a portion of their return on capital from existing sites to expand those sites or invest in de novo clinics together with us. De novo clinics typically reach positive EBITDA results within 12 months of opening, which we believe results in attractive returns on our investment. As a result of our substantial expertise in opening de novo clinics, we have never had a survey deficiency delay Medicare certification for one of our de novo clinics, and further, we have not experienced delays to our development timeline as a result of delays in certification.

Because the acquisition cost for an existing dialysis clinic is typically much higher than the cost to develop a de novo clinic, we typically acquire existing dialysis clinics in very selective situations. We pursue acquisitions that we believe to be an effective use of invested capital, or in situations where other factors we believe to be important, such as our desire to enter a new market and use the acquired clinic as the base from which to open additional de novo clinics in that market, favor such acquisitions. We intend to continue to pursue acquisitions of existing clinics with reputations for strong quality and service as well as leading local market shares. In making these acquisitions, we intend to continue to restructure the ownership of the acquired clinic as a joint venture in accordance with our JV model. In applying our management policies and procedures to acquired clinics, we believe we have been able to achieve significant improvements in key operating metrics in a relatively short period of time, which have resulted in improved clinical outcomes and financial performance at those clinics.

6

Summary of the Transactions

On March 22, 2010, American Renal Holdings Inc. (“ARH”) entered into a Contribution and Merger Agreement (the “Merger Agreement”) with C.P. Atlas Holdings, Inc. (the “Parent”), C.P. Atlas Intermediate Holdings, LLC, C.P. Atlas Acquisition Corp., certain of ARH’s stockholders party thereto and Pamlico Capital I, L.P. (formerly known as Wachovia Capital Partners GP I, LLC) (“Sellers’ Representative”), pursuant to which ARH agreed that C.P. Atlas Acquisition Corp. shall merge with and into ARH (the “Merger”) and, after which, ARH became the surviving entity and a wholly owned subsidiary of C.P. Atlas Intermediate Holdings, LLC, which is in turn a wholly owned subsidiary of the Parent. The parties agreed to consummate the Merger, subject to the terms and conditions set forth in the Merger Agreement, for an aggregate purchase price of $415 million, subject to adjustments including, without limitation, for working capital, indebtedness, certain specified liabilities and certain tax savings. ARH agreed that $2.5 million of the purchase price be placed into a third-party escrow account as security for working capital adjustments and that $27.5 million of the purchase price be placed into a third-party escrow account as security for indemnification claims that may be made by the Parent or its affiliates.

As of the effective time of the Merger, holders of shares of ARH’s common stock have no further ownership interest in ARH and instead received cash and the right to receive certain future payments from the Sponsor, ARH and/or the escrow agent pursuant to the Merger Agreement (in the case of the escrow agent, in respect of the unused portion of the third-party escrow accounts, if any) (with the exception of certain members of senior management and certain other employees who have agreed not to have certain of their equity interests cashed out in the Merger and holders who perfect their appraisal rights under Delaware law).

In connection with the Merger:

• Centerbridge made an aggregate cash equity investment of $161.5 million in the Parent, subject to certain adjustments, and in exchange, received 87% of the common stock of the Parent immediately following the Merger.

• Certain members of ARH’s management contributed a portion of their existing equity ownership in ARH in exchange for newly issued shares of common stock and options to purchase common stock of the Parent.

• ARH entered into a $25 million revolving credit facility (the “New Revolving Credit Facility”).

• ARH offered the outstanding notes being exchanged hereby.

The Merger and the financing transactions described above are collectively referred to herein as the “Transactions.”

The aggregate purchase price of approximately $415 million for the Merger, plus related fees and expenses, was funded by the equity investment by Centerbridge and from certain members of management and the net proceeds from the offering of the outstanding notes. See “Use of Proceeds,” “Description of Other Indebtedness,” and “The Transactions.” In connection with the Merger, all of ARH’s debt and preferred stock that existed prior to the closing date of the Merger was repaid or redeemed, except for $11.9 million aggregate amount of third-party debt as of December 31, 2009. Other third-party debt of ARH’s JVs was refinanced through secured intercompany loans. The secured intercompany loans, which total $36.3 million as of December 31, 2009, on a pro forma basis as if the Transactions had occurred on that date, were pledged as collateral for our New Revolving Credit Facility and for the outstanding notes being exchanged hereby. Although certain of ARH’s nephrologist partners had the right to require us to repurchase some or all of the equity interests in certain clinics as a result of the Transactions, these rights were waived.

7

Ownership Structure and Organizational Chart

The following chart summarizes our organizational structure, equity ownership and our principal indebtedness as of the date of this prospectus. This chart is provided for illustrative purposes only and does not represent all legal entities of the Company and its consolidated subsidiaries or all obligations of such entities.

8

Our Sponsor

Centerbridge Partners, L.P., established in 2005, is a private investment firm that sponsors and manages funds that make traditional private equity investments, distressed investments and other credit investments.

The firm is dedicated to partnering with world-class management teams to invest throughout a company’s capital structure and to employ various strategies to help companies achieve their operating and financial objectives. Through Centerbridge Capital Partners, L.P., the firm has made investments in companies that vary in size and geography and span a broad range of industries. The firm’s professionals have significant experience investing in healthcare companies.

Centerbridge’s limited partners include many prominent financial institutions, university endowments, public and corporate pensions and sovereign wealth funds, as well as foundations and other charitable trusts.

Our Corporate Information

American Renal Holdings Inc. was incorporated in Delaware on July 19, 1999. Our principal executive offices are located at 66 Cherry Hill Drive, Beverly, Massachusetts 01915 and our telephone number is (978) 922-3080. Our corporate website address is www.americanrenal.com. Information contained on our website is not a part of this prospectus.

9

The Exchange Offer

On May 7, 2010, we completed the private offering of $250,000,000 aggregate principal amount of our 8.375% Senior Secured Notes due 2018, which we refer to in this prospectus as the “outstanding notes.” The term “exchange notes” refers to the 8.375% Senior Secured Notes due 2018 as registered under the Securities Act of 1933, as amended (the “Securities Act”). References to the “notes” in this prospectus are references to both the outstanding notes and the exchange notes. This prospectus is part of a registration statement covering the exchange of the outstanding notes for the exchange notes.

General American Renal Holdings Inc. and the guarantors of the notes entered into a registration rights agreement with the initial purchasers in the private offering in which American Renal Holdings Inc. and the guarantors of the notes agreed to deliver to you this prospectus as part of the exchange offer and agreed to use all commercially reasonable efforts to have the registration statement covering the exchange to be declared effective on or prior to the date 210 days after the closing of the private offering. You are entitled to exchange in the exchange offer your outstanding notes for exchange notes which are identical in all material respects to the outstanding notes except:

• the exchange notes have been registered under the Securities Act;

• the exchange notes are not entitled to certain registration rights which are applicable to the outstanding notes under the registration rights agreement; and

• certain special interest rate provisions in the registration rights agreement are no longer applicable.

The Exchange Offer We are offering to exchange up to $250,000,000 aggregate principal amount of our 8.375% Senior Secured Notes due 2018, which have been registered under the Securities Act, for up to $250,000,000 aggregate principal amount of our existing 8.375% Senior Secured Notes due 2018. Outstanding notes may be exchanged only in denominations of $2,000 and integral multiples of $1,000 in excess of $2,000.

Resale Based on an interpretation by the staff of the Securities and Exchange Commission (the “SEC”) set forth in no-action letters issued to third parties, we believe that the exchange notes issued pursuant to the exchange offer in exchange for the outstanding notes may be offered for resale, resold and otherwise transferred by you (unless you are our “affiliate” within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that:

• you are acquiring the exchange notes in the ordinary course of your business; and

• you have not engaged in, do not intend to engage in, and have no arrangement or understanding with any person to participate in, a distribution of the exchange notes.

10

If you are a broker-dealer and receive exchange notes for your own account in exchange for outstanding notes that you acquired as a result of market-making activities or other trading activities, you must acknowledge that you will deliver this prospectus in connection with any resale of the exchange notes. See “Plan of Distribution.”

Any holder of outstanding notes who:

• is our affiliate;

• does not acquire exchange notes in the ordinary course of its business; or

• tenders its outstanding notes in the exchange offer with the intention to participate, or for the purpose of participating, in a distribution of exchange notes;

cannot rely on the position of the staff of the SEC enunciated in Morgan Stanley & Co. Incorporated (available June 5, 1991) and Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted in Shearman & Sterling (available July 2, 1993), or similar no-action letters and, in the absence of an exemption therefrom, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale of the exchange notes.

Expiration Date; Withdrawal of Tender The exchange offer will expire at 11:59 p.m., New York City time, on                     , 2010, unless extended by us. We do not currently intend to extend the expiration date. You may withdraw the tender of your outstanding notes at any time prior to the expiration of the exchange offer. We will return to you any of your outstanding notes that are not accepted for any reason for exchange, without expense to you, promptly after the expiration or termination of the exchange offer.

Conditions to the Exchange Offer The exchange offer is subject to customary conditions, which we may waive. See “The Exchange Offer—Conditions to the Exchange Offer” of this prospectus for more information.

Procedures for Tendering Outstanding Notes If you wish to participate in the exchange offer, you must complete, sign and date the accompanying letter of transmittal, or a facsimile of such letter of transmittal, according to the instructions contained in this prospectus and the letter of transmittal. You must then mail or otherwise deliver the letter of transmittal, or a facsimile of such letter of transmittal, together with your outstanding notes and any other required documents, to the exchange agent at the address set forth on the cover page of the letter of transmittal.

If you hold outstanding notes through The Depository Trust Company (“DTC”) and wish to participate in the exchange offer, you must comply with the Automated Tender Offer Program procedures of

11

DTC by which you will agree to be bound by the letter of transmittal. By signing, or agreeing to be bound by, the letter of transmittal, you will represent to us that, among other things:

• you are not our “affiliate” within the meaning of Rule 405 under the Securities Act;

• you do not have an arrangement or understanding with any person or entity to participate in the distribution of the exchange notes;

• you are acquiring the exchange notes in the ordinary course of your business; and

• if you are a broker-dealer that will receive exchange notes for your own account in exchange for outstanding notes that were acquired as a result of market-making activities, you will deliver a prospectus, as required by law, in connection with any resale of such exchange notes.

Special Procedures for Beneficial Owners If you are a beneficial owner of outstanding notes which are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, and you wish to tender such outstanding notes in the exchange offer, you should contact such registered holder promptly and instruct such registered holder to tender on your behalf. If you wish to tender on your own behalf, you must, prior to completing and executing the letter of transmittal and delivering your outstanding notes, either make appropriate arrangements to register ownership of the outstanding notes in your name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time and may not be able to be completed prior to the expiration date.

Guaranteed Delivery Procedures If you wish to tender your outstanding notes and your outstanding notes are not immediately available or you cannot deliver your outstanding notes, the letter of transmittal or any other required documents, or you cannot comply with the procedures under DTC’s Automated Tender Offer Program for transfer of book-entry interests prior to the expiration date, you must tender your outstanding notes according to the guaranteed delivery procedures set forth in this prospectus under “The Exchange Offer—Guaranteed Delivery Procedures.”

Effect on Holders of Outstanding Notes As a result of the making of, and upon acceptance for exchange of all validly tendered outstanding notes pursuant to the terms of the exchange offer, we and the guarantors will have fulfilled a covenant contained in the registration rights agreement and, accordingly, there will be no increase in the interest rate on the outstanding notes under the circumstances described in the registration rights agreement. If you are a holder of outstanding notes and you do not tender your outstanding notes in the exchange offer, you will continue to hold

12

such outstanding notes and you will be entitled to all the rights and limitations applicable to the outstanding notes as set forth in the indenture, except we and the guarantors will not have any further obligations to you to provide for the exchange and registration of untendered outstanding notes under the registration rights agreement. To the extent that outstanding notes are tendered and accepted in the exchange offer, the trading market for outstanding notes that are not so tendered and accepted could be adversely affected.

Consequences of Failure to Exchange All untendered outstanding notes will continue to be subject to the restrictions on transfer provided for in the outstanding notes and in the indenture. In general, the outstanding notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. Other than in connection with the exchange offer, we and the guarantors do not currently anticipate that we will register the outstanding notes under the Securities Act.

Material U.S. Federal Income Tax Consequences The exchange of outstanding notes for exchange notes in the exchange offer will not constitute a taxable event for U.S. federal income tax purposes. See “Material U.S. Federal Income Tax Consequences of the Exchange Offer.”

Accounting Treatment We will record the exchange notes in our accounting records at the same carrying value as the outstanding notes, which is the aggregate principal amount as reflected in our accounting records on the date of exchange.

Regulatory Approvals Other than compliance with the Securities Act and qualification of the indentures governing the notes under the Trust Indenture Act, there are no federal or state regulatory requirements that must be complied with or approvals that must be obtained in connection with the exchange offers.

Use of Proceeds We will not receive any cash proceeds from the issuance of exchange notes pursuant to the exchange offer. See “Use of Proceeds.”

Exchange Agent Wilmington Trust FSB is the exchange agent for the exchange offer. The address and telephone number of the exchange agent are set forth in the section captioned “The Exchange Offer—Exchange Agent” of this prospectus.

13

The Exchange Notes

The following summary is provided solely for your convenience. This summary is not intended to be complete. You should read the full text and more specific details contained elsewhere in this prospectus, including a more detailed summary of the terms of the notes under “Description of the Exchange Notes” beginning on page 134. In this section, “we” or the “Company” refers to American Renal Holdings Inc. and not to any of its subsidiaries.

Issuer American Renal Holdings Inc.

Notes Offered $250,000,000 aggregate principal amount of 8.375% Senior Secured Notes due 2018.

Maturity Date May 15, 2018.

Interest Payment Dates May 15 and November 15, commencing November 15, 2010.

Guarantees The notes are guaranteed, jointly and severally, by our direct parent and all of our existing and future wholly owned domestic restricted subsidiaries, other than certain excluded subsidiaries. Our majority owned subsidiaries, which operate the clinics, will not guarantee the notes.

Collateral The notes and the guarantees are secured by a first-priority lien (pari passu, subject to the intercreditor agreement described below, with the liens granted under the New Revolving Credit Facility and subject to certain exceptions and permitted liens) on substantially all of our and our guarantors’ tangible and intangible assets, which are valued at approximately $542 million as of September 30, 2010 (such assets, the “Collateral”). With respect to the Collateral, the indebtedness and obligations under the notes, our New Revolving Credit Facility and certain other first lien obligations permitted under the indenture governing the notes have first-priority liens. Under the terms of the intercreditor agreement, however, in the event of a foreclosure on the Collateral or insolvency proceedings, the holders of the notes will receive proceeds from the Collateral only after debt under the New Revolving Credit Facility as well as obligations under certain hedging and cash management arrangements owed to lenders or their affiliates under the New Revolving Credit Facility have been repaid. See “Description of the Exchange Notes—Collateral.” As of the time of the filing of this prospectus, the New Revolving Credit Facility is undrawn and the Company does not have any other obligations that would have priority over the notes pursuant to the intercreditor agreement.

Ranking The notes and the guarantees rank:

• pari passu with our and the guarantors’ obligations that are secured by first priority liens, except obligations under our New Revolving Credit Facility and obligations under certain hedging and cash management arrangements will be entitled to proceeds of the Collateral prior to the notes in the event of a foreclosure or in any insolvency proceeding;

• equal in right of payment to all of our and our guarantors’ unsubordinated obligations;

14

• effectively senior in right of payment to all of our and our guarantors’ existing and future unsecured obligations to the extent of the value of the Collateral;

• senior in right of payment to all of our and our guarantors’ future obligations that are expressly subordinated in right of payment to the notes;

• structurally junior to all obligations of our subsidiaries that are not guarantors except, with respect to any subsidiary, to the extent of any intercompany loans owing by such subsidiary that constitute Collateral. These obligations of non-guarantor subsidiaries totaled approximately $8.2 million as of September 30, 2010.

The indenture governing the notes permits additional indebtedness or other obligations to be secured by the Collateral either on a pari passu or on a junior priority basis relative to the notes, subject to limitations.

Intercreditor Agreement The trustee and the collateral agent under the indenture governing the notes and the administrative agent and collateral agent under the New Revolving Credit Facility have entered into an intercreditor agreement as to the relative priorities of their respective entitlement to proceeds of the assets securing the notes and borrowings under the New Revolving Credit Facility and other first-priority lien secured obligations upon a foreclosure or bankruptcy and certain other matters relating to the administration of security interests. See “Description of the Exchange Notes—Intercreditor Agreement.” As of the time of the filing of this prospectus, the New Revolving Credit Facility is undrawn and the Company does not have any other obligations that would have priority over the notes pursuant to the intercreditor agreement.

Use of Proceeds There will be no cash proceeds to us from the exchange offer.

Optional Redemption On or after May 15, 2013, we may redeem some or all of the notes at any time at the redemption prices specified under “Description of the Exchange Notes—Optional Redemption.” Prior to May 15, 2013, we may redeem some or all of the notes at a redemption price of 100% of the principal amount of each note to be redeemed plus a “make-whole” premium described in “Description of the Exchange Notes—Optional Redemption.”

In addition, prior to May 15, 2013, we will have the option to redeem, during each 12 month period commencing on the issue date, up to 10% of the aggregate principal amount of the notes at 103% of the aggregate principal amount of the notes redeemed plus accrued and unpaid interest to the date of redemption.

Furthermore, at any time prior to May 15, 2013, we may redeem up to 35% of the notes with the net cash proceeds from specified equity

15

offerings at a redemption price equal to 108.375% of the principal amount of each Note to be redeemed, plus accrued and unpaid interest, if any, to the date of redemption.

Change of Control Upon a change of control, we must offer to repurchase the notes at 101% of the principal amount, plus accrued interest to the purchase date. See “Description of the Exchange Notes—Change of Control.”

Certain Covenants The indenture governing the notes contains covenants that, among other things, limit our ability and ability of our restricted subsidiaries to:

• incur additional indebtedness or liens;

• pay dividends or make distributions on our capital stock or repurchase our capital stock;

• make certain investments or other restricted payments;

• place restrictions on the ability of subsidiaries to pay dividends or make other distributions to us;

• sell certain assets or merge with or into other companies; and

• enter into certain types of transactions with shareholders and affiliates.

These covenants are subject to important exceptions and qualifications, which are described in “Description of the Exchange Notes—Certain Covenants.”

Voting The exchange notes will be treated along with the outstanding notes as a single class for voting purposes.

No Prior Market The exchange notes will be freely transferable but will be new securities for which there will not initially be a market. Accordingly, we cannot assure you whether a market for the exchange notes will develop or as to the liquidity of any such market that may develop. The initial purchasers of the outstanding notes have informed us that they currently intend to make a market in the exchange notes; however, they are not obligated to do so, and they may discontinue any such market-making activities at any time without notice.

Risk Factors Potential investors in the notes should carefully consider the matters set forth under the caption “Risk Factors” prior to making an investment decision with respect to the notes.

16

Summary Historical and Pro Forma Consolidated Financial and Other Data

Set forth below is our summary historical and pro forma consolidated financial data at the dates and for the periods indicated. The statement of income and other financial data for each of the years in the three-year period ended December 31, 2009 and the balance sheet data as of December 31, 2008 and 2009 have been derived from our historical consolidated financial statements included elsewhere in this prospectus, which have been audited by Grant Thornton LLP.

The summary unaudited pro forma consolidated financial data as of and for the year ended December 31, 2009 and as of and for the nine months ended September 30, 2010 have been prepared to illustrate the estimated effects on our historical results of operations and financial condition of the following (the “Pro Forma Adjustments”):

• the Merger, including the cash equity investment by our Sponsor (net of transaction expenses);

• the issuance of the notes being exchanged hereby;

• the results of our four acquisitions in 2009;

• the effect on noncontrolling interests resulting from the purchase and sale of such noncontrolling interests in various clinics; and

• the purchase price allocation and related adjustments based on asset, liability and noncontrolling interest valuations.

The summary unaudited pro forma consolidated statement of income data and other financial data give effect to the Pro Forma Adjustments as if they had occurred on January 1, 2009. The Pro Forma Adjustments are based upon available information and certain assumptions that we believe are reasonable. The summary unaudited pro forma consolidated financial data are for informational purposes only and do not purport to represent what our results of operations or financial position actually would have been had the Pro Forma Adjustments actually occurred on the dates indicated, and the data do not purport to project our results of operations or financial condition for any future period or as of any future date.

The ratios of earnings to fixed charges for the relevant periods appear in “Selected Consolidated Financial Data.”

17

	Historical																		Pro Forma
	Predecessor Entity															Successor Entity			Year Ended December 31, 2009			Nine Months Ended September 30, 2010
	As of and for the Year Ended December 31,									As of and for the Nine Months Ended September 30, 2009			As of May 7, 2010 and for the period from January 1, 2010 through May 7, 2010			As of September 30, 2010 and for the period from May 8, 2010 through September 30, 2010
(in thousands, except ratios and operating data)	2007			2008			2009
										(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)
Statement of Income Data:
Net patient service revenue	$	178,391		$	217,777		$	262,989		$	193,109		$	102,094		$	120,833		$	265,206		$	222,927
Operating expenses:
Patient care costs		115,058			141,810			170,826			125,098			66,042			78,335			172,353			142,737
General and administrative expense		18,595			19,944			24,819			17,423			10,016			14,991			25,557			22,750
Merger and related expenses		—			—			—			—			7,378			14,839			—			—
Depreciation and amortization		7,919			9,777			12,127			8,816			4,429			6,434			15,493			12,322
Provision for doubtful accounts		3,258			4,834			3,216			3,184			(334	)		1,021			3,280			687
Total operating expenses		144,830			176,365			210,988			154,521			87,531			115,620			216,683			178,496
Operating income		33,561			41,412			52,001			38,588			14,563			5,213			48,523			44,431
Interest expense, net		(13,695	)		(13,729	)		(14,948	)		(11,212	)		(5,717	)		(9,205	)		(22,588	)		(16,935	)
Income (loss) before income taxes		19,866			27,683			37,053			27,376			8,846			(3,992	)		25,935			27,496
Income tax expense (benefit)		4,409			6,860			9,524			7,036			2,264			(649	)		1,880			2,992
Net income (loss)		15,457			20,823			27,529			20,340			6,582			(3,343	)		24,055			24,504
Less: Net income attributable to noncontrolling interests		(14,706	)		(17,179	)		(22,391	)		(15,823	)		(9,266	)		(10,949	)		(20,964	)		(19,583	)
Net income (loss) attributable to ARH	$	751		$	3,644		$	5,138		$	4,517		$	(2,684	)	$	(14,292	)	$	3,092		$	4,921
Other Financial Data:
Adjusted EBITDA (including noncontrolling interests) (1)	$	43,660		$	52,671		$	67,724		$	49,161		$	26,589		$	30,521		$	67,612		$	57,929
Adjusted EBITDA (1)		28,954			35,492			45,333			33,338			17,323			19,572			46,648			38,346
Capital expenditures (2)		15,218			21,254			15,067			9,757									15,067			11,045
Operating Data:
Number of clinics (as of end of period)		64			75			83			80						88			83			88
Patients (as of end of period)		3,740			4,545			5,405			5,235						6,119			5,405			6,119
Number of treatments		503,576			604,888			745,812			546,825									753,596			632,556
Non-acquired treatment growth (3)		16.9	%		20.1	%		20.6	%		22.5	%								20.6	%		15.5	%
Revenues per treatment (4)	$	354		$	360		$	353		$	353								$	352		$	352
Patient care costs per treatment (4)	$	228		$	234		$	229		$	229								$	229		$	226
General and administrative expenses per treatment (4)	$	37		$	33		$	33		$	32								$	34		$	36

18

	As of September 30,  2010 (unaudited)
	(dollars in thousands)
Consolidated Balance Sheet Data:
Cash and cash equivalents	$	27,579
Working capital (5)		29,244
Total assets		703,483
Total debt and capital lease obligations		250,569
ARH Equity		174,541

(1) Adjusted EBITDA is defined as net income attributable to ARH before income taxes, interest expense, depreciation and amortization, and we further adjust for non-cash charges, non-recurring charges and pro forma amounts for acquisitions as if they had been consummated on the first day of each period. We believe Adjusted EBITDA provides information useful for evaluating our businesses and understanding our operation performance in a manner similar to management. We believe Adjusted EBITDA is helpful in highlighting trends because Adjusted EBITDA excludes the results of decisions that are outside the control of operating management and can differ significantly from company to company depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate and capital investments. In addition, we present Adjusted EBITDA because it is one of the components used in the calculations under the covenants contained in our revolving credit facility. Adjusted EBITDA is not a measure of operating performance computed in accordance with GAAP and should not be considered as a substitute for operating income, net income, cash flows from operations, or other statement of operations or cash flow data prepared in conformity with GAAP, or as measures of profitability or liquidity. In addition, Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Adjusted EBITDA may not be indicative of historical operating results, and we do not mean for it to be predictive of future results of operations or cash flows. Adjusted EBITDA has limitations as an analytical tool, and you should not consider this item in isolation, or as a substitute for an analysis of our results as reported under GAAP. Some of these limitations are that Adjusted EBITDA:

• does not include interest expense—as we have borrowed money for general corporate purposes, interest expense is a necessary element of our costs and ability to generate profits and cash flows;

• does not include depreciation and amortization—because construction and operation of our dialysis clinics requires significant capital expenditures, depreciation and amortization are a necessary element of our costs and ability to generate profits;

• does not include stock-based compensation expense;

• does not reflect changes in, or cash requirements for, our working capital needs; and

• does not include certain income tax payments that represent a reduction in cash available to us.

You should not consider Adjusted EBITDA as an alternative to income from operations or net income, determined in accordance with GAAP, as an indicator of our operating performance, or as an alternative to cash flows from operating activities, determined in accordance with GAAP, as an indicator of cash flows or as a measure of liquidity.

19

The following table presents the reconciliation from net income (loss) to Adjusted EBITDA for the periods indicated:

	Historical																		Pro Forma
	Predecessor Entity															Successor Entity
	As of and for the Year Ended December 31,									For the Nine Months Ended September 30, 2009			For the period from January 1, 2010 through May 7, 2010			For the period from May 8, 2010 through September 30, 2010			Year Ended December 31, 2009			Nine Months Ended September 30, 2010
	2007			2008			2009
										(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)
Net income (loss)	$	15,457		$	20,823		$	27,529		$	20,340		$	6,582		$	(3,343	)	$	24,055		$	24,504
Add:
Stock-based compensation		2,180			1,482			1,135			876			219			4,487			1,135			763
Depreciation and amortization		7,919			9,777			12,127			8,816			4,429			6,434			15,493			12,322
Interest expense, net		13,695			13,729			14,948			11,212			5,717			9,205			22,588			16,935
Income tax expense (benefit)		4,409			6,860			9,524			7,036			2,264			(649	)		2,192			2,992
Merger and related expenses		—			—			—			—			7,378			14,839			—			—
Initial public offering transaction expenses		—			—			1,797			508			—			—			1,797			—
Management fee		—			—			—			—			—			220			550			413
Specified legal costs		—			—			664			373			—			—			664			—
Adjusted EBITDA (including noncontrolling interests)		43,660			52,671			67,724			49,161			26,589			31,193			68,612			57,929
Less: Net income attributable to noncontrolling interests		(14,706	)		(17,179	)		(22,391	)		(15,823	)		(9,266	)		(10,949	)		(20,964	)		(19,583	)
Adjusted EBITDA	$	28,954		$	35,492		$	45,333		$	33,338		$	17,323		$	20,244		$	47,198		$	38,346

This presentation of Adjusted EBITDA may not be directly comparable to similarly titled measures of other companies, since not all companies use identical calculations.

(2) Includes the following capital expenditure by type:

	Year Ended December 31,						Nine Months Ended September 30, 2009		Pro Forma Nine Months Ended September 30, 2010
	2007		2008		2009
Development capital expenditures	$	12,887	$	18,764	$	11,056	$	9,020	$	8,961
Maintenance capital expenditures		2,331		2,490		4,011		737		2,084
Total capital expenditures	$	15,218	$	21,254	$	15,067	$	9,757	$	11,045

(3) We calculate non-acquired treatment growth by dividing the number of treatments performed during the applicable period by the number of treatments performed during the corresponding prior period, excluding the number of treatments performed at clinics acquired during the applicable period, and expressing the resulting number as a percentage.

(4) We calculate revenues per treatment, patient care costs per treatment and general and administrative expenses per treatment by dividing net operating revenues, patient care costs and general and administrative expenses for the applicable period by the number of treatments performed in the applicable period.

(5) Current assets minus current liabilities.

20

RISK FACTORS

Investing in the notes involves a high degree of risk. You should consider carefully the risks and uncertainties described below, together with all of the other information in this prospectus, including the financial statements and the related notes appearing at the end of this prospectus, before making an investment decision. If any of the following risks actually occur, they may materially harm our business, prospects, financial condition and results of operations, which in turn could adversely affect our ability to repay the notes. You may lose all or part of your original investment.

Risks Related to the Exchange Offer

If you choose not to exchange your outstanding notes, the present transfer restrictions will remain in force and the market price of your outstanding notes could decline.

If you do not exchange your outstanding notes for exchange notes in the exchange offer, then you will continue to be subject to the transfer restrictions on the outstanding notes as set forth in the offering circular distributed in connection with the private offering of the outstanding notes. In general, the outstanding notes may not be offered or sold unless they are registered or exempt from registration under the Securities Act and applicable state securities laws. Except as required by the registration rights agreement, we do not intend to register resales of the outstanding notes under the Securities Act. You should refer to “Summary—The Exchange Offer” and “The Exchange Offer” for information about how to tender your outstanding notes.

The tender of outstanding notes under the exchange offer will reduce the principal amount of the outstanding notes outstanding, which may have an adverse effect upon, and increase the volatility of, the market price of the outstanding notes due to reduction in liquidity.

Certain persons who participate in the exchange offer must deliver a prospectus in connection with resales of the exchange notes.

Based on interpretations of the staff of the SEC contained in Exxon Capital Holdings Corp., SEC no-action letter (April 13, 1988), Morgan Stanley & Co. Inc., SEC no-action letter (June 5, 1991) and Shearman & Sterling, SEC no-action letter (July 2, 1983), we believe that you may offer for resale, resell or otherwise transfer the exchange notes without compliance with the registration and prospectus delivery requirements of the Securities Act. However, in some instances described in this prospectus under “Plan of Distribution,” certain holders of exchange notes will remain obligated to comply with the registration and prospectus delivery requirements of the Securities Act to transfer the exchange notes. If such a holder transfers any exchange notes without delivering a prospectus meeting the requirements of the Securities Act or without an applicable exemption from registration under the Securities Act, such a holder may incur liability under the Securities Act. We do not and will not assume, or indemnify such a holder against, this liability.

Your ability to transfer the notes may be limited by the absence of an active trading market, and an active trading market may not develop for the notes.

We do not intend to apply for a listing of the exchange notes on a securities exchange or on any automated dealer quotation system. There is currently no established market for the exchange notes, and we cannot assure you as to the liquidity of markets that may develop for the exchange notes, your ability to sell the exchange notes or the price at which you would be able to sell the exchange notes. If such markets were to exist, the exchange notes could trade at prices that may be lower than their principal amount or purchase price depending on many factors, including prevailing interest rates, the market for similar notes, our financial and operating performance and other factors. We cannot assure you that an active market for the exchange notes will develop or, if developed, that it will continue. Historically, the market for non-investment grade debt has been subject to disruptions that have caused substantial volatility in the prices of securities similar to the exchange notes. The market, if any, for the exchange notes may experience similar disruptions and any such disruptions may adversely affect the prices at which you may sell your exchange notes.

21

Risks Relating to Our Business

If the number of patients with commercial insurance declines, or if the average rates paid by commercial payors decline, our operating results and financial condition would be adversely affected.

Commercial payors pay us on terms and at rates that are generally significantly higher than Medicare rates. For the year ended December 31, 2009, we derived approximately 43% of our net operating revenues from commercial payors, even though these payors were the source of reimbursement for approximately 14% of the treatments performed. Medicare payment rates are generally insufficient to cover our total operating expenses allocable to providing dialysis treatments for Medicare patients, although in some circumstances they are sufficient to cover their patient care costs. The dialysis services industry is experiencing a growing number of commercial payors seeking to reduce payment rates and impose limitations on out-of-network access and rates. The downward pressure on commercial payment rates is a result of general conditions in the market, recent and future consolidations among commercial payors, increased focus on dialysis services and other factors. Decreases in the number of patients covered by commercial plans, reductions in commercial payor rates and decreases in out-of-network rates or increases in restrictions on out-of-network access could result in a significant decrease in our overall revenues derived from commercial payors.

We are continuously in the process of negotiating agreements with our commercial payors, who are increasingly aggressive in their negotiations with us. In the event that our continued negotiations result in overall commercial rate reductions in excess of overall commercial rate increases, the cumulative effect could have a material adverse effect on our financial results. Consolidations have significantly increased the negotiating leverage of commercial payors. Our negotiations with payors are also influenced by competitive pressures. It is possible that some of our contracted rates with commercial payors may decrease or that we may experience decreases in patient volume as our negotiations with commercial payors continue. In addition to increasing downward pressure on contracted commercial payor rates, payors have been attempting to impose restrictions and limitations on non-contracted or out-of-network providers. Rates for out-of-network providers are on average higher than rates for in-network providers. Commercial payors may restructure their benefits to create disincentives for patients to select or remain with out-of-network providers or may decrease payment rates for out-of-network providers. Through our affiliation with dialysis provider trade organizations, we are resisting attempts to limit access to out-of-network providers through regulatory, legislative and legal means. Because some of our clinics are currently designated as out of network providers for our current commercial payors, decreases in out-of-network rates and restrictions on out-of-network access combined with decreases in contracted rates could result in a significant decrease in our overall revenue derived from commercial payors. If the average rates that commercial payors pay us decline significantly, it would have a material adverse effect on our revenues, earnings and cash flows.

Additionally, our revenues are sensitive to the percentage of patients with commercial insurance coverage. A patient’s insurance coverage may change for a number of reasons, including as a result of changes in the patient’s or a family member’s employment status. Currently, for a patient covered by an employer group health plan, Medicare generally becomes the primary payor after 33 months, including a 3-month coordination of benefits period. When Medicare becomes the primary payor, the payment rate we receive for that patient shifts from the employer group health plan rate to the lower Medicare payment rate. If there is a significant reduction in the number of patients under higher-paying commercial plans relative to government-based programs, our revenues, earnings and cash flows would be adversely affected.

We have seen an increase in the number of patients who have government-based programs as their primary payors which we believe is largely as a result of the current economic recession which has reduced the percentage of patients covered under commercial insurance plans. To the extent there are sustained or increased job losses in the United States as a result of current economic conditions, we could experience a decrease in the number of patients under commercial plans. We could also experience a further decrease if changes to the healthcare regulatory system result in fewer patients covered under commercial plans. In addition, our continued negotiations with commercial payors could result in a decrease in the number of patients under commercial plans

22

to the extent that we cannot reach agreement with commercial payors on rates and other terms. If there is a significant reduction in the number of patients under higher-paying commercial plans relative to government-based programs that pay at lower rates, it would have a material adverse effect on our revenues, earnings and cash flows.

Changes in the structure of, and payment rates under, state Medicaid programs and the Medicare ESRD program could adversely affect our operating results and financial condition.

We derived approximately 3% of our revenues for the year ended December 31, 2009 from patients who have Medicaid as their primary coverage. As state governments face increasing budgetary pressure, they may propose reductions in payment rates, delays in the timing of payments, limitations on eligibility or other changes to Medicaid programs. Some states have already taken steps to reduce or delay payments. In addition, Medicaid eligibility requirements mandate that citizen enrollees in Medicaid programs provide documented proof of citizenship. Our revenues, earnings and cash flows could be negatively impacted to the extent that we are not paid by Medicaid or other state programs for services provided to patients who are unable to satisfy the eligibility requirements, including undocumented patients living in the United States. If state governments reduce the rates paid by Medicaid programs for dialysis and related services, delay the timing of payment for services provided, further limit eligibility for Medicaid coverage or adopt changes to the Medicaid payment structure which reduces our overall payments from Medicaid, then our revenues, earnings and cash flows could be adversely affected.

During the year ended December 31, 2009, we derived approximately 57% of our revenues from reimbursement from federal programs, such as Medicare and Medicaid. The Medicare ESRD program pays us for dialysis treatment services at a single composite rate for each dialysis treatment, adjusted based upon geography and individual patient characteristics. The composite rate includes the supplies used in those treatments, specified laboratory tests and certain pharmaceuticals. The existing Medicare ESRD program does not provide for regular percentage increases in the composite rate. Accordingly, the amounts by which we are reimbursed for our services are not adjusted to keep pace with inflation, even if our operating costs, which include labor and supply costs, increase.

Other services and pharmaceuticals, vitamin D analogs, and iron supplements, are separately billed. These separately-billable pharmaceuticals include erythropoietin (“EPO”), a pharmaceutical used to treat anemia, a common complication associated with ESRD. Reductions in the payment rate or changes in the reimbursement methodology for these separately billed items, without a corresponding increase in the composite rate, could have a material adverse effect on our revenues, earnings and cash flows.

In July 2008, the Medicare Improvements for Patients and Providers Act of 2008, or MIPPA, was passed by Congress. This legislation introduced a new payment system for dialysis services beginning in January 2011 whereby ESRD payments will be made under a bundled payment rate which will provide for a fixed rate for all goods and services provided during the dialysis treatment, including laboratory services, the administration of pharmaceuticals and payments for pharmaceuticals such as EPO that are separately billed under the current methodology. On July 23, 2010, CMS released the final rule regarding the new bundled payment rate system. We are still evaluating the various components of the new bundled payment rate system, however, we noted that the initial 2011 bundled rate includes reductions of 2% and 3.1%, respectively, to conform to the provisions of MIPPA and to establish budget neutrality. Further there is a 5.94% reduction tied to an expanded list of case mix adjustors which can be earned back based upon the presence of these co-morbidities at the time of treatment. There are other provisions which may impact payment including an outlier pool and a low volume facility adjustment. Further the new rule requires dialysis facilities to provide new services within the payment bundle such as oral vitamin D medications and an expanded list of laboratory tests. Historically these services were separately billable; now the dialysis facility will be at risk for utilization with reimbursement set at a fixed rate. With regard to the expanded list of case-mix adjustors, these may be difficult or impossible for our dialysis clinics or billing and other systems to document and track resulting in a reduction in the amounts of the payments that we would otherwise be entitled to receive. The rule also requires the new single bundled payment base rate

23

to be adjusted annually for inflation based upon a market basket index, less a productivity adjustment, beginning in 2012. Also, beginning in 2012, the rule provides for up to a 2% withhold that can be earned back by facilities that meet certain defined clinical performance standards.

Federal or state healthcare reform laws could adversely affect our operating results and financial condition.

On March 30, 2010, President Obama signed into law the Health Care and Education Reconciliation Act that modified the newly enacted Patient Protection and Affordable Care Act, commonly referred to as the Health Care Reform Act. This culmination of a yearlong legislative process will have a significant impact on the health care delivery system. Much of that impact, specifically as related to dialysis services, is unknown.

The Health Care Reform Act, among other things, sets out a plan for a type of universal healthcare coverage. A number of states, including California, Colorado, Connecticut, Massachusetts, New York and Pennsylvania, are also contemplating significant reform of their health insurance markets. Other states have mounted legal challenges to the implementation of certain aspects of the health care reform bill in their respective states. The Health Care Reform Act, along with possible changes at the state level, will affect both public programs and privately-financed health insurance arrangements. Both the new federal law and the state proposals increase the number of insured persons by expanding the eligibility levels for public programs and compelling individuals and employers to purchase health coverage. At the same time, these laws seek to reform the underwriting and marketing practices of health plans. These laws could further increase pricing pressure on existing commercial payors. As a result, commercial payors may likely seek to lower their rates of reimbursement for the services we provide. The state proposals are still being debated in various legislatures and the legal challenges to the Health Care Reform Act are in their earliest stages.

Given the recent enactment of the Health Care Reform Act, and taking into account proposed state reforms and possible legal challenges, we cannot predict how our business will be affected by the full implementation of these and future actions. The Health Care Reform Act, in connection with state initiatives, may increase our costs, decrease our revenues, expose us to expanded liability or require us to revise the ways in which we conduct our business, any of which could adversely affect our operating results and financial condition.

If we fail to adhere to all of the complex federal, state and local government regulations that apply to our business, we could suffer severe consequences and it could adversely affect our operating results and financial condition.

Our dialysis operations are subject to extensive federal, state and local government regulations, all of which are subject to change. These government regulations currently relate, among other things, to:

• government healthcare program participation requirements and reimbursement for patient services, including Medicare and Medicaid reimbursement rules and regulations;

• federal and state anti-kickback laws, the federal Stark Law’s prohibition on physician self-referrals and analogous state physician self-referral statutes;

• false claims prohibitions for healthcare reimbursement programs and other fraud and abuse laws and regulations, including amendments to the federal False Claims Act in 2009;

• federal and state laws regarding record keeping requirements, privacy and security protections applicable to the collection, use and disclosure of protected health information, security breach notification requirements relating to protected health information, and standards for the exchange of electronic health information, electronic transactions and code sets and unique identifiers for providers;

• licensing and certification requirements applicable to our dialysis clinics; and

• regulation related to health, safety and environmental compliance, including medical waste disposal.

24

We endeavor to comply with all of the requirements for receiving Medicare and Medicaid payments and to structure all of our relationships with physicians to comply with state and federal anti-kickback laws, the federal Stark Law and applicable state self-referral laws. However, the laws and regulations in this area are complex and subject to varying interpretations. For example, if a governmental agency were to challenge the level of compensation that we pay our medical directors, we could be required to change our practices, face criminal or civil penalties, pay substantial fines or otherwise experience a material adverse effect as a result of a challenge to these arrangements.

Both federal and state government agencies, as well as private payors, have heightened and coordinated audits and administrative, civil, and criminal enforcement efforts as part of numerous ongoing investigations of healthcare organizations. These investigations relate to a wide variety of topics, including the following:

• cost reporting and billing practices;

• quality of care;

• financial reporting;

• financial relationships with referral sources; and

• medical necessity of services provided.

In addition, CMS has increased the frequency and intensity of its certification inspections of dialysis clinics. State and federal governments have increased enforcement efforts and discussions related to proposed federal and state healthcare reform raise the possibility of significantly increased funding for enforcement of anti-fraud, physician self-referral, and false claims laws against healthcare providers. We may be especially susceptible to state law regulation risks in states where we have large concentrations of business and in states in which we establish new JVs but in which we may be unfamiliar with the regulatory requirements. For example, we are required to provide substantial documentation related to the administration of pharmaceuticals, including EPO. To the extent that any of this documentation is found insufficient, we may be required to refund any amounts received from this administration by government or commercial payors, and be subject to substantial penalties under applicable laws or regulations. In addition, fiscal intermediaries have increased their prepayment and post-payment reviews. Medicare Administrative Contractors are now active in many, but not all, states and are responsible for performing the functions previously performed by fiscal intermediaries. Medicare is also in the process of implementing a network of privately contracted auditors, called Recovery Audit Contractors, or RACs, which will conduct post-payment reviews to identify improper payments made by Medicare to providers. The RACs have been assigned to each of the four regional jurisdictions covering the United States under the Recovery Audit Contractor Program. They are scheduled to be fully functional by 2010, but are already operating in several states and are performing limited post-payment reviews. RACs are to be paid on a contingency basis for all overpayments identified and recovered. If any of these enforcement actions or payment reviews identifies non-compliance or overpayments by us, they could adversely affect our operating results and financial condition.

The Medicare and Medicaid reimbursement rules related to claims submission, licensing requirements, cost reporting, and payment processes impose complex and extensive requirements upon dialysis providers. A violation or departure from these requirements may result in government audits, lower reimbursements, recoupments or voluntary repayments, and the potential loss of certification. Further, if any of our operations are found to violate these or other government regulations, we could suffer severe consequences that would have a material adverse effect on our revenues, earnings and cash flows including:

• suspension or termination of our participation in government payment programs;

• refunds to the government and third-party payors of amounts received in violation of law or applicable payment program requirements;

• loss of required government certifications or exclusion from government payment programs;

25

• loss of licenses required to operate healthcare clinics in some of the states in which we operate;

• reductions in payment rates or coverage for dialysis and ancillary services and related pharmaceuticals;

• fines, damages or monetary penalties for anti-kickback law violations, federal Stark Law violations, violations of state self-referral and anti-kickback prohibitions, submission of false claims, civil or criminal liability based on violations of law, or other failures to meet regulatory requirements;

• claims for monetary damages from or on behalf of patients who believe their protected health information has been used or disclosed in violation of federal or state patient privacy laws, or the imposition of fines and penalties for violations of those laws;

• mandated practice changes that significantly increase operating expenses; and

• termination of relationships with medical directors or healthcare providers.

In addition, the Office of the Inspector General of the Department of Health and Human Services and the Department of Justice have, from time to time, undertaken national enforcement initiatives that focus on specific billing practices or other suspected areas of abuse. If such enforcement initiatives are undertaken or if we become subject to any federal or state audits or investigations we are unable to predict the impact such actions would have on our business, financial position or results of operations. See “Business—Government Regulation.”

Our attempt to expand through development of de novo clinics or acquisition of existing dialysis clinics entails risks to our growth, as well as our operating results and financial condition.

We have experienced rapid growth since our inception. We have grown primarily through the development of de novo dialysis clinics as JVs with nephrologists or nephrologist groups, but we have also grown through the acquisition of existing clinics that we have restructured as JVs. Growth through development and acquisition places significant demands on our financial and management resources. Inability on our part to address these demands could adversely affect our growth, as well as our operating results and financial condition.

We generally expand by seeking appropriate locations for a dialysis clinic, taking into consideration the potential patient base, payor types, the availability of a nephrologist to be our medical director and nephrologist partner, and a skilled work force including qualified and cost-effective nursing and technical personnel. The inability to identify suitable locations, suitable nephrologist partners and workforce personnel for our dialysis clinics could adversely affect our growth as well as our operating results and financial condition.

The cost of developing a de novo dialysis clinic can be expensive and may include costs related to construction, equipment and initial working capital. In general, acquiring an existing dialysis clinic is more costly than developing a de novo dialysis clinic, but has historically been a faster means for achieving profitability. De novo dialysis clinics are subject to various risks, including risks associated with the availability and terms of financing for development and securing appropriate licenses. In addition, our de novo clinics may not become cash flow positive or profitable on a timely basis or at all. The inability to develop de novo clinics or acquire existing clinics on reasonable terms or in a cost-effective manner could adversely affect our growth as well as our operating results and financial condition. There is no assurance that we will be able to continue to successfully expand our business through establishing de novo clinics, or that de novo clinics will be able to achieve profitability that is consistent with our past results.

Our business strategy includes the selective acquisition of existing dialysis clinics. Businesses we acquire may have unknown or contingent liabilities or liabilities that are in excess of the amounts that we originally estimated. Although we generally seek indemnification from the sellers of businesses we acquire for matters that are not properly disclosed to us, we may not be successful. In addition, even in cases where we are able to obtain indemnification, we may be subject to liabilities greater than the contractual limits of our indemnification or the financial resources of the indemnifying party. In the event that we are responsible for liabilities substantially in excess of any amounts recovered through rights to indemnification, we could suffer severe consequences that could adversely impact our operating results.

26

If physicians cease referring patients to our dialysis clinics, our revenues would decrease.

Our dialysis services business is dependent upon patients choosing our clinics as the location for their treatments. Patients may select a clinic based, in whole or in part, on the recommendation of their physician. We believe that physicians and other clinicians typically consider a number of factors when recommending a particular dialysis facility to an ESRD patient, including, but not limited to, the quality of care at a clinic, the competency of a clinic’s staff, convenient scheduling, and a clinic’s location and physical condition. Physicians, including our nephrologist partners who are our medical directors, may change their facility recommendations at any time, which may result in the transfer of our existing patients to competing clinics, including clinics established by the physicians themselves. Our dialysis care business also depends on recommendations by hospitals, managed care plans and other health care institutions. If a significant number of providers cease referring their patients to our clinics, this would reduce our dialysis care revenue and could materially adversely affect our overall operations.

Our arrangements with our nephrologist partners and medical directors do not satisfy all the elements of a safe harbor to the federal anti-kickback statute and certain state anti-kickback laws and as a result may subject us to government scrutiny.

We take great efforts to ensure that our JV arrangements and medical director agreements comply with applicable laws and government regulations or fall within applicable safe harbors. Our business model is focused exclusively on JVs with nephrologist partners, which we have sought to structure in compliance with the federal anti-kickback statute, the Stark Law, and analogous state anti-kickback and self-referral laws, including the exceptions applicable to Medicare ESRD services. Many of our JVs with physicians or physician groups also involve the nephrologist partners providing medical director services to those clinics. Under Medicare regulations, each of our dialysis clinics is required to have an active medical director who is responsible for decision-making in analyzing core processes and patient outcomes and in stimulating a team approach to Continuous Quality Improvement and patient safety. For these services, we retain a physician on an independent contractor basis at an annual fixed fee to serve as the medical director. In the majority of cases, the medical director is also a nephrologist partner of ours in the particular dialysis clinic in question.

We believe that our relationships with our nephrologist partners, which includes our medical directors, meet most but not all of the elements of one of the safe harbors to the federal anti-kickback statute and may not meet all of the elements of analogous state safe harbors. Arrangements that do not meet all of the elements of a safe harbor are not prohibited under the federal anti-kickback statute but are susceptible to government scrutiny. The Office of Inspector General, or OIG, of the U.S. Department of Health and Human Services has indicated a concern about joint venture arrangements between physicians and other healthcare providers that may benefit from referrals of patients by those physicians or other business generated between the parties. Accordingly, there is some risk that the OIG or another government agency might investigate our JV arrangements and medical director contracts. In addition, if physician self-referral laws were to be interpreted differently than they currently are, we may be found to be in violation of such laws. If our arrangements with our medical directors were investigated and determined to violate the federal anti-kickback statute or analogous state laws, we could be required to restructure these relationships. We could also be subjected to severe monetary consequences that could adversely affect our operating results and financial condition, including the repayment of amounts received from Medicare by the offending clinics and the payment of penalties.

If we cannot renew our medical director agreements or enforce the noncompetition agreements with our medical directors, whether due to regulatory or other reasons, our operating results and financial condition could be materially and adversely affected.

Our medical director contracts are for fixed initial ten-year periods with automatic renewal options. Medical directors have no obligation to extend their agreements with us. We may take actions to restructure existing relationships or take positions in negotiating extensions of relationships to assure compliance with the safe

27

harbor provisions of the anti-kickback statute, Stark Law and other similar laws. These actions could negatively impact the decision of physicians to extend their medical director agreements with us or to recommend us to their patients. If the terms of any existing agreement are found to violate applicable laws, we may not be successful in restructuring the relationship which could lead to the early termination of the agreement, or cause the physician to stop recommending our dialysis clinics to their patients. If a significant number of physicians were to cease recommending our dialysis clinics to their patients, whether due to regulatory or other reasons, then our revenues, earnings and cash flows would be substantially reduced.

If a medical director agreement terminates, whether before or at the end of its term, it may negatively impact that former medical director’s decision to treat his or her patients at one of our clinics. All of our medical director agreements provide for noncompetition restrictions prohibiting the medical directors from owning an interest in or serving as a medical director of a competing facility within specified geographical areas for specified periods of time. If we are unable to enforce the noncompetition provisions contained in our medical director agreements, it is possible that these medical directors may choose to provide medical director services for competing providers or establish their own dialysis clinics in competition with ours.

Delays in state Medicare and Medicaid certification of our dialysis clinics could adversely affect our operating results and financial condition.

We are required to obtain state and federal certification for participation in the Medicare and Medicaid programs before we can begin billing for patients treated in our clinics who are enrolled in government-based programs. Due to budgetary pressures, significant delays in certification have occurred in some states and additional delays may occur in the future. For example, the state of Texas stopped certifying dialysis clinics during a portion of 2009, and the state of California experienced significant delays in certifying dialysis clinics during 2009. Failures or delays in obtaining certification could cause significant delays in our ability to bill for services provided to patients covered under government programs, cause us to incur write-offs of investments or accelerate the recognition of lease obligations in the event we have to close clinics or our clinics’ operating performance deteriorates. This could have an adverse effect on our operating results and financial condition.

Our business is subject to substantial competition, which could adversely impact our operating results and financial condition as well as growth.

The development, acquisition and operation of dialysis clinics is highly competitive. Our competition comes from other dialysis clinics, many of which are owned by much larger public companies, small to mid-sized private companies, acute care hospitals, nursing homes and physician groups. The dialysis industry is rapidly consolidating, resulting in several large dialysis companies competing with us for the acquisition of existing dialysis clinics and the development of relationships with nephrologists to serve as medical directors for new clinics. Over the past few years, several dialysis companies, including some of our largest competitors, have adopted a JV model of dialysis clinic ownership resulting in increased competition in the development, acquisition and operation of our JV dialysis clinics. The addition of competitors using a JV model could adversely affect our growth as well as our operating results and financial condition. Some of our competitors have significantly greater financial resources, more dialysis clinics and a significantly larger patient base. Some of our competitors may also be able to achieve better economies of scale by asserting leverage against their suppliers and other commercial parties.

Changes in clinical practices relating to EPO, the use and marketing of alternatives to EPO and payment rates or rules for EPO and other pharmaceuticals could adversely affect our operating results and financial condition as well as our ability to care for patients.

Payments for the administration of EPO and other pharmaceuticals accounted for approximately 34% of our revenues for the year ended December 31, 2009, with payments for EPO accounting for approximately 22% of our revenue. Changes in clinical practices that result in decreased utilization of prescribed pharmaceuticals or

28

changes in payment rates for those pharmaceuticals could adversely affect our operating results and financial condition. Since late 2006, there has been significant media discussion and government scrutiny regarding anemia management practices in the United States which has created confusion and concern in the nephrology community. In late 2006, the House Ways and Means Committee held a hearing on the issue of the utilization of erythropoiesis stimulating agents, or ESAs, which include EPO, and in 2007, the FDA required changes to the labeling of EPO and Aranesp^® to include a black box warning, the FDA’s strongest form of warning label. The FDA held additional hearings to revisit these label changes as they apply to ESRD and has indicated that they will convene in 2010 to further review ESA labeling. CMS also reviewed its EPO reimbursement policies and in January 2008, changes to the EPO monitoring policy went into effect which further limited reimbursement and which impacted the prescribing habits of our physicians and which has in the past and may in the future result in lower pharmaceutical intensities. Most recently, on March 24, 2010, the CMS Medical Evidence Development & Coverage Committee (“MEDCAC”) met to examine currently available evidence on the use of erythropoiesis stimulating agents (“ESAs”), including EPO. MEDCAC is an independent body established to provide guidance and expert advice to CMS on clinical issues. At the meeting, evidence was presented from current and recently completed clinical studies regarding the effectiveness of use of ESAs to manage anemia in patients who have chronic kidney disease. No policy determinations or recommendations concerning the manner in which ESAs, such as EPO, are covered or reimbursed under Medicare were made at the meeting, although MEDCAC is empowered to submit future recommendations to CMS following its review of the available evidence. Commercial payors have also increasingly examined their administration policies for EPO and, in some cases have modified those policies. Further changes in labeling of EPO and other pharmaceuticals in a manner that alters physician practice patterns or accepted clinical practices, changes in private and government payment criteria, including the introduction of EPO administration policies or the conversion to alternate types of administration of EPO or other pharmaceuticals that result in further decreases in utilization or reimbursement for EPO and other pharmaceuticals could have a material adverse effect on our revenues, earnings and cash flows.

Amgen Inc. (“Amgen”) is the sole supplier of EPO. We purchase EPO from Amgen through a group purchasing organization that negotiates the terms on which we purchase EPO. The available supply of EPO could be delayed or reduced, whether by Amgen itself, through unforeseen circumstances or as a result of excessive demand. In addition, our group purchasing organization may be unable to negotiate acceptable terms for us to purchase EPO from Amgen, or Amgen may unilaterally decide to increase its price for EPO at any time. If that occurs, we may have no ability on our part to pass any price increases to our payors. Future changes in the cost of EPO could have a material adverse effect on our earnings and cash flows and ultimately reduce our income. Although our agreements with our group purchasing organization and Amgen for EPO include potential rebates that depend upon our achievement of certain criteria, we cannot predict whether we will continue to receive rebates for EPO at the levels that we currently receive, or whether we will continue to achieve the same levels of rebates within that structure as we have historically achieved. Our agreements with our group purchasing organization and Amgen provide for specific rebates off list price based on a combination of factors, including data submission. Factors that could impact our ability to qualify for rebates provided for in our agreements with our group purchasing organization and Amgen in the future include our ability to track data elements. Failure to meet targets and earn the specified rebates could adversely affect our operating results and financial condition.

Amgen has developed and obtained FDA approval for Aranesp^®, and Roche has developed Mircera^®, each of which are pharmaceuticals used to treat anemia that may replace EPO or reduce its use with dialysis patients. Unlike EPO, which is generally administered in conjunction with each dialysis treatment, Aranesp^® and Mircera^® are administered less frequently. If Aranesp^®, Mircera^® or any future alternatives to EPO are marketed for the treatment of dialysis patients, we may realize lower margins on the administration of these pharmaceuticals than we currently realize with EPO. A significant increase in the development and use of similar alternatives to EPO, or a change in drug administration practices, could adversely affect our operating results and financial condition.

29

Most of our EPO reimbursement is from government programs. In recent years, the Centers for Medicare & Medicaid Services, or CMS, revised its rules for reimbursement of pharmaceuticals, including EPO, which resulted in a net reduction of average Medicare payment rates. In 2006, reimbursement for EPO was set at the average sales price plus 6%, which resulted in a decreased reimbursement for pharmaceuticals, but was offset by a 1.6% composite rate increase. If government or commercial payors further reduce reimbursement for EPO, then our revenues, earnings and cash flows may decline.

The Medicare Improvements for Patients and Providers Act of 2008 provides for marginal increases in the dialysis composite rate for 2009 and 2010, but also establishes “bundled” payments for goods and services provided during a dialysis treatment beginning in 2011. By statute, the items and services in the new dialysis bundled rate will include in its calculation, among other things, EPO and other erythropoiesis stimulating agents.

Current economic conditions, including the current recession in the United States and the worldwide economic slowdown, as well as further disruptions in the financial markets, could adversely impact our operating results and financial condition.

The current economic recession in the United States and worldwide economic slowdown could adversely affect our operating results and financial condition. Among other things, the potential decline in federal and state revenues that may result from these conditions may create additional pressures to contain or reduce reimbursements for our services from Medicare, Medicaid and other government sponsored programs. Our business may be particularly sensitive to economic conditions in certain states in which we operate a large number of clinics, such as Florida, Rhode Island or others. The increased job losses and elevated unemployment rates in the United States resulting from the recession could result in a smaller percentage of patients being covered by commercial payors and a larger percentage being covered by lower-paying Medicare and Medicaid programs. Employers may also begin to select more restrictive commercial plans with lower reimbursement rates. To the extent that payors are adversely affected by a decline in the economy, we may experience further pressure on commercial rates, delays in fee collections and a reduction in the amounts we are able to collect. In addition, if the current turmoil in the financial markets continues, interest rates may increase and it could be more difficult to obtain credit in the future. Any or all of these factors, as well as other consequences of the current economic conditions which currently cannot be anticipated, could adversely impact our operating results and financial condition.

We may be subject to liability claims for damages and other expenses not covered by insurance that could adversely impact our operating results.

The administration of dialysis services to patients may subject us to litigation and liability for damages based on an allegation of malpractice, professional negligence in the performance of our treatment and related services, the acts or omissions of our employees, or other matters. Our exposure to this litigation and liability for damages increases with growth in the number of our clinics and treatments performed. Potential judgments, settlements or costs relating to potential future claims, complaints or lawsuits could result in substantial damages and could subject us to the incurrence of significant fees and costs. Our insurance may not be sufficient or available to cover these damages, costs or expenses. Our business, profitability and growth prospects could suffer if we face negative publicity or we pay damages or defense costs in connection with a claim that is outside the scope of any applicable insurance coverage, including claims related to contractual disputes and professional and general liability claims.

Our insurance costs have been increasing substantially over the last several years, and our coverage may not be sufficient to cover claims and losses.

We maintain a program of insurance coverage against a broad range of risks in our business. In particular, we maintain professional liability insurance, subject to deductibles. The premiums and deductibles under our insurance program have been increasing over the last several years as a result of general business rate increases.

30

We are unable to predict further increases in premiums and deductibles, but based on recent experience, we anticipate further increases in this area, which could adversely impact earnings. The liability exposure of operations in the healthcare services industry has increased, resulting not only in increased premiums, but in limited liability on behalf of the insurance carriers. Our ability to obtain the necessary and sufficient insurance coverage for our operations upon expiration of our insurance policies may be limited, and sufficient insurance may not be available on favorable terms, if at all. We could be materially and adversely affected by any of the following:

• our inability to obtain sufficient insurance for our operations;

• the collapse or insolvency of our insurance carriers;

• further increases in premiums and deductibles; and

• an inability to obtain one or more types of insurance on acceptable terms.

There are significant risks associated with estimating the amount of revenues that we recognize that could impact the timing of our recognition of revenues or have a significant impact on our operating results and financial condition.

There are significant risks associated with estimating the amount of revenues that we recognize in a reporting period. Ongoing insurance coverage changes, geographic coverage differences, differing interpretations of contract coverage, and other payor issues complicate the billing and collection process. Determining applicable primary and secondary coverage for an extensive number of patients at any point in time, together with the changes in patient coverage that occur each month, requires complex, resource-intensive processes. Errors in determining the correct coordination of benefits may result in refunds to payors. Revenues associated with Medicare and Medicaid programs also are subject to estimating risk related to the amounts not paid by the primary government payor that will ultimately be collectible from other government programs paying secondary coverage, the patient’s commercial health plan secondary coverage or the patient. Collections, refunds and payor retractions typically continue to occur for up to three years and longer after services are provided. If our estimates of revenues are materially inaccurate, it could impact the timing of our recognition of revenues and have a significant impact on our operating results and financial condition.

We may be the subject of inquiries by governmental authorities, any of which could result in substantial penalties against us.

From time to time, we may be the subject of inquiries or investigations by governmental authorities. Any negative findings could result in substantial financial penalties against us, exclusion from future participation in the Medicare and Medicaid programs, and, in some cases, criminal penalties. Further, in many cases the mere existence or announcement of any such inquiry could have a material adverse effect on our business. While some proceedings against companies in our industry may be filed under seal, we have no notice or knowledge that proceedings have been initiated against us at this time. Although we cannot predict whether or when proceedings might be initiated or when these matters may be resolved, it is not unusual for these investigations to continue for a considerable period of time. Responding to these investigations can require substantial management attention and significant legal expense, which could materially adversely affect our operations.

If our key supplier is unable to meet our needs or if we are unable effectively to access new technology it could adversely affect our operating results and financial condition.

Amgen Inc. is the sole supplier of EPO, the administration of which makes up a significant portion of our revenues. If this supplier is unable to meet our needs for EPO or EPO alternatives, including in the event of a product recall, and we are not able to find adequate alternative sources, it could adversely affect our operating results and financial condition.

31

In addition, the technology related to EPO is subject to new developments that may result in superior products. If we are not able to access these superior products on a cost-effective basis or if suppliers are not able to fulfill our requirements for products, we could face patient attrition which could adversely affect our operating results and financial condition.

Material decisions regarding our dialysis clinics may require consent or trigger rights of our nephrologist partners, and we may be required to purchase the ownership interests of our nephrologist partners or be unable to take actions that we believe are in our best interest.

Our nephrologist partners participate in material strategic and operating decisions we make for our clinics. For example, we generally must obtain the consent of our nephrologist partners before making any material amendments to the operating agreement for the dialysis clinic or admitting additional members. See “Business—JV Operating Agreements”. In addition, some of our JV operating agreements grant our nephrologist partners rights to require us to purchase—at fair market value or book value depending on the circumstances— their ownership interests at certain set times or upon the occurrence of certain triggering events. Event-based triggers of these rights in various JV operating agreements may include sale of assets, closure of the clinic, acquisitions over a certain dollar amount, failure to make distributions and other events. The consummation of the Transactions triggered some of these rights of our nephrologist partners, but such rights were waived. Time-based triggers give nephrologist partners at certain of our clinics the option to require us to purchase previously agreed upon percentages of their ownership interests at certain set dates.

The rights of our nephrologist partners to approve material decisions could limit our ability to take actions that we believe are in our best interest and the best interest of the dialysis clinic. We may not be able to resolve favorably, or at all, any dispute regarding material decisions with our nephrologist partners.

The funds required to honor our put obligations may make it difficult for us to meet our other debt obligations, including borrowings under the New Revolving Credit Facility and the payments of the notes being exchanged hereby. As a result of the exercise of these rights by nephrologist partners, we may also lose the JV ownership structure in some of our clinics. As of September 30, 2010, we have recorded liabilities of approximately $34 million for all existing time-based obligations and approximately $9 million for all existing event-based obligations to our nephrologist partners, which amounts reflect our estimation of fair market value as of September 30, 2010.

Shortages of qualified skilled clinical personnel, or higher than normal turnover rates, could affect our ability to grow and deliver quality, timely and cost-effective care services.

We depend on qualified nurses and other skilled clinical personnel to provide quality service to patients in our clinics. Competition is intense for qualified nursing, technical staff and nephrologists. We depend on our ability to attract and retain skilled clinical personnel to support our growth and generate revenues. There is currently a shortage of skilled clinical personnel in many of the markets in which we operate our clinics as well as markets in which we are considering opening new clinics. This nursing shortage may adversely affect our ability to grow or, in some cases, to replace existing staff, thereby leading to disruptions in our services. In addition, this shortage of skilled clinical personnel and the more stressful working conditions it creates for those remaining in the profession are increasingly viewed as a threat to patient safety and may trigger the adoption of state and federal laws and regulations intended to reduce that risk. For example, some states have adopted or are considering legislation that would prohibit forced overtime for nurses or establish mandatory staffing level requirements.

In response to the shortage of skilled clinical personnel, we have increased and are likely to have to continue to increase our wages and benefits to recruit and retain nurses or to engage contract nurses at a higher expense until we hire permanent staff nurses. We may not be able to increase the rates we charge to offset increased costs. The shortage of skilled clinical personnel may in the future delay our ability to achieve our operational goals at a dialysis clinic by limiting the number of patients we are able to service. The shortage of skilled clinical personnel

32

also makes it difficult for us in some markets to reduce personnel expense at our clinics by implementing a reduction in the size of the skilled clinical personnel staff during periods of reduced patient admissions and procedure volumes. In addition, we believe that retention of skilled clinical personnel is an important factor in a patient’s decision to continue receiving treatment at one of our clinics. If we are unable to hire skilled clinical personnel when needed, or if we experience a higher than normal turnover rate for our skilled clinical personnel, our operations and treatment growth will be negatively impacted, which would result in reduced revenues, earnings and cash flows.

Growing numbers of skilled clinical personnel are also joining unions that threaten and sometimes call work stoppages. Currently, none of our employees belong to a union. Union organizing activities at our clinics could adversely affect our operating costs, our employee relations, productivity, earnings and cash flows.

Because our senior management has been key to our growth and success, we may be adversely affected if we lose any member of our senior management.

We are highly dependent on our senior management. Although we have employment agreements with our Chairman, Chief Executive Officer, President and Chief Financial Officer, we do not maintain “key man” life insurance policies on any of our officers. Because our senior management has contributed greatly to our growth since inception, the loss of key management personnel or our inability to attract, retain and motivate sufficient members of qualified management or other personnel could have a material adverse effect on us.

We depend on our relationships with our medical directors. Our ability to provide medical services at our facilities would be impaired and our revenues reduced if we were not able to maintain these relationships.

Our business depends on the efforts and success of the physicians who are medical directors at our clinics and the strength of our relationships with these physicians. The efforts of our medical directors directly correlate to the patient satisfaction and operating metrics of our clinics. Our revenues would be reduced if we lost our relationship with one of these key medical directors or group of medical directors. In addition, any failure of these medical directors to maintain the quality of medical care provided or to otherwise adhere to professional guidelines at our clinics or any damage to the reputation of a key medical director or group of medical directors could damage our reputation, subject us to liability and significantly reduce our revenues.

In addition our ability to attract physicians to enter into JV partnerships with us is essential to the growth of our business. If we became unable to attract physicians to enter into JV partnerships it would have a material adverse effect on us.

We may make significant loans to, and are generally liable for a proportionate share of the debts and other obligations of, our JV clinics.

We own and operate our JV clinics through arrangements in which we own, generally, between 51% and 75% of the ownership interests and our nephrologist partners own the remainder interests. In each of our JVs we are liable for our proportionate share (based upon interests) of the third-party debts and other obligations of the JV. Our nephrologist partners guarantee their proportionate share of these non-consolidated third-party debts, which are commonly secured by a lien on substantially all of the clinics’ assets. As of December 31, 2009, we guaranteed approximately $1.9 million of the third-party debt owed by these clinics. A failure of a clinic to repay these debts, or the occurrence of an event of default under the applicable debt arrangements for that clinic, could result in a loss of the applicable clinic. Further, a failure of our nephrologist partners to satisfy their obligations under their guarantees of these debts could also result in the forfeiture of the applicable clinic(s) or may require us to provide further funds in excess of our guarantee to prevent such loss. Our financial condition and results of operations would be materially adversely affected if our clinics are unable to pay these third-party debts, or if our nephrologist partners are unable to satisfy their associated guarantees.

33

Following the Transactions, we expect that indebtedness at the clinic level will, in most cases, be funded through intercompany loans that we provide. Pursuant to these intercompany lending arrangements we will obtain a secured interest in substantially all of the clinic’s assets to secure the repayment of the intercompany loan. However, our financial condition and results of operations would be materially adversely affected if our clinics are unable to repay these intercompany loans.

We will be required to evaluate the effectiveness of our internal controls when we become subject to the Sarbanes-Oxley Act of 2002.

As a privately held company (“non-issuer”) we have not been and are not currently subject to the requirements of the Securities Act, the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the rules and regulations of the SEC or the Sarbanes-Oxley Act of 2002, which require, among other things, public companies to have and maintain effective disclosure controls and procedures to ensure timely disclosure of material information, and have management review the effectiveness of those controls on a quarterly basis. The Sarbanes-Oxley Act of 2002 also requires public companies to have and maintain effective internal controls over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements, and have management review the effectiveness of those controls on an annual basis (and, in certain cases, have the independent auditor attest to the effectiveness of such internal controls). We are not currently required to comply with these requirements, and therefore may not have comparable procedures in place as compared to public companies.

Following the effectiveness of our registration statement (see “The Exchange Offer”) we will, to the extent required by Section 404 of the Sarbanes-Oxley Act of 2002, be required to annually complete an evaluation of our internal controls over financial reporting. Because we have not completed such evaluations in the past, we cannot predict the outcome of this testing and our internal controls over financial reporting may not be effective. If our internal controls are ineffective, our financial results could be adversely affected. We will incur additional expenses and commitment of management’s time in connection with these evaluations.

Risks Related to the Notes

The following risks apply to the outstanding notes and will apply equally to the exchange notes.

Our substantial level of indebtedness could adversely affect our financial condition and prevent us from fulfilling our obligations under the notes and our other indebtedness.

We have substantial indebtedness. As of September 30, 2010, we have a total aggregate principal amount of indebtedness of $258.2 million, and an additional $25.0 million available to be borrowed under our New Revolving Credit Facility. Our high level of indebtedness could have important consequences. For example, it could:

• make it more difficult for us to satisfy our obligations under the notes offered hereby, as well as our New Revolving Credit Facility, exposing us to the risk of default, which could result in a foreclosure on our assets, which, in turn, would negatively affect our ability to operate as a going concern;

• require us to dedicate a substantial portion of our cash flow from operations to interest and principal payments on our indebtedness, reducing the availability of our cash flow for other purposes, such as capital expenditures, acquisitions and working capital;

• limit our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate;

• increase our vulnerability to general adverse economic and industry conditions;

• place us at a disadvantage compared to our competitors that have less debt;

• expose us to fluctuations in the interest rate environment because the interest rates on borrowings under our New Revolving Credit Facility will be variable;

34

• increase our cost of borrowing;

• limit our ability to borrow additional funds; and

• require us to sell assets to raise funds, if needed, for working capital, capital expenditures, acquisitions or other purposes.

Despite our current indebtedness levels, we may still incur significant additional indebtedness, which could increase the risks associated with our substantial indebtedness.

We may be able to incur substantial additional indebtedness, including additional secured indebtedness, in the future. The terms of the indenture governing the notes being exchanged hereby, and our New Revolving Credit Facility limit, but do not prohibit, us from incurring additional indebtedness. In addition, the indenture allows us to issue additional notes under certain circumstances which is also guaranteed by the guarantors and shares in the Collateral that secures the notes and guarantees. The indenture also allows our non-guarantor subsidiaries to incur a certain amount of additional debt, which would be structurally senior to the notes. In addition, the indenture does not prevent us from incurring other liabilities that do not constitute indebtedness. See “Description of the Exchange Notes.” This may have the effect of reducing the amounts available to pay interest on the notes. If we incur new debt or other liabilities, the related risks that we now face could intensify.

We may not be able to generate sufficient cash to service our indebtedness, including the notes, and we may be forced to take other actions to satisfy our payment obligations under our indebtedness, which may not be successful.

Our ability to make scheduled payments on or to refinance our debt obligations depends on our future performance, which will be affected by financial, business, economic, competitive, legislative, regulatory and other factors. We will not be able to control many of these factors, such as economic conditions in the industry in which we operate, regulatory changes and competitive pressures. Our cash flow may not be sufficient to allow us to pay principal and interest on our debt and to meet our other obligations. If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital or restructure or refinance our indebtedness, including the notes. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. In addition, the terms of existing or future debt agreements, including our New Revolving Credit Facility and the indenture relating to the notes, may restrict us from pursuing any of these alternatives. Any limitation on our ability to pay principal of and interest on the notes would likely reduce the value of the notes.

Our New Revolving Credit Facility and the indenture governing the notes being exchanged hereby impose significant operating and financial restrictions on us and our future subsidiaries, which may prevent us from capitalizing on business opportunities and taking some actions.

The agreements that govern the terms of our debt, including the indenture that governs the notes and our New Revolving Credit Facility, impose significant operating and financial restrictions on us. These restrictions limit our ability to, among other things:

• incur additional indebtedness;

• incur liens;

• make investments and sell assets;

• pay dividends and make other distributions;

• purchase our stock;

• engage in business activities unrelated to our current business;

35

• enter into transactions with affiliates; or

• consolidate, merge or sell all or substantially all of our assets.

In addition, under our New Revolving Credit Facility we are required to satisfy and maintain specified financial ratios and other financial condition tests. Our ability to meet those financial ratios and tests can be affected by events beyond our control, and we cannot assure you that we will meet those ratios and tests. A breach of any of these covenants could result in a default under our New Revolving Credit Facility. Upon the occurrence of an event of default under our New Revolving Credit Facility, our lenders could elect to declare all amounts outstanding under our New Revolving Credit Facility to be immediately due and payable and terminate all commitments to extend further credit.

As a result of these covenants and restrictions, we will be limited in how we conduct our business, and we may be unable to raise additional debt or equity financing to compete effectively or to take advantage of new business opportunities. The terms of any future indebtedness we may incur could include more restrictive covenants. A breach of any of these covenants 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 due and payable immediately and proceed against any Collateral securing that indebtedness.

This, in turn, could cause our other debt to become due and payable as a result of cross-acceleration provisions contained in the agreements governing such other debt. In the event that some or all of our debt is accelerated and becomes immediately due and payable, we may not have the funds to repay, or the ability to refinance, such debt.

The issuer and guarantors of the notes (other than American Renal Management LLC) are holding companies with no operations of their own.

The issuer and the guarantors of the notes (other than American Renal Management LLC) are holding companies, and their ability to service our debt is dependent upon the earnings from the business conducted by our non-guarantor subsidiaries that operate the clinics. The effect of this structure is that we depend on the earnings of our clinics, and the distribution or payment to us of a portion of these earnings to meet our obligations, including those under our New Revolving Credit Facility, the notes being exchanged hereby and any of our other debt obligations. The distributions of those earnings or advances or other distributions of funds by these entities to us, all of which are contingent upon the clinics’ earnings, are subject to various business considerations. In addition, distributions by our clinics could be subject to statutory restrictions, including state laws requiring that such subsidiaries be solvent, or contractual restrictions. Some of our clinics may become subject to agreements that restrict the sale of assets and significantly restrict or prohibit the payment of dividends or the making of distributions, loans or other payments to stockholders, partners or members. The indenture governing the notes permits our clinics to enter into agreements with similar prohibitions and restrictions in the future, subject to certain limitations.

The right to receive payments on the notes is structurally subordinated to the liabilities of our non-guarantor subsidiaries and substantially all of our operations are conducted through non-guarantor subsidiaries.

The notes are structurally subordinated to all indebtedness of our subsidiaries that are not guarantors of the notes. While the indenture governing the notes limits the indebtedness and activities of these non-guarantor subsidiaries, they are able to incur a certain amount of debt and their ability to incur non-debt obligations is not limited. The indenture governing the notes does not require our joint venture subsidiaries or our subsidiaries that are controlled foreign corporations to guarantee the notes.

36

In the event that any of the non-guarantor subsidiaries or joint venture entities becomes insolvent, liquidates or otherwise reorganizes:

• the creditors of the guarantors (including the holders of the notes) have no right to proceed against such subsidiary’s assets; and

• the creditors of such non-guarantor subsidiary, including trade creditors, generally are entitled to payment in full from the sale or other disposal of assets of such subsidiary, before any guarantor as direct or indirect shareholder, is entitled to receive any distributions from such subsidiary.

The notes are secured only to the extent of the value of the assets that have been granted as security for the notes and in the event that the security is enforced against the Collateral, the holders of the notes will receive proceeds from the Collateral only after the lenders under our New Revolving Credit Facility.

If we default on the notes, the holders of the notes are secured only to the extent of the value of the assets underlying their security interest. Not all of our assets secure the notes and we have not and will not take action to perfect all liens on assets which do secure the notes. Furthermore, upon enforcement against any Collateral or in insolvency, under the terms of the intercreditor agreement proceeds of such enforcement will first be used to pay obligations outstanding under our New Revolving Credit Facility (including post-petition interest, whether or not allowable in any bankruptcy case) and certain hedging and cash management arrangements prior to paying the notes.

The rights of holders of notes in the Collateral may be adversely affected by the intercreditor agreement.

Under the terms of the intercreditor agreement by and among the collateral agent for the holders of notes, the collateral agent under the New Revolving Credit Facility and the other parties from time to time thereto, the liens securing the obligations under the New Revolving Credit Facility and obligations under certain hedging and cash management arrangements on any assets of ours or the guarantors will generally rank equally with the liens on such assets securing our and the guarantors’ obligations under the notes and the guarantees. However, the intercreditor agreement provides that the obligations under the New Revolving Credit Facility (including post-petition interest, whether or not allowable in any bankruptcy case) as well as under such hedging and cash management arrangements will be paid prior to the obligations under the notes and guarantees in the event of any foreclosure or bankruptcy event.

Additionally, the intercreditor agreement generally permits each of the collateral agent for the holders of the notes, the collateral agent for the lenders under the New Revolving Credit Facility and the collateral agent for any other holders of pari passu lien indebtedness to independently enforce their liens on the Collateral (provided that distributions received on enforcement are applied as provided in the intercreditor agreement). It is possible that disputes may occur between the holders of the notes and lenders under our New Revolving Credit Facility or other secured parties as to the appropriate manner of pursuing enforcement remedies with respect to the Collateral which may delay enforcement of the Collateral, result in litigation and/or result in enforcement actions against the Collateral that are not approved by the holders of the notes. See “Description of the Exchange Notes—Intercreditor Agreement.”

The value of the Collateral securing the notes may not be sufficient to satisfy our obligations under the notes and the other obligations secured by an equal and ratable lien on the Collateral.

Obligations under the notes are secured by a lien on the Collateral. No appraisal of the value of the Collateral has been made in connection with this offering, and the fair market value is subject to fluctuations based on factors that include, among others, changing economic conditions, competition and other future trends. By its nature, some or all of the Collateral may be illiquid and may have no readily ascertainable market value. In the event of a foreclosure, liquidation, bankruptcy or similar proceeding, no assurance can be given that the proceeds from any sale or liquidation of the Collateral will be sufficient to pay our obligations under the notes, in

37

full or at all, after first satisfying our obligations in full under the New Revolving Credit Facility. There also can be no assurance that the Collateral will be saleable and, even if saleable, the timing of its liquidation would be uncertain. To the extent that liens, rights or easements granted to third parties encumber assets located on property owned by us, such third parties have or may exercise rights and remedies with respect to the property subject to such liens that could adversely affect the value of the Collateral and the ability of the collateral agent to foreclose on the Collateral. In addition, we may not have liens perfected on all of the Collateral securing the notes prior to the closing of this offering. Accordingly, there may not be sufficient Collateral to pay all or any of the amounts due on the notes. Any claim for the difference between the amount, if any, realized by holders of the notes from the sale of the Collateral securing the notes and the obligations under the notes will rank equally in right of payment with any second lien debt, all of our other unsecured unsubordinated indebtedness and other obligations, including trade payables. With respect to some of the Collateral, the collateral agent’s security interest and ability to foreclose will also be limited by the need to meet certain requirements, such as obtaining third-party consents and making additional filings. If we are unable to obtain these consents or make these filings, the security interests may be invalid and the holders will not be entitled to the Collateral or any recovery with respect thereto. We cannot assure you that any such required consents can be obtained on a timely basis or at all. These requirements may limit the number of potential bidders for certain Collateral in any foreclosure and may delay any sale, either of which events may have an adverse effect on the sale price of the Collateral. Therefore, the practical value of realizing on the Collateral may, without the appropriate consents and filings, be limited.

In addition, as noted above, the Issuer and the Guarantors (other than American Renal Management LLC) are holding companies for our joint venture subsidiaries that operate the clinics. Our joint venture subsidiaries are not guarantors, and their assets do not secure the notes obligations.

The pledge of the capital stock, other securities and similar items of our subsidiaries that secure the notes may automatically be released from the lien on them and no longer constitute collateral for so long as the pledge of such capital stock or such other securities would require the filing of separate financial statements with the SEC for that subsidiary.

The notes are secured by a pledge of the stock of some of our subsidiaries. Under the SEC regulations in effect as of the issue date of the notes, if the par value, book value as carried by us or market value (whichever is greatest) of the capital stock, other securities or similar items of a subsidiary pledged as part of the collateral is greater than or equal to 20% of the aggregate principal amount of the notes then outstanding, such subsidiary would be required to provide separate financial statements to the SEC. Therefore, the indenture and the collateral documents provide that any capital stock and other securities of any of our subsidiaries will be excluded from the collateral for so long as the pledge of such capital stock or other securities to secure the notes would cause such subsidiary to be required to file separate financial statements with the SEC pursuant to Rule 3-16 of Regulation S-X (as in effect from time to time). As a result, holders of the notes could lose a portion or all of their security interest in the capital stock or other securities of those subsidiaries during such period. It may be more difficult, costly and time-consuming for holders of the notes to foreclose on the assets of a subsidiary than to foreclose on its capital stock or other securities, so the proceeds realized upon any such foreclosure could be significantly less than those that would have been received upon any sale of the capital stock or other securities of such subsidiary. In addition, in the event that the capital stock or other securities of a subsidiary is included in the Collateral as described above, the collateral agent under the New Revolving Credit Facility would be entitled to maintain possession of such capital stock or other securities until the payment in full of the obligations under the New Revolving Credit Facility. See “Description of the Exchange Notes—Collateral.”

38

There are circumstances other than repayment or discharge of the notes under which Collateral could be released automatically without the consent of the holders of the notes, which could be adverse to holders of notes.

Under various circumstances, all or a portion of the Collateral may be released, including:

• to enable the sale, transfer or other disposal of such Collateral in a transaction not prohibited under the indenture, including the sale of any entity in its entirety that owns or holds such Collateral; and

• with respect to Collateral held by a guarantor, upon the release of such guarantor from its guarantee.

Our wholly owned domestic subsidiaries are required to be subsidiary guarantors and guarantee the notes. The guarantee of any subsidiary guarantor will be released in connection with a sale of such subsidiary guarantor in a transaction not prohibited by the indenture. The indenture also permits us to designate one or more of our restricted subsidiaries that is a guarantor of the notes as an unrestricted subsidiary. If we designate a subsidiary guarantor as an unrestricted subsidiary, all of the liens on any Collateral owned by such subsidiary or any of its subsidiaries and any guarantees of the notes by such subsidiary or any of its subsidiaries will be released under the indenture but not under the New Revolving Credit Facility. Designation of an unrestricted subsidiary will reduce the aggregate value of the Collateral with respect to the notes to the extent that liens on the assets of the unrestricted subsidiary and its subsidiaries are released. In addition, the creditors of the unrestricted subsidiary and its subsidiaries will have a senior claim on the assets of such unrestricted subsidiary and its subsidiaries. See “Description of the Exchange Notes.”

Rights of holders of notes in the Collateral may be adversely affected by bankruptcy proceedings and holders of notes may not be entitled to post-petition interest in any bankruptcy proceeding.

The right of the collateral agent for the notes to repossess and dispose of the Collateral securing the notes upon acceleration is likely to be significantly impaired by federal bankruptcy law if bankruptcy proceedings are commenced by or against us prior to or possibly even after the collateral agent has repossessed and disposed of the Collateral. Under the U.S. Bankruptcy Code, a secured creditor, such as the collateral agent for the notes, is prohibited from repossessing its security from a debtor in a bankruptcy case, or from disposing of security repossessed from a debtor, without bankruptcy court approval. Moreover, bankruptcy law permits the debtor to continue to retain and to use Collateral, and the proceeds, products, rents, or profits of the Collateral, even though the debtor is in default under the applicable debt instruments, provided that the secured creditor is given “adequate protection.” The meaning of the term “adequate protection” may vary according to circumstances, but it is intended in general to protect the value of the secured creditor’s interest in the Collateral and may include cash payments or the granting of additional security, if and at such time as the court in its discretion determines, for any diminution in the value of the Collateral as a result of the stay of repossession or disposition or any use of the Collateral by the debtor during the pendency of the bankruptcy case. In view of the broad discretionary powers of a bankruptcy court, it is impossible to predict how long payments under the notes could be delayed following commencement of a bankruptcy case, whether or when the collateral agent would repossess or dispose of the Collateral, or whether or to what extent holders of the notes would be compensated for any delay in payment of loss of value of the Collateral through the requirements of “adequate protection.” Furthermore, in the event the bankruptcy court determines that the value of the Collateral is not sufficient to repay all amounts due on the notes, the holders of the notes would have “undersecured claims” as to the difference. Federal bankruptcy laws do not permit the payment or accrual of interest, costs, and attorneys’ fees for “undersecured claims” during the debtor’s bankruptcy case.

We may not be able to repurchase the notes upon a change of control or pursuant to an asset sale offer.

Upon a change of control, as defined under the indenture governing the notes, the holders of notes have the right to require us to offer to purchase all of the notes then outstanding at a price equal to 101% of their principal amount plus accrued and unpaid interest. We cannot assure you that we would have sufficient funds available to

39

repay all of our indebtedness or other put rights that would become payable upon a change of control and to repurchase all of the notes. Our failure to offer to purchase all outstanding notes or to purchase all validly tendered notes would be an event of default under the indenture. Such an event of default may cause the acceleration of our other debt. Our other debt also may contain restrictions on repayment requirements with respect to specified events or transactions that constitute a change of control under the indenture.

In addition, in certain circumstances specified in the indenture governing the notes, we are required to commence an asset sale offer, or an intercompany loan refinancing offer, each as defined in the indenture, pursuant to which we are obligated to offer to purchase the applicable notes at a price equal to 100% of their principal amount plus accrued and unpaid interest. Our other debt may contain restrictions that would limit or prohibit us from completing any such asset sale offer. Our failure to purchase any such notes when required under the indenture would be an event.

Certain laws and regulations may impose restrictions or limitations on foreclosure.

Our obligations under the notes are secured only by the Collateral described in this prospectus. The collateral agent’s ability to foreclose on the Collateral on your behalf may be subject to perfection, priority issues, state law requirements and practical problems associated with the realization of the collateral agent’s security interest or lien in the Collateral, including cure rights, foreclosing on the Collateral within the time periods permitted by third parties or prescribed by laws, obtaining third-party consents, making additional filings, statutory rights of redemption, and the effect of the order of foreclosure. We cannot assure you that the consents of any third parties and approvals by governmental entities will be given when required to facilitate a foreclosure on such assets. Therefore, we cannot assure you that foreclosure on the Collateral will be sufficient to make all payments on the notes.

In addition, our business requires numerous registrations, licenses and permits. Continued operation of our dialysis clinics that are significant to the operations of our business depends on the maintenance of such registrations, licenses and permits. Our business is subject to substantial regulation and registration, license and permit requirements and may be adversely affected if we are unable to comply with existing regulations or requirements or changes in applicable regulations or requirements. In the event of an acquisition, sale or foreclosure of a dialysis clinic, the transfer of such registrations, licenses and permits may be prohibited and may require us to incur significant cost and expense. Further, we cannot assure you that the applicable governmental authorities will consent to the transfer of such registrations, licenses and permits. If the regulatory approvals required for such transfers are not obtained or are delayed, the acquisition, sale or foreclosure may be delayed, a temporary shutdown of operations may result.

Rights of holders of notes in the Collateral may be adversely affected by the failure to perfect liens on certain Collateral acquired in the future.

Applicable law requires that certain property and rights acquired after the grant of a general security interest or lien can only be perfected at the time such property and rights are acquired and identified. Although the indenture contains customary further assurances covenants, there can be no assurance that the trustee or the collateral agent will monitor, or that we will inform the trustee or the collateral agent of the future acquisition of property and rights that constitute Collateral, and that the necessary action will be taken to properly perfect the lien on such after-acquired Collateral. Neither the trustee nor the collateral agent for the notes has any obligation to monitor the acquisition of additional property or rights that constitute Collateral or the perfection of any security interests therein. Such failure may result in the loss of the practical benefits of the liens thereon or of the priority of the liens securing the notes.

The secured intercompany loans may be avoided or subordinated in the event of our bankruptcy.

The collateral includes a pledge by ARA of its right under secured intercompany loans made from time to time to our clinic subsidiaries. The enforceability of intercompany loans may be avoided or equitably subordinated if we are a debtor in a bankruptcy case.

40

Any future pledge by a clinic of collateral in favor of ARA to secure existing obligations under that intercompany debt might be avoidable by the pledgor (as debtor in possession) or by its trustee in bankruptcy if certain events or circumstances exist or occur, including if the pledgor is insolvent at the time of the pledge, the pledge permits ARA to receive a greater recovery than they would have received in a hypothetical liquidation under Chapter 7 of the U.S. Bankruptcy Code if the pledge had not been given and a bankruptcy proceeding in respect of the pledge is commenced within one year following the pledge. To the extent that the grant of any such mortgage or other security interest is avoided as a preference, you would lose the benefit of the mortgage or security interest as security for the intercompany loan. Similarly, payments made by a clinic under its intercompany loans and within one year of the commencement of a bankruptcy case of that clinic may be recaptured to the extent such payments exceed the value of the collateral for that intercompany loan.

Last, under the doctrine of equitable subordination, in the event of a bankruptcy case involving a clinic, the obligation of a clinic to repay its intercompany loan may be subordinated to the payment of a clinic’s other debts if it is determined that ARA engaged in inequitable conduct and subordination of the intercompany claim is proper.

Any future pledge of Collateral might be avoidable in bankruptcy.

Any future pledge of Collateral in favor of the collateral agent (for its benefit and for the benefit of the trustee and the holders of the notes), including pursuant to security documents delivered after the date of the indenture governing the notes, might be avoidable by the pledgor (as debtor in possession) or by its trustee in bankruptcy if certain events or circumstances exist or occur, including if the pledgor is insolvent at the time of the pledge, the pledge permits the holders of the notes to receive a greater recovery than they would have received in a hypothetical liquidation under Chapter 7 of the U.S. Bankruptcy Code if the pledge had not been given and a bankruptcy proceeding in respect of the pledge is commenced within 90 days following the pledge, or, in certain circumstances, a longer period. To the extent that the grant of any such mortgage or other security interest is avoided as a preference, you would lose the benefit of the mortgage or security interest. As more fully described herein, certain of the assets securing the notes were not subject to a valid and perfected security interest on the closing date. We have agreed to use commercially reasonable efforts to obtain a valid and perfected security interest on such assets.

A court could void our subsidiaries’ guarantees of the notes under fraudulent transfer laws.

Although the guarantees provide you with a direct claim against the assets of the subsidiary guarantors, under the federal bankruptcy laws and comparable provisions of state fraudulent transfer laws, a guarantee could be voided, or claims with respect to a guarantee could be subordinated to all other debts of that guarantor. In addition, a bankruptcy court could void (i.e., cancel) any payments by that guarantor pursuant to its guarantee and require those payments to be returned to the guarantor or to a fund for the benefit of the other creditors of the guarantor.

The bankruptcy court might take these actions if it found, among other things, that when a subsidiary guarantor executed its guarantee (or, in some jurisdictions, when it became obligated to make payments under its guarantee):

• such subsidiary guarantor received less than reasonably equivalent value or fair consideration for the incurrence of its guarantee; and

• such subsidiary guarantor:

• was (or was rendered) insolvent by the incurrence of the guarantee;

• was engaged or about to engage in a business or transaction for which its assets constituted unreasonably small capital to carry on its business;

41

• intended to incur, or believed that it would incur, obligations beyond its ability to pay as those obligations matured; or

• was a defendant in an action for money damages, or had a judgment for money damages docketed against it and, in either case, after final judgment, the judgment was unsatisfied.

A bankruptcy court would likely find that a subsidiary guarantor received less than fair consideration or reasonably equivalent value for its guarantee to the extent that it did not receive direct or indirect benefit from the issuance of the notes. A bankruptcy court could also void a guarantee if it found that the subsidiary issued its guarantee with actual intent to hinder, delay, or defraud creditors. Although courts in different jurisdictions measure solvency differently, in general, an entity would be deemed insolvent if the sum of its debts, including contingent and unliquidated debts, exceeds the fair value of its assets, or if the present fair saleable value of its assets is less than the amount that would be required to pay the expected liability on its debts, including contingent and unliquidated debts, as they become due.

We cannot predict what standard a court would apply in order to determine whether a subsidiary guarantor was insolvent as of the date it issued the guarantee or whether, regardless of the method of valuation, a court would determine that the subsidiary guarantor was insolvent on that date, or whether a court would determine that the payments under the guarantee constituted fraudulent transfers or conveyances on other grounds.

The indenture governing the notes contains a “savings clause” intended to limit each subsidiary guarantor’s liability under its guarantee to the maximum amount that it could incur without causing the guarantee to be a fraudulent transfer under applicable law. There can be no assurance that this provision will be upheld as intended. In a recent case, the U.S. Bankruptcy Court in the Southern District of Florida found this kind of provision in that case to be ineffective, and held the subsidiary guarantees to be fraudulent transfers and voided them in their entirety.

If a guarantee is deemed to be a fraudulent transfer, it could be voided altogether, or it could be subordinated to all other debts of the subsidiary guarantor. In such case, any payment by the subsidiary guarantor pursuant to its guarantee could be required to be returned to the subsidiary guarantor or to a fund for the benefit of the creditors of the subsidiary guarantor. If a guarantee is voided or held unenforceable for any other reason, holders of the notes would cease to have a claim against the subsidiary guarantor based on the guarantee and would be creditors only of the Company and any subsidiary guarantor whose guarantee was not similarly voided or otherwise held unenforceable.

Your ability to transfer the notes may be limited by the absence of an active trading market, and there is no assurance that any active trading market will develop for the notes.

There is currently no established public market for the notes, we do not intend to apply for the notes to be listed on any securities exchange or to arrange for their quotation on any automated dealer quotation system and we cannot assure you as to the liquidity of markets that may develop for the notes, your ability to sell the notes or the price at which you would be able to sell the exchange notes. If such markets were to exist, the notes could trade at prices that may be lower than their principal amount or purchase price depending on many factors, including prevailing interest rates, the market for similar notes, our financial and operating performance and other factors The initial purchasers have advised us that they intend to make a market in the exchange notes as permitted by applicable laws and regulations; however, the initial purchasers are not obligated to make a market in the exchange notes, and they may discontinue their market-making activities at any time without notice. In addition, such market making activity may be limited during the pendency of the exchange offer or the effectiveness of a shelf registration statement in lieu thereof. Therefore, an active market for the notes may not develop or, if developed, it may not continue. Historically, the market for non-investment grade debt has been subject to disruptions that have caused substantial volatility in the prices of securities similar to the notes. The market, if any, for the notes may experience similar disruptions and any such disruptions may adversely affect

42

the prices at which you may sell your notes. Any disruptions may have a negative effect on noteholders, regardless of our prospects and financial performance. In addition, subsequent to their initial issuances, the exchange notes may trade at discounts from their initial offering prices, depending upon prevailing interest rates, the market for similar notes, our financial and operating performance and other factors.

We are indirectly owned and controlled by the Sponsor, and the Sponsor’s interests as equity holders may conflict with yours as a creditor.

The Sponsor owns a significant majority of our parent company’s equity and, accordingly, will have the ability to control our policies and operations. The Sponsor will not have any liability for any obligations under the notes, and the interests of the Sponsor may not in all cases be aligned with your interests. For example, if we encounter financial difficulties or are unable to pay our debts as they mature, the interests of our equity holders might conflict with your interests as a noteholder. In addition, our equity holders may have an interest in pursuing acquisitions, divestitures, financings or other transactions that, in their judgment, could enhance their equity investments, even though such transactions might involve risks to you as a holder of the notes. Furthermore, the Sponsor may in the future own equity or debt interests in entities that directly or indirectly compete with us. The Sponsor also may pursue acquisition opportunities that may be complementary to our business, and as a result, those acquisition opportunities may not be available to us. For information concerning our arrangements with the Sponsor following the Transactions, see “Certain Relationships and Related Party Transactions.”

43

FORWARD-LOOKING STATEMENTS

This prospectus contains “forward-looking statements” within the meaning of the federal securities laws which are intended to be covered by the safe harbors created thereby. Forward-looking statements are those statements that are based upon management’s current plans and expectations as opposed to historical and current facts and are often identified in this report by use of words including but not limited to “may,” “believe,” “will,” “project,” “expect,” “estimate,” “anticipate,” and “plan.” These statements are based upon estimates and assumptions made by our management that, although believed to be reasonable, are subject to numerous factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those projected. These and other important factors, including those discussed in this prospectus under the headings “Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Some of the factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include, among others, the following:

• Our high degree of leverage and interest rate risk;

• Our ability to incur substantially more debt;

• Operating and financial restrictions in our debt agreements;

• Our ability to successfully implement our business strategies;

• Our ability to successfully develop future de novo clinics or to integrate future acquisitions;

• The highly competitive nature of the healthcare industry;

• Governmental regulation of the industry, including Medicare and Medicaid reimbursement levels, and potential federal or state reform of healthcare;

• Our ability to attract and retain qualified management and healthcare professionals, including physicians and nurses;

• The availability of capital to fund our corporate growth strategy;

• Potential lawsuits or other claims asserted against us;

• Our ability to maintain or increase patient membership and control costs of our managed healthcare plans;

• Pressures to contain costs by managed care organizations and other insurers and our ability to negotiate acceptable terms with these third-party payors;

• Changes in general economic conditions;

• Our exposure to the increased amounts of and collection risks associated with uninsured accounts and the co-pay and deductible portions of insured accounts; and

• Dependence on our senior management team and local management personnel.

Our forward-looking statements speak only as of the date made. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements contained herein, whether as a result of new information, future events or otherwise. You are cautioned to not rely on such forward-looking statements when evaluating the information contained in this report. In light of the significant uncertainties inherent in the forward-looking statements included in this prospectus, you should not regard the inclusion of such information as a representation by us that our objectives and plans anticipated by the forward-looking statements will occur or be achieved, or if any of them do, what impact they will have on our results of operations and financial condition.

44

USE OF PROCEEDS

We will not receive any cash proceeds from the issuance of the exchange notes pursuant to the exchange offer. In consideration for issuing the exchange notes as contemplated in this prospectus, we will receive in exchange a like principal amount of outstanding notes, the terms of which are identical in all material respects to the exchange notes, except that the exchange notes are registered under the Securities Act, are not entitled to the registration rights which are applicable to the outstanding notes, and are not subject to certain special interest rate provisions applicable to the outstanding notes. The outstanding notes surrendered in exchange for the exchange notes will be retired and canceled and cannot be reissued. Accordingly, issuance of the exchange notes will not result in any change in our capitalization.

45

CAPITALIZATION

The following table sets forth our cash and cash equivalents and capitalization as of September 30, 2010. The table below should be read in conjunction with “The Transactions,” “Summary Historical and Pro Forma Consolidated Financial and Other Data,” “Selected Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Use of Proceeds,” “Description of Other Indebtedness” and our historical consolidated financial statements, including the related notes, appearing elsewhere in this offering memorandum.

	September 30, 2010
	(in thousands)
Cash and cash equivalents	$	27,579
Debt:
New Revolving Credit Facility	$	—
Notes being exchanged hereby (1)		250,000
Debt and capital lease obligations, including current portion (1)		8,212
Total equity		329,174
Total capitalization	$	587,386

(1) Represents principal amount.

46

THE TRANSACTIONS

General

On March 22, 2010, ARH entered into the Merger Agreement with the Parent, C.P. Atlas Intermediate Holdings, LLC, C.P. Atlas Acquisition Corp., certain of ARH’s stockholders party thereto and the Sellers’ Representative pursuant to which ARH agreed that C.P. Atlas Acquisition Corp. merged with and into ARH and, after which, ARH became the surviving entity and a wholly owned subsidiary of C.P. Atlas Intermediate Holdings, LLC, which is in turn a wholly owned subsidiary of the Parent. The parties agreed to consummate the Merger, subject to the terms and conditions set forth in the Merger Agreement, for an aggregate purchase price of $415 million, subject to adjustments, including, without limitation, for working capital, indebtedness, certain specified liabilities and certain tax savings. ARH agreed that $2.5 million of the purchase price was to be placed into a third-party escrow account as security for working capital adjustments and that $27.5 million of the purchase price was to be placed into a third-party escrow account as security for indemnification claims, as described below under “—Merger Agreement.”

As of the effective time of the Merger, holders of shares of ARH’s common stock have no further ownership interest in ARH and instead received cash and the right to receive certain future payments from Centerbridge, ARH and/or the escrow agent pursuant to the Merger Agreement (in the case of the escrow agent, in respect of the unused portion of the third-party escrow accounts, if any) (with the exception of certain members of senior management and certain other employees who have agreed not to have certain of their equity interests cashed out in the Merger and holders who perfect their appraisal rights under Delaware law). These future payments consist of the right to receive tax benefits, estimated to be worth $17.0 million, which the former shareholders are entitled to receive when they are received by Centerbridge, ARH and/or the escrow agent, as applicable.

In connection with the Merger:

• Centerbridge made an aggregate cash equity investment of $161.5 million in the Parent, subject to certain adjustments, and in exchange received 87% of the common stock of the Parent immediately following the Merger.

• Certain members of ARH’s management contributed a portion of their existing equity ownership in ARH in exchange for newly issued shares of common stock and options to purchase common stock of the Parent.

• ARH entered into the New Revolving Credit Facility.

• ARH offered the notes being exchanged hereby.

In connection with the Merger, all of ARH’s debt and preferred stock that existed prior to the closing date of the Merger was repaid or redeemed with the proceeds of the notes being exchanged hereby and our borrowings under the New Revolving Credit Facility. All of ARH’s JVs’ debt was refinanced through secured intercompany loans, except for $11.9 million aggregate amount, as of December 31, 2009, of third-party debt. The secured intercompany loans, which total $36.3 million as of December 31, 2009, were pledged as collateral for our New Revolving Credit Facility and for the notes being exchanged hereby. The aggregate purchase price of approximately $415 million for the Merger (including the related repayment of ARA’s existing debt) and related fees and expenses were funded by the cash equity investment by Centerbridge and the net proceeds from the outstanding notes. Although certain of ARH’s nephrologist partners had the right to require ARH to repurchase some or all of the equity interests in certain clinics as a result of the Transactions, these rights were waived.

Merger Agreement

The Merger Agreement provides for indemnification for losses relating to specified events, circumstances or matters. ARH’s selling stockholders, optionholders and warrantholders (collectively, the “Sellers”) are obligated to indemnify C.P. Atlas Holdings, Inc., and after the consummation of the Merger, ARH, for any losses arising out of, relating to or resulting from the following: (1) any inaccuracy or breach of any representation or warranty

47

made by ARH in the Merger Agreement or any certificate delivered in connection with the conditions to closing of the Merger Agreement; (2) any breach by ARH (or any of ARH’s subsidiaries) of a covenant or an agreement set forth in the Merger Agreement, other than post-closing covenants or agreements; (3) any breach by the selling stockholders or the Sellers’ Representative of any of their respective post-closing covenants or agreements, specified tax losses or liabilities; (4) any and all income taxes imposed on ARH or any of ARH’s subsidiaries attributable to a pre-closing tax period; (5) any and all taxes imposed on ARH or any of ARH’s subsidiaries attributable to certain specified tax positions; and (6) certain specified matters. The right to indemnification generally for a breach by ARH of a representation or warranty is not effective until the aggregate dollar amount of all losses exceeds $1,500,000, with each individual claim exceeding $50,000, subject to certain limited exceptions. Subject to limited exceptions, the aggregate indemnification obligations of the Sellers for losses will not exceed $27.5 million.

48

SELECTED CONSOLIDATED FINANCIAL DATA

The following table presents our selected consolidated financial and operating information, which you should read in conjunction with, and is qualified in its entirety by reference to, our historical financial statements, the notes to those statements, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The selected consolidated financial information set forth below as of December 31, 2008 and 2009 and for each of the years ended December 31, 2007, 2008 and 2009 has been derived from our audited consolidated financial statements included in this prospectus. The selected consolidated financial information set forth below as of December 31, 2005 and 2006 and for each of the years ended December 31, 2005 and 2006 has been derived from our unaudited consolidated financial statements not including this prospectus. Historical results are not indicative of future performance.

	Historical
	Predecessor Entity																					Successor Entity
	As of and for the Year Ended December 31,															As of and for the Nine Months Ended September 30, 2009			As of May 7, 2010 and for the period from January 1, 2010 through May 7, 2010			As of September 30, 2010 and for the period from May 8, 2010 through September 30, 2010
(in thousands, except ratios and operating data)	2005			2006			2007			2008			2009
	(unaudited)			(unaudited)												(unaudited)			(unaudited)			(unaudited)
Statement of Income Data:
Net patient service revenue	$	104,314		$	145,118		$	178,391		$	217,777		$	262,989		$	193,109		$	102,094		$	120,833
Operating expenses:
Patient care costs		69,989			91,859			115,058			141,810			170,826			125,098			66,042			78,335
General and administrative expense		11,966			14,576			18,595			19,944			24,819			17,423			10,016			14,991
Merger and related expenses		—			—			—			—			—			—			7,378			14,839
Depreciation and amortization		4,598			6,682			7,919			9,777			12,127			8,816			4,429			6,434
Provision for doubtful accounts		2,085			2,781			3,258			4,834			3,216			3,184			(334	)		1,021
Total operating expenses		88,638			115,898			144,830			176,365			210,988			154,521			87,531			115,620
Operating income		15,676			29,220			33,561			41,412			52,001			38,588			14,563			5,213
Interest expense, net		(4,545	)		(12,845	)		(13,695	)		(13,729	)		(14,948	)		(11,212	)		(5,717	)		(9,205	)
Income (loss) before income taxes		11,131			16,375			19,866			27,683			37,053			27,376			8,846			(3,992	)
Income tax expense (benefit)		709			309			4,409			6,860			9,524			7,036			2,264			(649	)
Net income (loss)		10,422			16,066			15,457			20,823			27,529			20,340			6,582			(3,343	)
Less: Net income attributable to noncontrolling interests		(7,198	)		(11,833	)		(14,706	)		(17,179	)		(22,391	)		(15,823	)		(9,266	)		(10,949	)
Net income (loss) attributable to ARH	$	3,224		$	4,233		$	751		$	3,644		$	5,138		$	4,517		$	(2,684	)	$	(14,292	)
Other Financial Data:
Capital expenditures (1)		6,707			9,296			15,218			21,254			15,067			9,757
Ratio of earnings to fixed charges (2)		1.68			1.31			1.33			1.64			1.81			2.69			0.94	(3)		0.55	(4)
Operating Data:
Number of clinics (as of end of period)		43			53			64			75			83			80						88
Patients (as of end of period)		2,548			3,041			3,740			4,545			5,405			5,235						6,119
Number of treatments		322,739			418,584			503,576			604,888			745,812			546,825
Revenues per treatment (5)	$	323		$	347		$	354		$	360		$	353		$	353
Patient care costs per treatment (5)	$	217		$	219		$	228		$	234		$	229		$	229
General and administrative expenses per treatment (5)	$	37		$	35		$	37		$	33		$	33		$	32

49

(1) Includes the following capital expenditure type:

	Year Ended December 31,										Nine Months Ended September 30, 2009
	2005		2006		2007		2008		2009
Development capital expenditures	$	6,027	$	7,846	$	12,887	$	18,764	$	11,056	$	9,020
Maintenance capital expenditures		680		1,450		2,331		2,490		4,011		737
Total capital expenditures	$	6,707	$	9,296	$	15,218	$	21,254	$	15,067	$	9,757

(2) For the purposes of calculating the ratio of earnings to fixed charges, earnings consists of income from operations before income taxes plus fixed charges less amounts attributable to noncontrolling interests. Fixed charges consist of interest expense and interest portion of rent expense.

(3) Represents a deficiency of approximately $420,000.

(4) Represents a deficiency of approximately $4,736,000.

(5) We calculate revenues per treatment, patient care costs per treatment and general and administrative expenses per treatment by dividing net operating revenues, patient care costs and general and administrative expenses for the applicable period by the number of treatments performed in the applicable period.

50

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA

Set forth below is our summary historical and pro forma consolidated financial data at the dates and for the periods indicated. The statement of operations and other financial data for each of the years in the three-year period ended December 31, 2009 and the balance sheet data as of December 31, 2008 and 2009 have been derived from our historical consolidated financial statements included elsewhere in this prospectus, which have been audited by Grant Thornton LLP. The unaudited interim summary historical and pro forma consolidated financial data for the period from January 1, 2010 through May 7, 2010, and the period from May 8, 2010 through September 30, 2010 were derived from our historical consolidated financial statements included elsewhere in this prospectus.

The unaudited condensed consolidated statements of income give effect to the Pro Forma Adjustments as if they had occurred on January 1, 2009. The Pro Forma Adjustments are described below and in the accompanying notes, which should be read in conjunction with these unaudited condensed consolidated financial statements.

The unaudited pro forma condensed consolidated statements of income give effect to the Transactions and the following transactions (together, the “Pro Forma Adjustments”):

(i) the Merger, including the cash equity investment by our Sponsor as well as related transaction expenses,

(ii) the issuance of the notes being exchanged hereby with related interest expense and amortization of deferred financing costs and fees capitalized,

(iii) the results of our four acquisitions in 2009,

(iv) the effect on noncontrolling interests resulting from the purchase and sale of such noncontrolling interests in various clinics,

(v) the annual fee paid to Centerbridge Advisors, L.L.C. in accordance with the new management agreement entered into in connection with the Transactions, and

(vi) the asset, liability and non-controlling interest valuations and the related purchase price allocations.

The unaudited pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable under the circumstances. The unaudited pro forma condensed consolidated financial information is presented for informational purposes only. The unaudited pro forma condensed consolidated financial information does not purport to represent what our results of operations would have been had the pro forma adjustments actually occurred on the dates indicated, and they do not purport to project our results of operations for any future period or as of any future date. Further, the unaudited pro forma consolidated financial statements do not reflect the impact of restructuring activities, cost savings, employee termination costs and other exit costs that may result from or in connection with the Transactions. The unaudited pro forma condensed consolidated financial information should be read in conjunction with the information contained in other sections of this offering memorandum, particularly the sections entitled “The Transactions,” “Selected Consolidated Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes thereto included elsewhere in this prospectus. All pro forma adjustments and their underlying assumptions are described more fully in the notes to our unaudited pro forma condensed consolidated financial statements.

The Merger was accounted for as a business combination using the acquisition method of accounting. The pro forma information presented includes all adjustments required to reflect the fair value of assets, both tangible and intangible, acquired, liabilities assumed and noncontrolling interests based upon valuations of assets acquired, liabilities assumed and noncontrolling interests.

51

American Renal Holdings Inc.

Unaudited Pro Forma Consolidated Statement of Income

For the Year Ended December 31, 2009

(in thousands)	Historical (a)			Pro Forma Adjustments					Pro Forma Consolidated
Net patient service revenue	$	262,989		$	2,217		(b)		$	265,206
Operating expenses:
Facility operating expenses		170,826			1,527		(c)			172,353
General and administrative expense		24,819			738		(d)			25,557
Depreciation and amortization		12,127			3,366		(e)			15,493
Provision for doubtful accounts		3,216			64		(f)			3,280
Total operating expenses		210,988			5,695					216,683
Operating income		52,001			(3,478	)				48,523
Interest expense, net		(14,948	)		(7,640	)	(g)			(22,588	)
Income before income taxes		37,053			(11,118	)				25,935
Income tax expense		9,524			(7,644	)	(h)			1,880
Net income		27,529			(3,474	)				24,055
Less: Net income attributable to noncontrolling interests		(22,391	)		1,427		(i	)		(20,964	)
Net income attributable to ARH	$	5,138		$	(2,046	)			$	3,092

See accompanying notes to the unaudited pro forma financial information.

52

American Renal Holdings Inc.

Unaudited Pro Forma Consolidated Statement of Income

For the Nine Months Ended September 30, 2010

	Historical (a)						Pro Forma Adjustments				Pro Forma Results
	Successor			Predecessor
(in thousands)	Period from May 8 through September 30, 2010			Period from January 1 through May 7, 2010
Net patient service revenue	$	120,833		$	102,094		$	—			$	222,927
Operating expenses:
Patient care costs		78,335			66,042			(1,640	)	(c)		142,737
General and administrative expense		14,991			10,016			(2,257	)	(d)		22,750
Merger and related expenses		14,839			7,378			(22,217	)	(j)		—
Depreciation and amortization		6,434			4,429			1,459		(e)		12,322
Provision for (recoveries of) doubtful accounts		1,021			(334	)		—				687
Total operating expenses		115,620			87,531			(24,655	)			178,496
Operating income (loss)		5,213			14,563			24,655				44,431
Interest expense, net		(9,205	)		(5,717	)		(2,013	)	(g)		(16,935	)
Income (loss) before income taxes		(3,992	)		8,846			22,642				27,496
Income tax expense (benefit)		(649	)		2,264			1,377		(h)		2,992
Net income (loss)		(3,343	)		6,582			21,265				24,504
Less: Net income attributable to noncontrolling interests		(10,949	)		(9,266	)		632		(i)		(19,583	)
Net income (loss) attributable to ARH	$	(14,292	)	$	(2,684	)	$	21,897			$	4,921

See accompanying notes to the unaudited pro forma financial information.

53

American Renal Holdings Inc.

Notes to Unaudited Pro Forma Financial Information

(dollars in thousands)

(a) The amounts in these columns represent our historical balances and results for the periods reflected.

(b) Reflects the effect of our 2009 acquisitions as if they had occurred on January 1, 2009.

(c) Reflects the following adjustments to facility operating expenses:

	Year Ended December  31, 2009			Nine Months Ended September 30, 2010
Acquisitions if occurred on January 1, 2009	$	1,697		$	—
Decreased rent expense from the valuation of leases		(170	)		(54	)
Exclude costs associated with the accelerated vesting of equity awards		—			(1,586	)
Total Facility operating expense adjustments	$	1,527		$	(1,640	)

(d) Reflects the following adjustments to general and administrative expenses:

	Year Ended December  31, 2009		Nine Months Ended September 30, 2010
Acquisitions if occurred on January 1, 2009	$	188	$	—
Sponsor management fee		550		193
Exclude costs associated with the accelerated vesting of equity awards		—		(2,450	)
Total General and administrative expense adjustments	$	738	$	(2,257	)

(e) Reflects the following adjustments to depreciation and amortization:

	Year Ended December  31, 2009		Nine Months Ended September 30, 2010
Acquisitions if occurred on January 1, 2009	$	51	$	—
Allocation of purchase price to tangible and intangible assets		3,315		1,459
Total Depreciation and amortization expense adjustments	$	3,366	$	1,459

(f) Reflects the effect of our acquisitions as if they occurred on January 1, 2009.

54

American Renal Holdings Inc.

Notes to Unaudited Pro Forma Financial Information—(Continued)

(dollars in thousands)

(g) Reflects the following adjustments to interest expense, net:

	Year Ended December  31, 2009		Nine Months Ended September 30, 2010
Senior Secured Notes (1)	$	20,938	$	15,703
New Revolving Credit Facility (2)		188		141
Rollover clinic debt (3)		826		614
Amortization of capitalized debt issuance costs and discount (4)		644		477
Total pro forma interest expense		22,596		16,935
Less: actual interest expense for the period		14,948		14,922
Net adjustment to interest expense	$	7,648	$	2,013

(1) Reflects pro forma interest expense on the senior secured notes.

(2) Reflects no outstanding balance on the $25,000 New Revolving Credit Facility and includes annual commitment fee of 75 basis points on undrawn commitments under the New Revolving Credit Facility.

(3) Reflects actual interest expense on third-party clinic debt that was not refinanced as part of the Transactions, including the amortization of debt issuance costs.

(4) Represents amortization of debt issuance costs of $5,085 and discount of $1,800 associated with the senior secured notes amortized over eight years.

h) Reflects the effects on our income tax provision of the pro forma adjustments to result in an effective tax rate of 10.9%, which approximates our actual effective tax rate in the successor period excluding non-deductible Merger-related expenses.

(i) Reflects the following adjustments to net income attributable to noncontrolling interests:

	Year Ended December  31, 2009			Nine Months Ended September 30, 2010
Acquisitions if occurred on January 1, 2009	$	(102	)	$	—
Changes in ownership since January 1, 2009		114			—
Allocation of purchase price to tangible and intangible assets		1,415			632
Total Net income attributable to noncontrolling interest adjustments	$	1,427		$	632

(j) Reflects a pro forma adjustment to exclude Transaction costs incurred and expensed by us resulting from the Transactions.

55

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes appearing at the beginning of this document. Some of the information contained in this discussion and analysis or set forth elsewhere in this document, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties.

Merger and Presentation

On March 22, 2010, ARH entered into the Merger Agreement with C.P. Atlas Holdings, Inc (the “Parent”), C.P. Atlas Intermediate Holdings, LLC, C.P. Atlas Acquisition Corp., certain of ARH’s stockholders party thereto and the Sellers’ Representative pursuant to which ARH agreed that C.P. Atlas Acquisition Corp. merged with and into ARH (the “Merger”) and, after which, ARH became the surviving entity and a wholly owned subsidiary of C.P. Atlas Intermediate Holdings, LLC, which is in turn a wholly owned subsidiary of the Parent. The parties agreed to consummate the Merger, subject to the terms and conditions set forth in the Merger Agreement, for an aggregate purchase price of $415 million, subject to adjustments, including, without limitation, for working capital, indebtedness, certain specified liabilities and certain tax savings. ARH agreed that $2.5 million of the purchase price was to be placed into a third-party escrow account as security for working capital adjustments and that $27.5 million of the purchase price was to be placed into a third-party escrow account as security for indemnification claims, as described below under “—Merger Agreement.”

The aggregate purchase price of approximately $415 million for the Merger, plus related fees and expenses, was funded by the equity investment by Centerbridge as well as from certain members of management and the net proceeds from the offering of $250.0 million of Senior Secured Notes (the “Senior Secured Notes”) due 2018 which bear interest at 8.375%. The Merger and the financing transaction described above are collectively referred to herein as the “Transactions.”

The Transactions were consummated on May 7, 2010. Although ARH continued as the surviving corporation and same legal entity after the merger, the accompanying consolidated balance sheet, statements of operations and cash flows are presented for two periods: predecessor and successor, which relate to the periods preceding the Merger and the period succeeding the Merger, respectively. The Merger resulted in a new basis of accounting beginning on May 8, 2010. The Merger was accounted for under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. Accordingly, the assets acquired, liabilities assumed and noncontrolling interests in the Merger were recorded at fair value. As a result of the Merger and the associated acquisition accounting, the Consolidated Financial Statements of the Successor are not comparable to periods preceding the Merger.

Executive Overview

We are a national provider of kidney dialysis services for patients suffering from chronic kidney failure, also known as end stage renal disease, or ESRD. As of September 30, 2010 we owned and operated 88 dialysis clinics treating more than 6,100 patients in 17 states and the District of Columbia. Our operating model is based on shared ownership of our facilities with physicians, known as nephrologists, who specialize in kidney-related diseases in the local market served by the clinic. Each clinic is maintained as a separate joint venture in which we own a controlling interest and our local nephrologist partners own noncontrolling interests, although during the development stages or under certain circumstances we may temporarily own up to 100% of the interests of a clinic. The results of operations for all of clinics are currently included in our consolidated financial statements.

We endeavor to provide our nephrologist partners with comprehensive management and operational tools in order to enable them (and other referring physicians) to focus on providing quality care to patients.

56

We derive our revenues from providing both outpatient and inpatient dialysis treatments as well as from ancillary services such as administering dialysis-related pharmaceuticals, but not including services that we outsource to third-party vendors such as lab services. The sources of these revenues are principally government-based programs, including Medicare, Medicaid and Medicare-certified HMO plans as well as commercial insurance plans.

The Competitive Strength of Our JV Model

We operate our clinics exclusively through our JV model, in which we share the ownership and operational responsibility of our dialysis clinics with physicians known as nephrologists who specialize in kidney-related diseases. In each of our JVs, we own a controlling interest in the clinic and our nephrologist partners own noncontrolling interests. We believe that our exclusive focus on a JV model makes us well-positioned to increase our market share by attracting nephrologists who are not only interested in our service platform but also want greater clinical autonomy and a potential return on capital investment associated with ownership of a noncontrolling interest in a dialysis clinic. We believe our JV model best aligns our interests with those of our nephrologist partners and their patients. By owning a portion of the clinics where their patients are treated, our nephrologist partners have a vested stake in the quality, reputation and performance of the clinics. We believe that this enhances patient and staff satisfaction and retention, clinical outcomes, patient growth, and operational and financial performance.

Clinic Development

We have experienced significant growth since opening our first clinic in December 2000. Since that date, we have developed 64 new clinics, commonly referred to as de novo clinics. The following chart shows the number of de novo and acquired clinics over the three years ended December 31, 2009 and nine months ended September 30, 2010:

	Nine Months Ended September 30,		Years Ended December 31,
	2010		2009		2008		2007
De novo clinics (1)		5		7		12		12
Acquired clinics (2)		1		3		—		2
Total new clinics		6		10		12		14

(1) Clinics formed by us which began to operate and dialyze patients in the applicable period.

(2) Clinics acquired by us which began to operate and dialyze patients in the applicable period.

Selective recruitment of new nephrologist partners who have an established practice is critical in achieving our growth objectives. We also believe we enjoy a strong and growing reputation among the nephrologist community, ensuring that nephrologists who contemplate a migration to the shared-ownership model strongly consider us.

We also believe that the return earned by our nephrologist partners on the clinic investment can drive organic growth by enabling our nephrologist partners to reinvest in their practices, including by adding new nephrologists, which provides us with the opportunity to expand existing clinics, develop new clinics or acquire competing clinics in the same market.

We will continue to incur start-up losses associated with the opening of de novo clinics. It has been our experience that newly established dialysis centers, although contributing to increased revenues, have adversely affected our results of operations in the short term due to start-up fixed operating expenses and a smaller patient base. We consider new dialysis centers to be “start-up centers” through their initial 12 months of operations, or when they achieve consistent profitability, whichever is sooner.

57

Effect of the Transactions

In connection with the Transactions we incurred significant additional indebtedness, including $250.0 million aggregate principal amount of the Senior Secured Notes being exchanged hereby and $25.0 million of borrowing availability under our Credit Facility (the “New Revolving Credit Facility”). As of September 30, 2010, we had $258.2 million aggregate principal amount of indebtedness outstanding including approximately $8.2 million of third-party debt owed by our clinic subsidiaries. We estimate this additional indebtedness will result in annualized interest expense, including amortization of deferred financing costs and discounts, of approximately $23.0 million which is significantly higher than our historical annual interest expense and which may result in lower net income in future periods.

The following discussion and analysis of our historical financial condition and results of operations covers periods prior to and after the consummation of the Transactions. After the Transactions, we are highly leveraged. Significant additional liquidity requirements, resulting primarily from increased interest expense, and other factors related to the Transactions, such as increased amortization of identified intangible assets as a result of the application of acquisition accounting will continue to significantly affect our financial condition, results of operations and liquidity going forward.

Components of Revenues and Expenses

Net Operating Revenues

The major components of our net operating revenues include both base charges for dialysis services and the administration of separately-billable pharmaceuticals as part of the dialysis treatment, such as erythropoietin (EPO). As a result, changes in physician practice patterns, including the prescription of pharmaceuticals, and changes in private and governmental payment rates for EPO and other separately-billable pharmaceuticals significantly influence our level of revenues. During the nine months ended September 30, 2010, we derived approximately 88% of our net operating revenues from outpatient hemodialysis treatments, approximately 10% from home-based hemodialysis and peritoneal dialysis and approximately 2% from hospital inpatient hemodialysis. The administration of EPO and other pharmaceuticals as part of the dialysis treatment represented approximately 33% of net operating revenues during the nine months ended September 30, 2010.

Operating Expenses

Patient Care Costs. Patient care costs are those costs directly associated with operating and supporting our dialysis clinics and ancillary operations. Patient care costs consist principally of labor, pharmaceuticals, medical supplies and facility costs. The principal drivers of patient care costs are clinical staff hours per treatment, labor rates, vendor pricing of pharmaceuticals and business infrastructure and compliance costs. However, other cost categories, such as employee benefit costs and insurance costs, can result in significant cost changes from period to period. Our average clinical staff hours per treatment have remained stable over the past several years primarily because of limited staff turnover. For the past several years we have been able to negotiate relatively stable pharmaceutical pricing with our vendors. In addition, our agreements with our group purchasing organization and Amgen for the purchase of EPO provide for specific rebates off list price and discounted pricing based data submission, which could negatively impact our earnings if we are unable to qualify for these rebates and discounts. Our ability to influence the pricing of our services is limited. Profitability depends on our ability to grow but also on our ability to manage labor, drug and supply costs. For mature clinics, we believe there is limited opportunity for productivity improvements beyond the levels currently achieved.

General and Administrative Costs. General and administrative costs consist of expenses for clinic and corporate administration, including accounting, billing and cash collection functions, and regulatory compliance oversight. Our general and administrative expenses, both on an absolute dollar basis and as a percentage of our net operating revenues, have increased following the issuance of the notes as a result of our agreement to register the notes with the Securities and Exchange Commission.

58

Operating Environment

Current regulation and proposed changes

Proposed and pending regulatory changes could significantly change the reimbursement rates we receive for our dialysis services from government-based programs and, indirectly, from commercial payors. In July 2008, the Medicare Improvements for Patients and Providers Act of 2008, or MIPPA, was passed by Congress. This legislation provides for an increase in the composite rate of 1% which went into effect on January 1, 2009 and an additional 1% increase that went into effect on January 1, 2010. In addition, MIPPA introduced a new payment system for dialysis services beginning in January 2011 whereby ESRD payments will be made under a bundled payment rate which will provide for a fixed rate for all goods and services provided during the dialysis treatment, including laboratory services, the administration of pharmaceuticals and payments for pharmaceuticals such as EPO that are separately billed under the current methodology. The initial 2011 bundled rate will be set based on a 2% reduction in the payment rate that providers would have received under the historical fee for service payment methodology and based on the lowest average industry pharmaceutical utilization from 2007 to 2009. The combined effect of these adjustments could result in a bundled rate that represents a greater than 2% reduction in the payment rate that we would have received for our services prior to bundling. Beginning in 2012, a new single bundled payment base rate will be adjusted annually for inflation based upon a market basket index, less a productivity adjustment based on a 10-year moving average of productivity as projected by the Secretary of Health and Human Services. The bundled payment rate will be determined by the Secretary of Health and Human Services, who will have discretion to determine the base payment rate based on the goods and services included in the bundled rate. Dialysis providers will have the option to move fully to the bundled payment system in 2011 or to phase in the payment system over four years.

Results of Operations

The following table presents our operating results for the periods indicated, expressed both in dollars and as a percentage of net operating revenues. Historical results for the successor period during the three months ended September 30, 2010 are compared and discussed in relation to the historical predecessor results during the three months ended September 30, 2009. Historical results for the period from January 1, 2010 to May 7, 2010 (Predecessor period) and from May 8, 2010 to September 30, 2010 (Successor period) are compared and discussed in relation to the historical predecessor results during the nine month period ended September 30, 2009. Supplementally, pro forma results for the nine months ended September 30, 2010 are compared and discussed in relation to the historical predecessor results during the nine month period ended September 30, 2009.

59

Successor Three Months Ended September 30, 2010 as compared with the Predecessor Three Months Ended September 30, 2009

	Successor			Predecessor
	Three Months Ended September 30, 2010			Three Months Ended September 30, 2009
(in thousands)							Dollar Change			Percent Change
Statement of Operations Data:
Net patient service revenue	$	77,231		$	68,084		$	9,147			13.4	%
Operating expenses:
Patient care costs		49,321			44,061			5,260			11.9
General and administrative expense		8,001			6,393			1,608			25.2
Merger and related expenses		152			—			152			100.0
Depreciation and amortization		4,085			2,814			1,271			45.2
Provision for uncollectible accounts		371			1,016			(645	)		-63.5
Total operating expenses		61,930			54,284			7,646			14.1
Operating income		15,301			13,800			1,501			10.9
Interest expense, net		(5,885	)		(3,755	)		(2,130	)		56.7
Income before income taxes		9,416			10,045			(629	)		-6.3
Income tax expense		977			2,582			(1,605	)		-62.2
Net income		8,439			7,463			976			13.1
Less: Net income attributable to noncontrolling interests		(6,907	)		(5,756	)		(1,151	)		20.0
Net income attributable to ARH	$	1,532		$	1,707		$	(175	)		-10.3	%

Net Operating Revenues

Net operating revenues for the three months ended September 30, 2010 were $77.2 million, an increase of 13.4% from $68.1 million for the three months ended September 30, 2009. The increase in net operating revenues was primarily due to an increase of approximately 12.8% in the number of dialysis treatments for the three months ended September 30, 2010. The increase in treatments resulted principally from non-acquired treatment growth from existing clinics and de novo clinics. Net operating revenue per treatment for the three months ended September 30, 2010 was $352, compared with $350 for the three months ended September 30, 2009. The increase in revenue per treatment was primarily due to a slight improvement in commercial payor reimbursement rates. The administration of EPO represented approximately 22% of net operating revenues for both the three months ended September 30, 2010 and 2009.

Our net operating revenues are driven by the number of treatments performed and our average revenue per treatment. The following table summarizes our net operating revenues and net operating revenue per treatment for each of the periods indicated:

	Three Months Ended September 30,
	2010		2009
Net operating revenues (in thousands)	$	77,231	$	68,084
Net operating revenue per treatment	$	352	$	350

The number of treatments that we performed during the three months ended September 30, 2010 increased by approximately 12.8% over the number of treatments that we performed during the three months ended September 30, 2009. This treatment growth has been driven by increasing the patient base at our existing clinics,

60

adding new patients through the opening of de novo clinics and the acquisition of existing dialysis clinics in which we acquired a controlling interest. The following table summarizes the sources of our treatment growth for the periods indicated.

	Three Months Ended September 30,
	2010			2009
Source of Treatment Growth:
Existing clinics (1)		8.9	%		17.1	%
De novo clinics opened (2)		3.2	%		5.7	%
Non-acquired treatment growth		12.1	%		22.8	%
Clinics acquired (3)		0.7	%		4.0	%
Total treatment growth		12.8	%		26.8	%

(1) Represents net growth in treatments at clinics operating at end of the period that were also opened at the end of the prior period.

(2) Represents additional treatments provided at clinics opened since the end of the prior period, compared to the total number.

(3) Represents treatments performed at clinics acquired since the end of the prior period.

Our net operating revenue per treatment is principally driven by our mix of commercial and government (principally Medicare and Medicaid) patients, the mix and amount of physician-prescribed pharmaceuticals, and commercial and government payment rates. We are generally paid more for services provided to patients covered by commercial healthcare plans than we are for patients covered by Medicare or Medicaid. Patients covered by employer group health plans transition to Medicare coverage after a maximum of 33 months. As a result, our ability to generate operating earnings is substantially dependent on revenues derived from commercial payors, some of which pay negotiated payment rates and others of which pay based on our usual and customary fee schedule. Additionally, as a patient transitions from commercial coverage to Medicare coverage, the payment rates typically decline substantially.

The following table summarizes our net operating revenues and treatments by source for each of the periods indicated.

	Three Months Ended September 30,
	2010			2009
Source of revenues:
Government-based programs and other		57.5	%		57.5	%
Commercial payors		42.5	%		42.5	%
		100.0	%		100.0	%
Source of treatments:
Government-based programs and other		86.3	%		86.1	%
Commercial payors		13.7	%		13.9	%
		100.0	%		100.0	%

Operating Expenses

Patient care costs. Patient care costs for the three months ended September 30, 2010 were $49.3 million, an increase of 11.9% from $44.1 million in the three months ended September 30, 2009. This increase was primarily due to an increase in the number of treatments. As a percentage of net operating revenues, patient care costs were approximately 63.8% for the three months ended September 30, 2010 compared to 64.7% for the three months ended September 30, 2009. Patient care costs per treatment were $225 for the three months ended September 30, 2010 and $227 for the three months ended September 30, 2009.

61

General and administrative expenses. General and administrative expenses for the three months ended September 30, 2010 were $8.0 million, an increase of 25.2% from $6.4 million in the three months ended September 30, 2009. The increase is primarily attributable to approximately $0.8 million of increased charitable contributions and approximately $0.2 million of increased stock-based compensation. As a percentage of net operating revenues, general and administrative costs were approximately 10.3% for the three months ended September 30, 2010 compared to 9.4% for the three months ended September 30, 2009. General and administrative costs per treatment for the three months ended September 30, 2010 were $36, compared to $33 for the three months ended September 30, 2009, reflecting an increase of $3 per treatment.

Depreciation and amortization. Depreciation and amortization expense represents expense attributable to our clinics’ equipment and leasehold improvements and amortization of intangible assets. We calculate depreciation and amortization expense using a straight-line method over the assets’ useful lives. Depreciation and amortization expense for the three months ended September 30, 2010 was $4.1 million, an increase of 45.2% from $2.8 million in the three months ended September 30, 2009 due to the amortization in intangible assets acquired as part of the Transactions. As a percentage of operating revenues, depreciation and amortization expense was approximately 5.3% during the three months ended September 30, 2010 and 4.1% during the three months ended September 30, 2009.

Provision for uncollectible accounts. Provision for uncollectible accounts represents reserves established for amounts for which patients are primarily responsible which we believe will not be collectible. Provision for uncollectible accounts for the three months ended September 30, 2010 was $0.4 million as compared to $1.0 million in the three months ended September 30, 2009. The decrease in our provision is primarily due determining in 2010 that we have developed sufficient and relevant historical experience with Medicare bad debt cost reporting to use as a basis for reliably estimating Medicare bad debt cost recoveries. Our accounts receivable, net of the bad debt allowance, represented approximately 54 days of revenues as of September 30, 2010 and approximately 60 days of revenues as of September 30, 2010.

Interest Expense, net. Interest expense represents charges for interest associated with our corporate level debt and credit facilities entered into by our dialysis clinics, as well as accumulated dividends attributable during the predecessor period to our Series X preferred stock. Interest expense, net for the three months ended September 30, 2010 was $5.9 million, an increase of 56.7% from $3.8 million in the three months ended September 30, 2009 primarily related to interest on the Senior Secured Notes issued as part of the transactions.

Income Tax Expense. The income tax expense included in the accompanying consolidated statements of operations principally relates to our proportionate share of the pre-tax income of our majority-owned subsidiaries. The provision for income taxes for the three months ended September 30, 2010 represented an effective annualized tax rate of 10.3% compared with 25.7% for the three months ended September 30, 2009. The decrease in our effective income tax rate is primarily due to nondeductible Series X dividends and discount amortization accumulated during the predecessor period. The Series X redeemable preferred stock was settled in the Transactions.

Net income attributable to noncontrolling interests. Noncontrolling interests represent the equity interests in our consolidated entities that we do not own, which is primarily the equity interests of our nephrologist partners in our JV clinics. Net income attributable to noncontrolling interests for the three months ended September 30, 2010 was $6.9 million, an increase of 20.0% from $5.8 million in the three months ended September 30, 2009. The increase was primarily due to the addition of de novo clinics and growth in the earnings of our existing JVs.

62

Nine Months Ended September 30, 2010 as compared with the Nine Months Ended September 30, 2009

(in thousands)	Pro Forma			Historical									Pro Forma Nine Months Ended September 30, 2010 vs. Historical Nine Months Ended September 30, 2009
				Successor			Predecessor
	Nine Months Ended September 30, 2010			Period from May 8 through September 30, 2010			Period from January 1 through May 7, 2010			Nine Months Ended September 30, 2009
													Dollar Change			Percent Change
Statement of Operations Data:
Net patient service revenue	$	222,927		$	120,833		$	102,094		$	193,109		$	29,818			15.4	%
Operating expenses:
Patient care costs		142,737			78,335			66,042			125,098			17,639			14.1
General and administrative expense		22,750			14,991			10,016			17,423			5,327			30.6
Merger and related expenses		—			14,839			7,378			—			—			N/A
Depreciation and amortization		12,322			6,434			4,429			8,816			3,506			39.8
Provision for (recoveries of) uncollectible accounts		687			1,021			(334	)		3,184			(2,497	)		-78.4
Total operating expenses		178,496			115,620			87,531			154,521			23,975			15.5
Operating income		44,431			5,213			14,563			38,588			5,843			15.1
Interest expense, net		(16,935	)		(9,205	)		(5,717	)		(11,212	)		(5,723	)		51.0
Income (loss) before income taxes		27,496			(3,992	)		8,846			27,376			120			0.4
Income tax expense (benefit)		2,992			(649	)		2,264			7,036			(4,044	)		-57.4
Net income (loss)		24,504			(3,343	)		6,582			20,340			4,164			20.5
Less: Net income attributable to noncontrolling interests		(19,583	)		(10,949	)		(9,266	)		(15,823	)		(3,760	)		23.8
Net income (loss) attributable to ARH	$	4,921		$	(14,292	)	$	(2,684	)	$	4,517		$	404			8.9	%

Net Operating Revenues

Net operating revenues for the nine months ended September 30, 2010 increased $29.8 million, an increase of 15.4%, including $102.1 million in the Predecessor period and $20.8 million in the Successor period, from $193.1 million for the nine months ended September 30, 2009. The increase in net operating revenues was primarily due to an increase of approximately 15.7% in the number of dialysis treatments for the nine months ended September 30, 2010. The increase in treatments resulted principally from non-acquired treatment growth from existing clinics and de novo clinics. Net operating revenue per treatment for the nine months ended September 30, 2010 was $352, compared with $353 for the nine months ended September 30, 2009. The decrease in revenue per treatment was primarily due to a change in our commercial payor mix resulting from the relatively high rates of unemployment in the current economic climate. The administration of EPO represented approximately 22% of net operating revenues for both the nine months ended September 30, 2010 and September 30, 2009.

Our net operating revenues are driven by the number treatments performed and our average revenue per treatment. The following table summarizes our net operating revenues and net operating revenue per treatment for each of the periods indicated.

	Nine Months Ended September 30,
	2010		2009
Net operating revenues (in thousands)	$	222,927	$	193,109
Net operating revenue per treatment	$	352	$	353

63

The number of treatments that we performed during the nine months ended September 30, 2010 increased by approximately 15.7% over the number of treatments that we performed during the nine months ended September 30, 2009. This treatment growth has been driven by increasing the patient base at our existing clinics, adding new patients through the opening of de novo clinics and the acquisition of existing dialysis clinics in which we acquired a controlling interest. The following table summarizes the sources of our treatment growth for the periods indicated.

	Nine Months Ended September 30,
	2010			2009
Source of Treatment Growth:
Existing clinics (1)		13.0	%		18.4	%
De novo clinics opened (2)		2.5	%		4.1	%
Non-acquired treatment growth		15.5	%		22.5	%
Clinics acquired (3)		0.2	%		2.3	%
Total treatment growth		15.7	%		24.8	%

(1) Represents net growth in treatments at clinics operating at end of the period that were also opened at the end of the prior period.

(2) Represents additional treatments provided at clinics opened since the end of the prior period, compared to the total number.

(3) Represents treatments performed at clinics acquired since the end of the prior period.

Our net operating revenue per treatment is principally driven by our mix of commercial and government (principally Medicare and Medicaid) patients, the mix and amount of physician-prescribed pharmaceuticals, and commercial and government payment rates. We are generally paid more for services provided to patients covered by commercial healthcare plans than we are for patients covered by Medicare or Medicaid. Patients covered by employer group health plans transition to Medicare coverage after a maximum of 33 months. As a result, our ability to generate operating earnings is substantially dependent on revenues derived from commercial payors, some of which pay negotiated payment rates and others of which pay based on our usual and customary fee schedule. Additionally, as a patient transitions from commercial coverage to Medicare coverage, the payment rates typically decline substantially.

The following table summarizes our net operating revenues and treatments by source for each of the periods indicated.

	Nine Months Ended September 30,
	2010			2009
Source of revenues:
Government-based programs and other		57.6	%		56.6	%
Commercial payors		42.4	%		43.4	%
		100.0	%		100.0	%
Source of treatments:
Government-based programs and other		86.6	%		85.6	%
Commercial payors		13.4	%		14.4	%
		100.0	%		100.0	%

Operating Expenses

Patient care costs. Pro forma patient care costs for the nine months ended September 30, 2010 were $142.7 million, an increase of 14.1% from $125.1 million in the nine months ended September 30, 2009. This increase was primarily due to an increase in the number of treatments. As a percentage of net operating revenues, pro forma

64

patient care costs were approximately 64.0% for the nine months ended September 30, 2010 compared to 64.8% for the nine months ended September 30, 2009. Pro forma patient care costs per treatment for the nine months ended September 30, 2010 were $226, compared to $229 for the nine months ended September 30, 2009.

Patient care costs were $66.0 million in the Predecessor period and $78.3 million in the Successor period or $144.4 for the nine months ended September 30, 2010, an increase of $19.3 million or 15.4% as compared to $125.1 million during the nine month period ended September 30, 2009. This increase was primarily due to the number of treatments as well as $1.6 million of stock-based compensation related to the Merger.

General and administrative expenses. Pro forma general and administrative expenses for the nine months ended September 30, 2010 were $22.8 million, an increase of 30.6% from $17.4 million in the nine months ended September 30, 2009. The increase is primarily attributable to approximately $2.8 million of increased charitable contributions and approximately $1.2 million of increased stock compensation. As a percentage of net operating revenues, pro forma general and administrative costs were approximately 10.2% for the nine months ended September 30, 2010 compared to 9.0% for the nine months ended September 30, 2009. Pro forma general and administrative costs per treatment for the nine months ended September 30, 2010 were $36, compared to $32 for the nine months ended September 30, 2009, reflecting an increase of $4 per treatment.

General and administrative expenses were $10.0 million in the Predecessor period and $15.0 million in the Successor period or $25.0 for the nine months ended September 30, 2010, an increase of $7.6 million or 43.7% as compared to $17.4 million during the nine month period ended September 30, 2009. This increase was primarily due the increases discussed previously as well as $2.5 million of stock-based compensation related to the Merger.

Depreciation and amortization. Depreciation and amortization expense represents expense attributable to our clinics’ equipment and leasehold improvements and amortization of intangible assets. We calculate depreciation and amortization expense using a straight-line method over the assets’ useful lives. Pro forma depreciation and amortization expense for the nine months ended September 30, 2010 was $12.3 million, an increase of 39.8% from $8.8 million in the nine months ended September 30, 2009 primarily related to intangible assets acquired as part of the Merger. As a percentage of operating revenues, pro forma depreciation and amortization expense was approximately 5.5% for the nine months ended September 30, 2010 compared to 4.6% for the nine months ended September 30, 2009.

Depreciation and amortization was $4.4 million in the Predecessor period and $6.4 million in the Successor period or $10.8 million for the nine months ended September 30, 2010, an increase of $2.0 million or 22.7% as compared to $8.8 million during the nine month period ended September 30, 2009. This increase is primarily related to intangible assets acquired as part of the Merger.

Provision for uncollectible accounts. Provision for uncollectible accounts represents reserves established for amounts for which patients are primarily responsible which we believe will not be collectible. Provision for uncollectible accounts for the nine months ended September 30, 2010 was $0.7 million, a decrease of 78.4% from $3.2 million in the nine months ended September 30, 2009. In the period from April 1, 2010 to May 7, 2010, we determined that we have developed sufficient and relevant historical experience with Medicare bad debt cost reporting to use as a basis for reliably estimating successful Medicare bad debt cost recoveries. As such, we revised our estimate on the collectability of Medicare bad debt claims related to 2008 and 2009 which resulted in a favorable adjustment of $1.8 million to our provision for doubtful accounts. Our accounts receivable, net of the bad debt allowance, represented approximately 54 days of revenues as of September 30, 2010 and approximately 60 days of revenues as of September 30, 2009.

Interest Expense, net. Interest expense represents charges for interest associated with our corporate level debt and credit facilities entered into by our dialysis clinics, as well as accumulated dividends and amortization of discount attributable to our Series X preferred stock during the predecessor period. Pro forma interest expense, net for the nine months ended September 30, 2010 was $16.9 million, an increase of 51.0% from $11.2 million in the nine months ended September 30, 2009 primarily related to interest related to the Senior Secured Notes.

65

Interest expense was $5.7 million in the Predecessor period and $9.2 million in the Successor period or $14.9 million for the nine months ended September 30, 2010, an increase of $3.7 million or 33.0% as compared to $11.2 million during the nine month period ended September 30, 2009. This increase is primarily related to interest related to the Senior Notes.

Income Tax Expense. The pro forma provision for income taxes for the nine months ended September 30, 2010 represented an effective annualized tax rate of 10.9% compared with 25.6% in 2009. The variation from the statutory federal rate of 35% on our share of pre-tax income during the nine months ended September 30, 2009 is primarily due to nondeductible Series X dividends and discount amortization accumulated during the predecessor period, state taxes and the tax impact of the noncontrolling interest.

The provision for income taxes in Predecessor period was 25.6% and during the Successor period was 16.2%. The variation from the statutory federal rate during the Predecessor period was primarily due to nondeductible Series X dividends and discount amortization accumulated during the Predecessor period. The variation from the statutory rate in the Successor period was primarily due to the nondeductible transaction expenses related to the Merger.

Net income attributable to noncontrolling interests. Noncontrolling interests represent the equity interests in our consolidated entities that we do not own, which is primarily the equity interests of our nephrologist partners in our JV clinics. Pro forma net income attributable to noncontrolling interests for the nine months ended September 30, 2010 was $19.6 million, an increase of 23.8% from $15.8 million in the nine months ended September 30, 2009. The increase was primarily due to the addition of de novo clinics and growth in the earnings of our existing JVs.

Net income attributable to noncontrolling interests was $9.3 million in the Predecessor period and $10.9 million in the Successor period for $20.2 million for the nine months ended September 30, 2010, an increase of $4.4 million or 27.8%, as compared to $15.8 million during the nine month period ended September 30, 2009. This increase is primarily due to the addition of de novo clinics and growth in earnings of our existing JVs.

Year ended December 31, 2009, as compared with year ended December 31, 2008

	Year Ended December 31,						Dollar Change			Percent Change
(in thousands)	2009			2008
Net patient service revenue	$	262,989		$	217,777		$	45,212			20.8	%
Operating expenses:
Facility operating expenses		170,826			141,810			29,016			20.5
General and administrative expense		24,819			19,944			4,875			24.4
Depreciation and amortization		12,127			9,777			2,350			24.0
Provision for doubtful accounts		3,216			4,834			(1,618	)		-33.5
Total operating expenses		210,988			176,365			34,623			19.6
Operating income		52,001			41,412			10,589			25.6
Interest expense, net		(14,948	)		(13,729	)		(1,219	)		8.9
Income before income taxes		37,053			27,683			9,370			33.8
Income tax expense		9,524			6,860			2,664			38.8
Net income		27,529			20,823			6,706			32.2
Less: Net income attributable to noncontrolling interests		(22,391	)		(17,179	)		(5,212	)		30.3
Net income attributable to ARH	$	5,138		$	3,644		$	1,494			41.0	%

66

Net Operating Revenues

Net operating revenues for the year ended December 31, 2009 were $263.0 million, an increase of 20.8% from $217.8 million for the year ended December 31, 2008. The increase in net operating revenues was primarily due to an increase of approximately 23.3% in the number of dialysis treatments, but was partially offset by a 1.9% decrease in the average revenues per treatment. The increase in treatments resulted principally from non-acquired treatment growth from existing clinics and de novo clinics. Net operating revenues per treatment for the year ended December 31, 2009 was $353, compared with $360 for the year ended December 31, 2008. The decrease in revenues per treatment was primarily due to a decrease in the administration of EPO, which represented approximately 22% of net operating revenues for the year ended December 31, 2009, compared to 24% for the year ended December 31, 2008, and a change in our commercial payor mix resulting from the relatively high rates of unemployment in the current economic climate. The decrease in the administration of EPO was due to a change in our goal in hemoglobin levels as a result of new target hemoglobin levels in patients set by the Centers for Medicare and Medicaid Services. Our net operating revenues are driven by the number treatments performed and our average revenues per treatment. The following table summarizes our net operating revenues and net operating revenues per treatment for each of the periods indicated.

	Years Ended December 31,
	2009		2008
Net operating revenues (in thousands)	$	262,989	$	217,777
Net operating revenues per treatment	$	353	$	360

The number of treatments that we performed during the year ended December 31, 2009 increased by approximately 23.3% over the number of treatments that we performed during the year ended December 31, 2008. This treatment growth has been driven by increasing the patient base at our existing clinics, adding new patients through the opening of de novo clinics and the acquisition of existing dialysis clinics in which we acquired a controlling interest. The following table summarizes the sources of our treatment growth for the period indicated.

	Years Ended December 31,
	2009			2008
Source of Treatment Growth:
Existing clinics (1)		18.9	%		16.5	%
De novo clinics opened (2)		1.7	%		3.6	%
Non-acquired treatment growth		20.6	%		20.1	%
Clinics acquired (3)		2.7	%		—	%
Total treatment growth		23.3	%		20.1	%

(1) Represents net growth in treatments at clinics operating at end of the period that were also opened at the end of the prior period.

(2) Represents additional treatments provided at clinics opened since the end of the prior period, compared to the total number.

(3) Represents treatments performed at clinics acquired since the end of the prior period.

Our net operating revenues per treatment is principally driven by our mix of commercial and government (principally Medicare and Medicaid) payor patients, the mix and amount of physician-prescribed pharmaceuticals, and commercial and government payment rates. We are generally paid more for services provided to patients covered by commercial healthcare plans than we are for patients covered by Medicare or Medicaid. Patients covered by employer group health plans transition to Medicare coverage after a maximum of 33 months. During the year ended December 31, 2009, the Medicare ESRD dialysis reimbursement rates for patients at our clinics were between $126 and $154 per treatment, excluding the administration of separately-billable pharmaceuticals, such as EPO. Medicare payment rates are generally insufficient to cover our total operating expenses allocable to providing dialysis treatments for Medicare patients, although in some circumstances they are sufficient to cover their patient care costs. As a result, our ability to generate operating

67

earnings is substantially dependent on revenues derived from commercial payors, some of which pay negotiated payment rates and others of which pay based on our usual and customary fee schedule. Additionally, as a patient transitions from commercial coverage to Medicare coverage, the payment rates typically decline substantially.

The following table summarizes our net operating revenues and treatments by source for each of the periods indicated. These numbers are largely driven by the nephrologist partners we choose to partner with and the overall economic environment, particularly unemployment.

	Years Ended December 31,
	2009			2008
Source of revenues:
Government-based programs and other		57.0	%		57.9	%
Commercial payors		43.0	%		42.1	%
		100.0	%		100	%
Source of treatments:
Government-based programs and other		85.9	%		86.1	%
Commercial payors		14.1	%		13.9	%
		100.0	%		100.0	%

Operating Expenses

Patient care costs. Patient care costs for the year ended December 31, 2009 were $170.8 million, an increase of 20.5% from $141.8 million in the year ended December 31, 2008. This increase was primarily due to an increase in the number of treatments. As a percentage of net operating revenues, patient care costs were approximately 64.9% for the year ended December 31, 2009 compared to 65.1% for the year ended December 31, 2008. Patient care costs per treatment for the year ended December 31, 2009 were $229, compared to $234 for the year ended December 31, 2008, reflecting a decrease of $5 per treatment. This decrease was primarily due to decreased pharmacy costs associated with the decrease in the administration of EPO.

General and administrative expenses. General and administrative expenses for the year ended December 31, 2009 were $24.8 million, an increase of 24.4% from $19.9 million in the year ended December 31, 2008. The increase is primarily attributable to an increase in headcount associated with our total treatment growth of 23.3%. As a percentage of net operating revenues, general and administrative costs were approximately 9.4% during the year ended December 31, 2009 and 9.1% during the year ended December 31, 2008. General and administrative costs per treatment were $33 for the year ended December 31, 2009 and for the year ended December 31, 2008.

Depreciation and amortization. Depreciation and amortization expense represents expense attributable to our clinics’ equipment and leasehold improvements. We calculate depreciation and amortization expense using a straight-line method over the assets’ useful lives. Depreciation and amortization expense for the year ended December 31, 2009 was $12.1 million, an increase of 23.5% from $9.8 million in the year ended December 31, 2008. The increase is primarily due to the increase in the number of clinics from 64 as of January 1, 2008 to 83 as of December 31, 2009. As a percentage of net operating revenues, depreciation and amortization expense was approximately 4.6% for the year ended December 31, 2009 compared to 4.5% for the year ended December 31, 2008.

Provision for uncollectible accounts. Provision for uncollectible accounts represents reserves established for amounts for which patients are primarily responsible which we believe will not be collectible. Provision for uncollectible accounts for the year ended December 31, 2009 was $3.2 million, a decrease of 33.3% from $4.8 million in the year ended December 31, 2008. As a percentage of net operating revenues, provision for uncollectible accounts was approximately 1.2% for the year ended December 31, 2009, compared to 2.2% for the year ended December 31, 2008. The decrease was primarily due to uncollectible amounts in the corresponding period of 2008 from CMS for a new facility which did not receive its Medicare certification until July 2008. Our accounts receivable, net of the bad debt allowance, represented approximately 59 days of revenues as of December 31, 2009 and as of December 31, 2008.

68

Interest Expense, net. Interest expense represents charges for interest associated with our corporate level debt and credit facilities entered into by our dialysis clinics, as well as accumulated dividends attributable to our Series X preferred stock. Interest expense, net for the year ended December 31, 2009 was $14.9 million, an increase of 8.8% from $13.7 million in the year ended December 31, 2008. Interest expense for the year ended December 31, 2009 and 2008 consisted of $5.7 million and $5.9 million, respectively, attributable to interest on long-term debt, $8.1 million and $7.2 million, respectively, of a non-cash charge attributable to Series X preferred stock dividends and discount accretion, and $1.1 million and $0.6 million, respectively, attributable to amortization of deferred financing costs. Interest expense on long-term debt decreased due to a decrease in our weighted average interest rate to 6.8% during 2009 from 7.1% during 2008 as a result of lower LIBOR rates. Series X preferred stock dividends increased as dividends compound quarterly. The increase in amortization of deferred financing costs is attributable to expensing the remaining unamortized deferred financing costs of $0.6 million in connection with the amendment of certain loans during 2009.

Income Tax Expense. The provision for income taxes for the year ended December 31, 2009 represented an effective annualized tax rate of 25.7% compared with 24.8% in 2008. The income tax expense included in the accompanying consolidated statements of income principally relates to our proportionate share of the pre-tax income of our majority-owned subsidiaries. The principal difference between our effective tax rate and the statutory tax rate is the non-deductible interest expense, including original issue discount, related to the Series X redeemable preferred stock, which amounted to $8.1 million and $7.2 million in 2009 and 2008, respectively.

Net income attributable to noncontrolling interests. Noncontrolling interests represent the equity interests in our consolidated entities that we do not own, primarily the equity interests of our nephrologist partners in our JV clinics. Net income attributable to noncontrolling interests for the year ended December 31, 2009 was $22.4 million, an increase of 30.2% from $17.2 million in the year ended December 31, 2008. The increase was primarily due to de novo clinics and growth in the earnings of our existing JVs. Net income attributable to noncontrolling interests as a percentage of operating income was 43.1% in the year ended December 31, 2009 and 41.5% in the year ended December 31, 2008.

Year ended December 31, 2008, as compared with year ended December 31, 2007

	Year Ended December 31,						Dollar Change			Percent Change
(in thousands)	2008			2007
Net patient service revenue	$	217,777		$	178,391		$	39,386			22.1	%
Operating expenses:
Facility operating expenses		141,810			115,058			26,752			23.3	%
General and administrative expense		19,944			18,595			1,349			7.3	%
Depreciation and amortization		9,777			7,919			1,858			23.5	%
Provision for doubtful accounts		4,834			3,258			1,576			48.4	%
Total operating expenses		176,365			144,830			31,535			21.8	%
Operating Income		41,412			33,561			7,851			23.4	%
Interest expense, net		(13,729	)		(13,695	)		(34	)		0.2	%
Income before income taxes		27,683			19,866			7,817			39.3	%
Income tax expense		6,860			4,409			2,451			55.6	%
Net income		20,823			15,457			5,366			34.7	%
Less: Net income attributable to noncontrolling interests		(17,179	)		(14,706	)		(2,473	)		16.8	%
Net income attributable to ARH	$	3,644		$	751		$	2,893			385.2	%

69

Net Operating Revenues

Net operating revenues for the year ended December 31, 2008 were $217.8 million, an increase of 22.1% from $178.4 million for the year ended December 31, 2007. The increase in net operating revenues was primarily due to an increase of approximately 20.1% in the number of dialysis treatments and a 1.7% increase in the average dialysis revenues per treatment. The increase in treatments resulted principally from non-acquired treatment growth from existing clinics and de novo clinics. Net operating revenues per treatment for the year ended December 31, 2008 was $360, compared with $354 for the year ended December 31, 2007. The increase in revenues per treatment was primarily due to a favorable increase in our commercial treatment mix in 2008.

	Years Ended December 31,
	2008		2007
Net operating revenues (in thousands)	$	217,777	$	178,391
Net operating revenues per treatment	$	360	$	354

The number of treatments that we performed during the year ended December 31, 2008 increased by approximately 20.1% over the number of treatments that we performed during the year ended December 31, 2007. This treatment growth has been driven by increasing the patient base at our existing clinics, adding new patients through the opening of de novo clinics and the acquisition of existing dialysis clinics in which we acquired a controlling interest. The following table summarizes the sources of our treatment growth for the period indicated.

	Years Ended December 31,
	2008			2007
Source of Treatment Growth:
Existing clinics (1)		16.5	%		11.3	%
De novo clinics opened (2)		3.6	%		5.6	%
Non-acquired treatment growth		20.1	%		16.9	%
Clinics acquired (3)		—	%		3.4	%
Total treatment growth		20.1	%		20.3	%

(1) Represents net growth in treatments at clinics operating at end of the period that were also opened at the end of the prior period.

(2) Represents additional treatments provided at clinics opened since the end of the prior period, compared to the total number.

(3) Represents treatments performed at clinics acquired since the end of the prior period.

Our net operating revenues per treatment is principally driven by our mix of commercial and government (principally Medicare and Medicaid) payor patients, the mix and amount of physician-prescribed pharmaceuticals, and commercial and government payment rates. We are generally paid more for services provided to patients covered by commercial healthcare plans than we are for patients covered by Medicare or Medicaid. Patients covered by employer group health plans transition to Medicare coverage after a maximum of 33 months. Medicare payment rates are generally insufficient to cover our total operating expenses allocable to providing dialysis treatments for Medicare patients, although in some circumstances they are sufficient to cover their patient care costs. As a result, our ability to generate operating earnings is substantially dependent on revenues derived from commercial payors, some of which pay negotiated payment rates and others of which pay based on our usual and customary fee schedule. Additionally, as a patient transitions from commercial coverage to Medicare coverage, the payment rates typically decline substantially.

70

The following table summarizes our net operating revenues and treatments by source for each of the periods indicated. These numbers are largely driven by the nephrologist partners we choose to partner with and the overall economic environment, particularly unemployment.

	Years Ended December 31,
	2008			2007
Source of revenues:
Government-based programs and other		57.9	%		57.7	%
Commercial payors		42.1	%		42.3	%
		100	%		100.0	%
Source of treatments:
Government-based programs and other		86.1	%		87.6	%
Commercial payors		13.9	%		12.4	%
		100.0	%		100.0	%

Operating Expenses

Patient care costs. Patient care costs for the year ended December 31, 2008 were $141.8 million, an increase of 23.2% from $115.1 million in the year ended December 31, 2007. This increase was primarily attributable to an increase in the number of treatments. As a percentage of net operating revenues, patient care costs were approximately 65.1% for the year ended December 31, 2008 compared to 64.4% for the year ended December 31, 2007. Patient care costs per treatment for the year ended December 31, 2008 were $234, compared to $228 for the year ended December 31, 2007, reflecting an increase of $6 per treatment. This increase was primarily due to increased salaries and benefits costs for personnel and increased medical supply costs.

General and administrative expenses. General and administrative expenses for the year ended December 31, 2008 were $19.8 million, an increase of 7.3% from $18.6 million in the year ended December 31, 2007. The increase is primarily attributable to an increase in headcount associated with our treatment growth of 20.1%. As a percentage of net operating revenues, general and administrative costs were approximately 9.1% for the year ended December 31, 2008 and 10.4% for the year ended December 31, 2007. General and administrative costs per treatment for the year ended December 31, 2008 were $32, compared to $37 for the year ended December 31, 2007 primarily related to lower stock-based compensation in 2008 as compared to 2007.

Depreciation and amortization. Depreciation and amortization expense for the year ended December 31, 2008 was $9.8 million, an increase of 24.1% from $7.9 million in the year ended December 31, 2007. The increase is primarily attributable to the increase in the number of clinics from 53 as of January 1, 2007 to 75 as of December 31, 2008. As a percentage of net operating revenues, depreciation and amortization expense was approximately 4.5% for the year ended December 31, 2008 and 4.4% for the year ended December 31, 2007.

Provision for uncollectible accounts. Provision for uncollectible accounts for the year ended December 31, 2008 was $4.8 million, an increase of 45.4% from $3.3 million in the year ended December 31, 2007. As a percentage of net operating revenues, provision for uncollectible accounts was 2.2% during the year ended December 31, 2008 and 1.8% during the year ended December 31, 2007. The increase was primarily due to uncollectible amounts in the corresponding period of 2008 from CMS for a new facility which did not receive its Medicare certification until July 2008. Provision for uncollectible accounts per treatment for the year ended December 31, 2008 was $8, compared to $6 for the year ended December 31, 2007. Our accounts receivable, net of the bad debt allowance, represented approximately 59 days of revenues as of December 31, 2008, and 58 days as of December 31, 2007.

Interest Expense, net. Interest expense was $13.7 million for the year ended December 31, 2008 and in the year ended December 31, 2007. Interest expense for the year ended December 31, 2008 and 2007 consisted of $5.9 million and $6.4 million, respectively, attributable to interest on long-term debt, $7.2 million and

71

$6.5 million, respectively, of a non-cash charge attributable to Series X preferred stock dividends and discount accretion, and $0.6 million and $0.8 million, respectively, attributable to amortization of deferred financing costs. Interest expense on long-term debt decreased 7.8% due to a decrease in our weighted average interest rate to 7.1% during 2008 from 8.6% during 2007 due to lower LIBOR rates but offset by an increase in our long-term debt in 2008. Series X preferred stock dividends increased as dividends compound quarterly.

Income Tax Expense. The provision for income taxes for the year ended December 31, 2008 represented an effective tax rate of 24.8%, compared with 22.2% for the year ended December 31, 2007. The income tax expense included in the accompanying consolidated statements of income principally relates to our proportionate share of the pre-tax income of our majority-owned subsidiaries. The principal difference between our effective tax rate and the statutory federal tax rate of 35% is the non-deductible interest expense, including original issue discount, related to the Series X redeemable preferred stock, which amounted to $7.2 million and $6.5 million in 2008 and 2007, respectively, state taxes and the tax impact of the noncontrolling interest.

Net income attributable to noncontrolling interests. Net income attributable to noncontrolling interests for the year ended December 31, 2008 was $17.2 million, an increase of 17.0% from $14.7 million in the year ended December 31, 2007. The increase was primarily due to de novo clinics and growth in the earnings of our existing JVs. Net income attributable to noncontrolling interests as a percentage of operating income was 41.5% for the year ended December 31, 2008, compared with 43.8% for the year ended December 31, 2007.

Liquidity and Capital Resources

We own controlling interests in our JV clinics and our nephrologist partners own noncontrolling interests, typically between 25% and 49%. Except as otherwise indicated, the following discussion of our liquidity and capital resources presents information on a consolidated basis, without giving effect to any noncontrolling interests in our JV clinics.

Cash Flows

The following discussion highlights our cash flow activities during the successor period from May 8, 2010 to September 30, 2010, the predecessor periods from January 1, 2010 through May 7, 2010 and the nine month period ended September 30, 2009.

Cash Flows from Operations:

	Successor			Predecessor
	May 8 through September 30, 2010			January 1 through May 7, 2010			Nine months Ended September 30, 2009
Source / (Use)
Net (loss) income	$	(3,343	)	$	6,582		$	20,340
Depreciation and amortization		6,434			4,634			8,816
Non-cash and non-operating items		5,533			4,558			8,580
Increase (decrease) in cash resulting in changes from:
Accounts receivable		2,132			(2,465	)		(4,827	)
Inventories		424			(6	)		192
Other assets		3,668			(1,506	)		2,985
Accounts payable and accrued expenses		374			(6,432	)		3,306
Other liabilities		1,615			(70	)		(1,254	)
Net cash provided by operating activities	$	16,837		$	5,295		$	37,222

72

The decrease in our net income is primarily attributable to expenses related to the Merger. In the successor period, other non-cash and non-operating items such as stock-based compensation expense and expenses related to the Merger. In the predecessor period, other non-cash and non-operating items is primarily non-cash Series X preferred stock interest expense. The increase in accounts receivable in the predecessor periods resulted from the timing of collections compared to billings.

Cash Flows from Investing Activities:

	Successor			Predecessor
	May 8 through September 30, 2010			January 1 through May 7, 2010			Nine months Ended September  30, 2009
Source / (Use)
Purchases of property and equipment	$	(6,141	)	$	(4,904	)	$	(9,757	)
Cash paid for acquisitions		(275	)		(144	)		(3,964	)
Merger with C.P. Atlas Holdings, Inc.		(249,716	)		—			—
Net cash used in investing activities	$	(256,132	)	$	(5,048	)	$	(13,721	)

The increase in our cash used in investing activities is due to the Merger. Cash paid for acquisitions during the nine months ended September 30, 2009 represents the acquisition of three clinics.

Cash Flows provided by (used in) Financing Activities:

	Successor			Predecessor
	May 8 through September 30, 2010			January 1 through May 7, 2010			Nine months Ended September 30, 2009
Source / (Use)
Payments on long-term debt	$	(65,104	)	$	(5,391	)	$	(8,687	)
Proceeds from issuance of common stock		161,732			8			81
Issuance of debt, net of issuance cost of 11,426		236,774			—			—
Payoff of Series X Preferred Stock		(68,088	)		—			—
Distributions to noncontrolling interests		(9,934	)		(11,394	)		(15,016	)
Other		(747	)		(408	)		485
Net cash provided by (used in) financing activities	$	254,633		$	(17,185	)	$	(23,137	)

The increase in our cash provided by financing activities is primarily due to the Merger. In connection with the Merger:

• Centerbridge made an aggregate cash equity investment of $161.5 million in the Parent, subject to certain adjustments, and in exchange received 87% of the common stock of the Parent immediately following the Merger;

• Certain members of ARH’s management contributed a portion of their existing equity ownership in ARH in exchange for newly issued shares of common stock and options to purchase common stock of the Parent;

• ARH entered into the New Revolving Credit Facility;

• ARH offered the Senior Secured Notes;

• ARH repaid approximately $63.0 million of debt related to the Predecessor; and

• ARH purchased all of the outstanding shares as of May 7, 2010 of the Series X Preferred Stock for $65.2 million.

73

Capital Resources

Our future needs for liquidity will arise primarily from funding the development of new clinics, operating expenses, capital expenditures, payment of the advisory fee and other expenses payable under the management agreement with Centerbridge and to service our debt, including our New Revolving Credit Facility and the Senior Secured Notes. Our primary sources of liquidity will be funds generated from our operations, short-term borrowing under our New Revolving Credit Facility and borrowings of long-term debt.

We believe our cash flows from operations, combined with availability under our New Revolving Credit Facility, provides sufficient liquidity to fund our current obligations, projected working capital requirements and capital spending for a period that includes the next 12 months. If existing cash and cash generated from operations and borrowings under the New Revolving Credit Facility are insufficient to satisfy our liquidity requirements, we may seek to obtain additional debt or equity financing. If additional funds are raised through the issuance of debt securities, these securities could contain covenants that would restrict our operations. Any financing may not be available in amounts or on terms acceptable to us. If we are unable to obtain required financing, we may be required to reduce the scope of our planned growth efforts, which could harm our financial condition and operating results.

As of September 30, 2010 we have outstanding $258.2 million in aggregate principal amount of indebtedness, with an additional $25.0 million of borrowing capacity available under our New Revolving Credit Facility (not giving effect to any outstanding letters of credit, which would reduce the amount available under our New Revolving Credit Facility).

Our liquidity requirements will be significant, primarily due to debt service requirements in connection with the Transactions. In addition, we pay Centerbridge a yearly advisory services fee beginning for the fiscal year 2010 of the greater of (i) an amount equal to the greater of (x) $550,000 and (y) the amount of the previous fiscal year’s advisory fee and (ii) an amount equal to 1.25% of our EBITDA for that fiscal year.

Historically, our principal needs for liquidity have been to fund the development and acquisition of new clinics, to pay our operating expenses, to fund capital expenditures and to service our debt. Our primary sources of liquidity are funds generated from our operations and from borrowings of long-term debt. Our cash and cash equivalent balances were the following for each period:

	December 31,				September  30, 2010
	2008		2009
	(in thousands)
Cash and cash equivalents at issuer and guarantor subsidiaries	$	11,869	$	11,423	$	5,379
Cash and cash equivalents at non-guarantor subsidiaries		17,313		17,756		22,200
Consolidated cash and cash equivalents	$	29,182	$	29,179	$	27,579

The decrease in cash and cash equivalents of the issuer and guarantor subsidiaries is primarily attributable to the issuer financing the Merger by approximately $8.4 million on May 7, 2010.

At September 30, 2010, our subsidiary level long-term debt, on an aggregated basis, consisted of term loans, lines of credit and mortgages totaling $8.2 million with maturities ranging from December 2011 to February 2015 and interest rates ranging from 3.06% to 8.67%.

Senior Secured Notes

In connection with the Transactions, we issued $250.0 million of Senior Secured Notes (the notes) at an offering price of 99.28%. The notes are secured, subject to certain exceptions, by (i) all of the our capital stock and (ii) substantially all of our assets of our wholly owned subsidiary guarantors. The notes are guaranteed by the our direct parent, C. P. Atlas Intermediate Holdings, LLC and all of our existing and future wholly owned domestic subsidiaries. The notes mature on May 15, 2018. Interest is payable semi-annually at 8.375% per annum, commencing November 15, 2010.

On or after May 15, 2015, we may redeem the notes at our option, subject to certain notice periods, at a price equal to 100% of the principal amount of the notes. Prior to May 15, 2013, we have the option to redeem during each 12-month period commencing on the issue date of May 7, 2010 up to 10% of the aggregate principal

74

amount of the notes at 103% of the aggregate principal amount of the notes redeemed plus accrued and unpaid interest to the date of redemption. In addition, we may redeem up to 35% of the notes before May 15, 2013, with the net cash proceeds from certain equity offerings. We may also redeem some or all of the notes before May 15, 2013 at a redemption price of 100% of the principal amount thereof plus accrued and unpaid interest, if any, to the redemption date, plus a “make-whole” premium. Upon a change in control, we must offer to purchase the notes at 101% of the principal amount, plus accrued interest to the purchase date.

New Revolving Credit Facility

In connection with the Transactions, we entered into a $25.0 million senior secured revolving credit facility (the New Revolving Credit Facility). As of September 30, 2010, there were no borrowings outstanding under the New Revolving Credit Facility. The New Revolving Credit Facility expires on May 7, 2015. Borrowings under the New Revolving Credit Facility bear interest at a rate equal to, at our option, either (a) an alternate base rate determined by reference to the higher of (1) the prime rate in effect on such day, (2) the federal funds effective rate plus 0.50% and (3) the Eurodollar rate applicable for an interest period of one month plus 1.00% or (b) the LIBOR rate, plus an applicable margin. The initial applicable margin for borrowings under the New Revolving Credit Facility is 3.50% with respect to alternate base rate borrowings and 4.50% with respect to LIBOR borrowings. In addition to paying interest on outstanding principal under the New Revolving Credit Facility, we are required to pay a commitment fee, initially 0.75% per annum, in respect of the unutilized revolving credit commitments thereunder.

Earnings before Interest, Taxes, Depreciation and Amortization and other Adjustments

We believe earnings before interest, taxes, depreciation and amortization and other adjustments, which we refer to as Adjusted EBITDA, provides information useful for evaluating our businesses and understanding our operation performance in a manner similar to management. We define Adjusted EBITDA as net income attributable to ARH before income taxes, interest expense, depreciation and amortization, and we further adjust for non-cash charges, non-recurring charges and pro forma amounts for acquisitions as if they had been consummated on the first day of each period. We believe Adjusted EBITDA is helpful in highlighting trends because Adjusted EBITDA excludes the results of decisions that are outside the control of operating management and can differ significantly from company to company depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate and capital investments. In addition, we present Adjusted EBITDA because it is one of the components used in the calculations under the covenants contained in our revolving credit facility. Adjusted EBITDA is not a measure of operating performance computed in accordance with GAAP and should not be considered as a substitute for operating income, net income, cash flows from operations, or other statement of operations or cash flow data prepared in conformity with GAAP, or as measures of profitability or liquidity. In addition, Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Adjusted EBITDA may not be indicative of historical operating results, and we do not mean for it to be predictive of future results of operations or cash flows. Adjusted EBITDA has limitations as an analytical tool, and you should not consider this item in isolation, or as a substitute for an analysis of our results as reported under GAAP. Some of these limitations are that Adjusted EBITDA:

• does not include interest expense—as we have borrowed money for general corporate purposes, interest expense is a necessary element of our costs and ability to generate profits and cash flows;

• does not include depreciation and amortization—because construction and operation of our dialysis clinics requires significant capital expenditures, depreciation and amortization are a necessary element of our costs and ability to generate profits;

• does not include stock-based compensation expense;

• does not reflect changes in, or cash requirements for, our working capital needs; and

• does not include certain income tax payments that represent a reduction in cash available to us.

You should not consider Adjusted EBITDA as an alternative to income from operations or net income, determined in accordance with GAAP, as an indicator of our operating performance, or as an alternative to cash flows from operating activities, determined in accordance with GAAP, as an indicator of cash flows or as a measure of liquidity.

75

The following table presents the reconciliation from net income to Adjusted EBITDA for the periods indicated:

	Historical						Pro Forma			Historical
	Three-Months Ended September 30,						Nine-Months Ended September 30,
(in thousands)	2010			2009			2010			2009
	Successor			Predecessor			Successor			Predecessor
Net income	$	8,439		$	7,463		$	24,504		$	20,340
Interest expense		5,885			3,755			16,935			11,212
Income tax expense		977			2,582			2,992			7,036
Depreciation and amortization		4,085			2,814			12,322			8,816
Merger and related expenses		152			—			—			—
Stock-based compensation		544			293			763			876
Initial public offering transaction expenses		—			462			—			508
Management fee		138			—			413			—
Specified legal costs		—			130			—			373
Adjusted EBITDA (including noncontrolling interests)	$	20,220		$	17,499		$	57,929		$	49,161
Less: Net income attributable to noncontrolling interests		(6,907	)		(5,756	)		(19,583	)		(15,823	)
Adjusted EBITDA	$	13,313		$	11,743		$	38,346		$	33,338

Covenant Compliance

Under the New Revolving Credit Facility, certain limitations, restrictions and defaults could occur if we are not able to satisfy and remain in compliance with specified financial ratios. We have agreed that beginning on September 30, 2010, we will not permit the Consolidated Net Debt to Consolidated EBITDA (both as defined in the agreement) Ratio for any 12 month period (last four fiscal quarters) ending during a period set forth below to be greater than the ratio set forth below opposite such period:

Period	Ratio
September 30, 2010 through September 30, 2011		5.75:1.00
December 31, 2011 through September 30, 2012		5.50:1.00
December 31, 2012 through September 30, 2013		5.00:1.00
December 31, 2013 through September 30, 2014		4.75:1.00
December 31, 2014 and thereafter		4.25:1.00

We have also agreed that beginning on September 30, 2010, we will not permit the Consolidated EBITDA to Fixed Charges (both as defined in the agreement) Ratio for any 12 month period (last four fiscal quarters) ending during a period set forth below to be lower than the ratio set forth below opposite such period:

Period	Ratio
September 30, 2010 through September 30, 2011		1.80:1.00
December 31, 2011 through September 30, 2012		1.80:1.00
December 31, 2012 through September 30, 2013		2.00:1.00
December 31, 2013 through September 30, 2014		2.25:1.00
December 31, 2014 and thereafter		2.50:1.00

The breach of these covenants could result in a default under the New Revolving Credit Facility and the lenders could elect to declare all amounts borrowed due and payable. As of September 30, 2010, we are in compliance with our covenants.

76

In determining Consolidated EBITDA, EBITDA is calculated by reference to net income plus interest and other financing costs, net, provision for income taxes, depreciation and amortization and stock-based compensation. Consolidated EBITDA as defined in the agreement is calculated by adjusting EBITDA to exclude unusual items and other adjustments permitted in calculating covenant compliance under the indentures and the credit facilities. The adjustments made in determining Consolidated EBITDA include those used in determining Adjusted EBITDA, and further include adjustments for net income attributable to noncontrolling interests with clinic-level debt and other adjustments. We believe that the inclusion of supplementary adjustments to EBITDA applied in presenting Consolidated EBITDA are appropriate to provide additional information to investors to demonstrate our ability to comply with the financial covenants of the credit facility. The calculation of Consolidated EBITDA under the New Revolving Credit Facility is as follows (in thousands):

	Last Twelve months ended September 30, 2010
Net loss	$	(16,359	)
Interest expense, net (1)		18,658
Provision for income taxes		4,103
Depreciation and amortization		14,174
Stock-based compensation		5,058
Transaction expenses (2)		22,217
Initial public offering transaction expenses		1,289
Specified legal costs (3)		299
Adjusted EBITDA (5)	$	49,439
Net income attributable to noncontrolling interests with clinic-level debt (4)		4,025
Other		235
Consolidated EBITDA (5)	$	53,699

(1) Includes interest expense and interest income.

(2) Reflects expenses related to the Transactions.

(3) Represents adjustments for certain legal costs as a specified exclusion.

(4) Reflects net income attributable to noncontrolling interests at those clinics with $8.2 million of third-party debt as of September 30, 2010. The agreement permits this adjustment up to the amount of third-party debt that is included in certain coverage and leverage ratios.

(5) Adjusted EBITDA is defined as net income plus net interest expense, income taxes, depreciation and amortization, stock-based compensation transaction expenses, initial public offering transaction expenses and specified legal costs. Adjusted EBITDA is not a recognized term under GAAP and does not purport to be an alternative to net income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Additionally, Adjusted EBITDA is not intended to be a measure of free cash flow available for management’s discretionary use as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements. The presentation of Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. Management believes Adjusted EBITDA is helpful in highlighting trends because Adjusted EBITDA excludes the results of decisions that are outside the control of operating management and can differ significantly from company to company depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate and capital investments. In addition, Adjusted EBITDA provides more comparability between our predecessor results and our successor results that reflect acquisition accounting and our new capital structure. Management compensates for the limitations of using non-GAAP financial measures by using them to supplement GAAP results to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone.

77

Consolidated EBITDA (or debt covenant EBITDA) is defined as Adjusted EBITDA plus net income attributable to noncontrolling interests with clinic-level debt and other adjustments. Consolidated EBITDA, not Adjusted EBITDA, is used in calculating covenant compliance under the agreements governing the New Revolving Credit Facility. The Company believes that the inclusion of supplementary adjustments to Adjusted EBITDA are appropriate to provide additional information to investors about items that will impact the calculation of EBITDA that is used to determine covenant compliance under the agreements governing the New Revolving Credit Facility. Since not all companies use identical calculations, this presentation of Consolidated EBITDA may not be comparable to other similarly titled measures of other companies.

Off Balance Sheet Arrangements, Contractual Obligations and Commitments

The following is a summary of historical contractual obligations and commitments as of September 30, 2010 (in thousands)

Scheduled payments under contractual obligations	Total		July 1 to December 31, 2010		2011 & 2012		2013 & 2014		2015		After 2015
Clinic level third-party long-term debt and capital lease obligations (including current portion)	$	8,212	$	849	$	5,757	$	1,602	$	4	$	—
Senior Secured Notes (1)		250,000		—		—		—		—		250,000
Operating leases (2)		66,376		2,490		17,893		15,190		6,650		24,153
Total	$	324,588	$	3,339	$	23,650	$	16,792	$	6,654	$	274,153

(1) Bear interest at 8.375% with interest payment dates of May 15 and November 15, commencing November 15, 2010. As of September 30, 2010, accrued interest totals approximately $8.4 million.

(2) Net of estimated sublease proceeds of $0.3 million remaining in 2010, $1.0 million per year from 2011 to 2015 and $6.9 million thereafter.

We also have potential acquisition obligations for some of our non-wholly-owned subsidiaries in the form of put provisions, which are exercisable at our nephrologist partners’ future discretion within specified periods (“time-based puts”) or upon the occurrence of certain events (“event-based puts”) as set forth in each specific put provision. See Note H—Noncontrolling Interests Subject to Put Provisions in the Notes to our Consolidated Financial Statements, included elsewhere in this prospectus, for discussion of these put provisions. These put obligations are not customary in the operating agreements with our JV partners. Although no assurance can be given, we do not expect a significant increase in the number of future JV arrangements to contain put provisions.

Since our inception, $15.5 million of time-based obligations have become exercisable by our nephrologist partners, but only $2.4 million of these puts have been exercised. The following is a summary of the estimated cash obligations in each of the specified years under all time-based puts existing as of September 30, 2010 (in thousands) and reflects the payments that would be made, assuming (a) all vested puts as of September 30, 2010 are exercised on October 1, 2010 and paid accordingly and (b) all puts exercisable thereafter are exercised as soon as they vest and are paid accordingly.

Year	Amount Exercisable
2010 (remainder)	$	6,552
2011	$	6,234
2012	$	10,148
2013	$	7,966
2014	$	2,263
Thereafter	$	721

We do not have any off balance sheet arrangements.

78

Critical Accounting Policies and Estimates

We believe that the accounting policies described below are critical to understanding our business, results of operations and financial condition because they involve significant judgments and estimates used in the preparation of our consolidated financial statements. An accounting policy is deemed to be critical if it requires a judgment or accounting estimate to be made based on assumptions about matters that are highly uncertain, and if different estimates that could have been used, or if changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact our consolidated financial statements. Other significant accounting policies, primarily those with lower levels of uncertainty than those discussed below, are also critical to understanding our consolidated financial statements. The notes to our consolidated financial statements contain additional information related to our accounting policies and should be read in conjunction with this discussion.

Net Operating Revenues and Allowance for Doubtful Accounts

We recognize net operating revenues as services are provided to patients. Net operating revenues consist primarily of reimbursement for dialysis and ancillary services provided to patients. We maintain a usual and customary fee schedule for dialysis treatment and other patient services; however, actual collectible revenues are normally at a discount to the fee schedule. We bill Medicare and Medicaid programs at predetermined net realizable rates per treatment that are established by statute or regulation. We record contracted payors at contracted rates and bill other payors at usual and customary rates, and record a contractual allowance to reflect the expected net realizable revenues for services provided. We estimate contractual allowances, along with provisions for uncollectible amounts, based upon contractual terms, regulatory compliance, and historical collection experience. Recognition of net revenues and allowances for uncollectible billings require the use of estimates of the amounts that will actually be realized considering among other items, retroactive adjustments that may be associated with regulatory reviews, audits, billing reviews, and other matters. As a result, there is at least a reasonable possibility that our recorded estimates will change by a material amount in the near term. We separately disclose changes in estimates of our revenues for prior periods if these changes are material.

Approximately 56% of our total net patient service revenues for the nine months ended September 30, 2010 were accounted for by net patient service revenues associated with patients whose primary coverage is under governmental programs, including Medicare and Medicaid and Medicare or Medicaid Managed Care programs. Laws and regulations governing the Medicare and Medicaid programs are extremely complex and subject to interpretation. As a result, there is at least a reasonable possibility that our recorded estimates will change by a material amount in the near term. Patient accounts receivable from these programs was $39.8 million at September 30, 2010. No other single payor accounted for more than 5% of total patient accounts receivable.

Noncontrolling Interests

We own a controlling interest in each of our 88 clinics, and our local nephrologist partners own the remaining noncontrolling interests. Effective January 1, 2009, we were required to treat noncontrolling interests as a separate component of equity, but apart from our equity, and not as a liability or other item outside of equity. We were also required to identify and retrospectively present consolidated net income attributable to us and to noncontrolling interests on the face of the consolidated statement of income. In addition beginning on January 1, 2009, changes in our ownership interest while we retain a controlling financial interest are prospectively accounted for as equity transactions. We were also required to expand disclosures in the financial statements to include a reconciliation of the beginning and ending balances of the equity attributable to us and the noncontrolling owners and a schedule showing the effects of changes in our ownership interest in a subsidiary on the equity attributable to us. This change did not have a material impact on our consolidated financial statements; however, it did change the presentation of noncontrolling interests in our consolidated financial statements.

In conjunction with adopting these requirements, we were required to classify securities with redemption features that are not solely within our control, such as the noncontrolling interests subject to put provisions,

79

outside of permanent equity and to measure these noncontrolling interests at fair value. See Note E—Noncontrolling Interests Subject to Put Provisions in the Notes to our Consolidated Financial Statements for further details. These put provisions, if exercised, would require us to purchase our nephrologist partners’ interests at the appraised fair value. We estimate the fair value of the noncontrolling interests subject to these put provisions using an average multiple of earnings, based on historical earnings, development stage of the underlying business and other factors. The estimate of the fair values of the interests subject to these put provisions is a critical accounting estimate that involves significant judgments and assumptions and may not be indicative of the actual values at which these obligations may ultimately be settled in the future. The estimated fair values of the interests subject to these put provisions can also fluctuate and the implicit multiple of earnings at which these obligations may be settled will vary depending upon market conditions access to the credit and capital markets, which can impact the level of competition for dialysis and non-dialysis related businesses, the economic performance of these businesses and the restricted marketability of the nephrologist partners’ interests.

Stock-based Compensation

We measure and recognize compensation expense for all share-based payment awards based on estimated fair values at the date of grant. Determining the fair value of share-based awards requires judgment in developing assumptions, which involve a number of variables. We calculate fair value by using the Black-Scholes option-pricing model, which requires estimates for expected volatility, expected dividends, the risk-free interest rate and the expected term of the option. In addition, estimates of the number of share-based awards that are expected to be forfeited must be made. We also estimate the expected service period over which our stock option awards will vest, as well as make estimates regarding whether or not performance-based restricted stock will vest. Vesting of share-based awards issued with performance-based vesting criteria must be “probable” before we begin recording compensation expense. At each reporting period, we review the likelihood that these awards will vest and if the vesting is deemed probable, we begin to recognize compensation expense at that time. If ultimately performance goals are not met, for any awards where vesting was deemed probable, previously recognized compensation cost will be reversed. Each of these assumptions, while reasonable, requires a certain degree of judgment and the fair value estimates could vary if actual results are materially different than those initially applied.

Fair Value of Common Stock Determination by Predecessor

We granted stock options with the following exercise prices during the predecessor period from January 1, 2009 through May 7, 2010:

Option Grant Dates	Number of Shares Underlying Options		Exercise Price Per Share		Fair Market Value Per Underlying Share as of Grant Date
February 2009		257,500	$	4.72	$	4.72
May 2009		147,500		5.20		5.20
September 2009		207,500		5.24		5.24
November 2009		95,500		5.24		5.24

The fair value of the common stock underlying stock options granted during this predecessor period was estimated by our board of directors, which intended all options granted to be exercisable at a price per share not less than the per share fair value of our common stock underlying those options on the date of grant. In the absence of a public trading market, our board of directors considered numerous objective and subjective factors to determine its best estimate of the fair market value of our common stock as of the date of each option grant, including but not limited to, the following factors: (i) the rights, preferences and privileges of our preferred stock relative to the common stock; (ii) our performance and stage of development; (iii) valuations of our common stock; and (iv) the likelihood of achieving a liquidity event for the shares of common stock underlying these stock options, such as an initial public offering or sale of our company, given prevailing market conditions. The

80

assumptions we use in the valuation model are based on subjective future expectations combined with management judgment. If any of the assumptions used in the Black-Scholes model changes significantly, stock-based compensation for future awards may differ materially compared with the awards granted previously.

Every six months (June 30^th and December 31^st), we performed a concurrent valuation analysis to determine the fair value to be used for options to be granted in the successive six month period. The valuation analysis consists of two major steps: the estimation of the aggregate value of the entire company (referred to as Business Enterprise Value, or BEV) and the allocation of this aggregate value to each element of the contemporary capital structure (preferred stock, common stock, options and warrants). As described below, the BEV was estimated using a combination of income and market-based methods. The allocation of the BEV to equity classes was performed using an option-based method as of each valuation date.

Significant Factors, Assumptions and Methodologies Used in Determining Fair Value

In determining the fair value of our BEV and common stock, we used a combination of the income approach and the market approach to estimate our aggregate BEV at each valuation date.

The income approach is an estimate of the present value of the future monetary benefits expected to flow to the owners of a business. It requires a projection of the cash flows that the business is expected to generate over a forecast period and an estimate of the present value of cash flows beyond that period, which is referred to as residual value. These cash flows are converted to present value by means of discounting, using a rate of return that accounts for the time value of money and the appropriate degree of risks inherent in the business. The market approach considers multiples of financial metrics based on both acquisitions and trading multiples of a peer group of companies. These multiples are then applied to our financial metrics to derive an indication of value.

Our indicated BEV at each valuation date was first reduced by the amount of long-term debt outstanding and then, the residual value was allocated to the preferred stock and common stock, using a contingent claim methodology. This methodology treats the various components of our capital structure as a series of call options on the proceeds expected from the sale of the company or the liquidation of our assets at some future date. These call options are then valued using the Black-Scholes option pricing model. This model defines the securities’ fair values as functions of the current fair value of the company and assumptions based on the securities’ rights and preferences. As a result, the option-pricing method requires assumptions regarding the anticipated timing of a potential liquidity event, such as an initial public offering, and the estimated volatility of our equity securities. The anticipated timing of a liquidity event utilized in these valuations was based on then current plans and estimates of our board of directors and management regarding an initial public offering. Estimates of the volatility of our stock were based on available information on the volatility of capital stock of comparable publicly traded companies.

Fair Value of Common Stock Determination by Successor

During the successor period from May 8, 2010, we granted stock options to purchase 1,184,050 shares in July 2010 at an exercise price of $21.00 per share, the fair value on the date of the grant. The fair value was determined by our board of directors as $21.00 per share as this represented the price per share of common stock paid by C.P. Atlas Holdings, Inc. in the Merger, on an as converted basis.

Accounting for income taxes

We estimate our income tax provision to recognize our tax expense for the current year, and our deferred tax liabilities and assets for future tax consequences of events that have been recognized in our financial statements, measured using enacted tax rates and laws expected to apply in the periods when the deferred tax liabilities or assets are expected to be realized. Deferred tax assets are assessed based upon the likelihood of recoverability from future taxable income and, to the extent that recovery is not likely, a valuation allowance is established. We

81

regularly review and update the allowance for changes in circumstances that would cause a change in judgment about the realizability of the related deferred tax assets. These calculations and assessments involve complex estimates and judgments because the ultimate tax outcome can be uncertain and future events unpredictable.

Acquisition accounting valuation estimates

We make various assumptions and estimates regarding the valuation of tangible and intangible assets, liabilities and contractual as well as non-contractual contingencies associated with our acquisitions. These assumptions can have a material effect on our balance sheet valuations and the related amount of depreciation and amortization expense that will be recognized in the future. Long-lived tangible and intangible assets are subject to our regular ongoing impairment assessments.

Goodwill impairment

The excess of aggregate purchase price over the fair value of the net tangible and specifically identifiable intangible assets of businesses acquired in purchase transactions is recorded as goodwill.

We evaluate goodwill for impairment at least on an annual basis and more frequently if certain indicators are encountered. We assess goodwill for impairment as of October 1. Goodwill is to be tested at the reporting unit level, defined as an operating segment or one level below an operating segment (referred to as a component), with the fair value of the reporting unit being compared to its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered to be impaired. We have determined that we have one operating, as well as one reportable, segment. For impairment testing purposes, our individual clinics qualify as components of that operating segment. Because they have similar economic characteristics, the components are aggregated and deemed a single reporting unit. No impairment was identified during the years ended December 31, 2009 and 2008.

Recent Accounting Pronouncements

In January 2010, the FASB issued ASC Topic 820, Fair Value Measurements and Disclosures—Improving Disclosures About Fair Value Measurements. The ASU requires new disclosures about transfers into and out of Levels 1 and 2 and separate disclosures about purchases, sales, issuances, and settlements related to Level 3 measurements. It also clarifies existing fair value disclosures about the level of disaggregations and about inputs and valuation techniques used to measure fair value. The new disclosures and clarifications of existing disclosures are effective January 1, 2010, except for the disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurements, which are effective January 1, 2011. Other than requiring additional disclosures, the adoption of this new guidance is not expected to have a material impact on our consolidated results of operations and financial position.

In August 2010, the FASB issued guidance that requires health care entities to use cost as the measurement basis for charity care disclosures and defines cost as the direct and indirect costs of providing charity care. The amended disclosure requirements are effective for fiscal years beginning after December 15, 2010 and must be applied retrospectively. The Company will adopt the amended disclosure requirements for their fiscal year beginning January 1, 2011. Since the new guidance amends disclosure requirements only, its adoption will not impact the Company’s statement of financial position, statement of operations, or cash flow statement.

In August 2010, the FASB issued ASU 2010-24 to address how health care entities should account for medical malpractice claims and related anticipated insurance recoveries. The new guidance, which amends ASC 954-450, Contingencies, and ASC 954-720, Other Expenses, also applies to similar contingent liabilities. Under the new guidance, health care entities are prohibited from presenting claim liabilities net of insurance recoveries. Further, the guidance requires health care entities to disregard insurance recoveries when measuring the amount of a claim liability. However, a related insurance receivable should be recorded

82

concurrently with the liability, subject to a valuation allowance, if necessary. The new guidance is effective beginning January 1, 2011. In the period of adoption, entities must recognize in opening retained earnings any cumulative-effect adjustment resulting from the application of the new guidance. Entities may apply the new guidance retrospectively, and early application is permitted. We are currently assessing the impact this may have on our consolidated financial statements.

Quantitative and Qualitative Disclosure About Market Risk

Our investments include cash and cash equivalents. Cash and cash equivalents consist of cash, money market accounts, certificates of deposit and commercial paper. The primary objective of our investment activities is to preserve principal while maximizing income without significantly increasing risk. We do not enter into investments for trading or speculative purposes. Our investments are exposed to market risk due to a fluctuation in interest rates, which may affect our interest income and the fair market value of our investments. Due to the short-term nature of our investment portfolio, we do not believe an immediate 10% increase in interest rates would have a material effect on the fair market value of our portfolio, and therefore we do not expect our operating results or cash flows to be materially affected to any degree by a sudden change in market interest rates.

Interest Rate Risk

Our New Revolving Credit Facility contains multiple interest rate options which allow us to choose between a U.S. prime rate based interest rate or a London Interbank Offered Rate based interest rate. As of September 30, 2010, there were no borrowings under our New Revolving Credit Facility. If we were to draw on it, then we would be subject to changes in interest rates. As of September 30, 2010, we did not maintain any interest rate swap agreements.

Inflation Risk

We do not believe that inflation has had a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations.

83

BUSINESS

Our Company

We are a national provider of kidney dialysis services for patients suffering from chronic kidney failure, also known as end stage renal disease, or ESRD. As of September 30, 2010 we owned and operated 88 dialysis clinics treating more than 6,100 patients in 17 states and the District of Columbia. Our operating model is based on shared ownership of our facilities with physicians, known as nephrologists, who specialize in kidney-related diseases in the local market served by the clinic. Each clinic is maintained as a separate joint venture, or JV, in which we own a controlling interest and our local nephrologist partners own noncontrolling interests.

We believe we are the largest dialysis services provider in the United States founded and operating exclusively on a joint venture model. We have invested significantly in the development of our senior and field level core management function and operating procedures, and we believe we are well-positioned to continue to realize the benefits of platform scalability, which will allow us to add clinics without significant incremental operating costs. As a result, our revenue and earnings growth will be driven primarily by the growth in the number of our JV clinics and treatment growth at our existing clinics. Since our founding, we have opened 64 new clinics (“de novo clinics”) and have acquired 21 clinics from third parties (“acquired clinics”) that we subsequently converted to our JV model. In 2009 we opened 10 clinics, seven of which are de novo clinics and three are acquired clinics. We plan to continue the expansion of our operations with the use of the JV model primarily through the redeployment of free cash flow to create de novo clinics, to expand existing clinics and to selectively acquire clinics.

We believe our JV model is attractive to the nephrologist community because it provides a platform for favorable clinical outcomes and superior financial results while enabling our nephrologist partners to focus on providing the highest quality of patient care rather than the administration of corporate-directed treatments and protocols. Through our wholly-owned subsidiary, American Renal Management, LLC (“ARM”), we provide our nephrologist partners with the managerial, accounting, financial, technological and administrative support necessary to operate our clinics. In particular, our management services focus on critical revenue cycle management for each patient, which encompasses patient registration, insurance and benefit verification, medical treatment documentation and coding, bill preparation and collections. In addition, our corporate clinical advisory team, which includes our National Medical Director and clinical and regulatory advisors, assists our nephrologist partners in establishing clinical objectives, while our operating model allocates to our nephrologist partners autonomy over the clinical protocols used to achieve those objectives.

According to the United States Renal Data System, or USRDS, the number of dialysis patients in the U.S. is expected to continue growing faster than increases in the general population, primarily due to an aging population with increased life expectancies. As a result, we believe there will be an increasing need for dialysis clinics. In addition, we believe that the JV model will continue to be one of the fastest growing operating models for dialysis clinics and will represent an increasing percentage of the dialysis clinic industry. We believe that our JV model, with its clinic level autonomy for the physician, together with the comprehensive management services that we have developed, enhance the clinical and operating performance of our clinics and make us a preferred dialysis partner for nephrologists. We believe this will lead to additional JV opportunities with nephrologists seeking the corporate support we provide.

Dialysis Services Industry Overview

End Stage Renal Disease, or ESRD, is characterized by the loss of kidney functionality and is normally irreversible and fatal unless treated. ESRD most commonly results from complications associated with diabetes, hypertension, renal and hereditary diseases, old age and a combination of other risk factors. ESRD requires continued dialysis treatments or a kidney transplant to sustain life. Absent transplantation, the average life expectancy for an ESRD patient on dialysis is approximately five years following diagnosis, according to the USRDS. Scarcity of compatible kidneys has limited the option for transplants, causing most patients suffering

84

from ESRD to rely on dialysis. Dialysis is the removal of toxins and fluids from the blood of ESRD patients by artificial means. Patients suffering from ESRD generally require dialysis at least three times per week, amounting to approximately 156 treatments per year, for the remainder of their lives.

There are two primary methods of dialysis commonly used today, hemodialysis and peritoneal dialysis. Hemodialysis, or the removal of toxins and fluid from the blood through a specially designed filter, is the most common form of ESRD treatment and represented approximately 92% of all dialysis treatments in the United States in 2007. Hemodialysis is typically performed in outpatient dialysis clinics and lasts approximately 3.5 hours per treatment. Treatments are usually performed by teams of licensed nurses and trained technicians pursuant to a physician’s instructions. Almost all patients receive hemodialysis in our outpatient dialysis clinics as their primary ESRD treatment, although we also provide such services in the home. Peritoneal dialysis uses the patient’s peritoneal, or abdominal, cavity to eliminate fluid and toxins. A patient generally performs peritoneal dialysis at home. We also provide peritoneal dialysis services to patients who prefer and are able to receive that form of treatment.

Large, Growing Market for Outpatient Dialysis Services

The total annual cost of providing healthcare services to ESRD patients in the U.S. in 2007 has been estimated by the USRDS to be approximately $35 billion, of which we believe approximately $18 billion represents our currently addressable market. According to the most recent report by the USRDS, there were approximately 527,000 ESRD patients in the United States as of December 31, 2007, with the number of ESRD patients expected to grow at an annual rate consistent with the historical rate of 3-4%, outpacing general population growth. Aside from a relatively small number of individuals who qualify for and successfully undergo kidney transplants, the vast majority of ESRD patients require three dialysis treatments per week, on average, for the remainder of their lives. USRDS data indicates that the prevalence rate in patients ages 65 to 74 increased 24% from 2000 to 2007; while, in patients ages 75 and older the prevalence rate increased 28% over the same period.

According to the USRDS, the increasing percentage of the U.S. population afflicted with ESRD has been primarily caused by:

• aging of the general population;

• improved treatment and increased survival rate of patients with diabetes, hypertension and other illnesses that lead to ESRD;

• growth rates of minority populations with higher than average incidence rates of ESRD; and

• improved dialysis technology, that has enabled older patients and those who previously could not tolerate dialysis due to other illnesses, to benefit from this treatment.

Reimbursement Environment

A majority of reimbursement for dialysis services is provided by the federal government’s Medicare ESRD program based on rates established by the Centers for Medicare and Medicaid Services, or CMS. The coverage criteria for dialysis centers under Medicare are well defined and, as a result, Medicare reimbursement for dialysis services has historically been more predictable than reimbursements for most other services and procedures. ESRD has been classified as a chronic disability since 1972 and patients are entitled to treatment and Medicare benefits regardless of age or financial circumstances. Generally, if a patient does not have employer-sponsored health coverage, Medicare becomes the primary payor either immediately or after a three-month waiting period. For a patient with employer-sponsored health coverage, Medicare generally becomes the primary payor after 33 months, which includes a three-month coordination of benefits period, or earlier if the patient’s employer-sponsored health coverage terminates. Additional sources of reimbursement for dialysis services include other government agencies such as state Medicaid programs as well as private pay options.

85

Currently, Medicare reimburses dialysis providers separately for treatments and ancillaries. Recently approved Medicare legislation, however, will establish a “bundled” Medicare rate for dialysis reimbursement, starting in 2011. This new bundled rate will combine the current payments for composite rate and the separately billable dialysis services into a single base rate. This rate will include all services such as certain drugs and laboratory tests which are currently billed separately. The initial 2011 bundled rate will be set based on a 2% reduction in the payment rate that providers would have received under the historical fee for service payment methodology and based on the lowest average industry pharmaceutical utilization from 2007 to 2009. Beginning in 2012, the new single bundled payment base rate will be adjusted annually for inflation based upon a market basket index, less a productivity adjustment based on a 10-year moving average of productivity as projected by the Secretary of Health and Human Services. The bundled payment rate will be determined by the Secretary of Health and Human Services, who will have discretion to determine the base payment rate based on the goods and services included in the bundled rate. Dialysis providers, including us, will have the option to move fully to the bundled payment system in 2011 or to phase in the payment system over four years on a facility by facility basis. We believe that the move to bundled payment, together with the introduction of automatic annual rate increases of 1.5% per year, will result in greater predictability of rates and stability of revenue for the Company. The Congressional Budget Office estimates that these changes will result in an additional $1.5 billion in government payments to the dialysis industry over the next 10 years, which is directly related to the automatic annual rate increases.

Before Medicare becomes the primary payor, a patient’s commercial insurance plan, if any, is responsible for payment of the dialysis services provided. Although commercial payment rates vary significantly, average commercial payment rates are generally significantly higher than Medicare rates and often include price increases. Payment methods from commercial payors include a single lump-sum per treatment, referred to as bundled rates, and separate payments for ancillary treatments and pharmaceuticals, if used as part of the dialysis treatment, referred to as fee for service rates. We believe commercial payors are generally sensitive to the special circumstances and challenges faced by ESRD patients, particularly because they are responsible for primary coverage for a relatively limited number of ESRD patients for a finite 30-month period of time. We also believe commercial payors are incentivized to facilitate quality dialysis care because patients who do not regularly receive dialysis treatment typically require hospitalization and other more costly acute care treatment. For the year ended December 31, 2009, we derived approximately 43% of our net operating revenues from commercial payors, which represented approximately 14% of the treatments performed. The source of the balance of our treatments and net operating revenues come from Medicare and other governmental payors.

Our Operations

Our JV Operating Model

We believe we are the only dialysis service provider founded and operating exclusively on a shared-ownership model. Each of our clinics is maintained as a separate joint venture in which we own a controlling interest typically between 51% and 75%, and our nephrologist partners, who may be single practitioners or an affiliated group of nephrologists, own the noncontrolling interest. As of December 31, 2009, on average we owned a 55% interest in our clinics and our nephrologist partners owned a 45% interest.

Our operating model stresses the following ideals for our company:

• Take excellent care of the patients and the financial success will follow;

• Enable the nephrologist to practice as he/she deems appropriate;

• Provide the nephrologist the autonomy to make operational decisions;

• Acknowledge that clinic staff members are a critical and valuable asset; do everything possible to hire and retain the best possible staff;

• Listen to the practitioners and provide the tools needed to take excellent care of their patients; and

• The corporate office works for our staff, our doctors and patients.

86

Our relationships with physicians and other referral sources relating to our joint ventures are required to comply with the anti-kickback statute. Although there is a safe harbor for certain investment interests in “small entities,” it is not clear if any of our joint ventures satisfies all of the requirements for protection by this safe harbor. Under current law, physician joint ventures are not prohibited but instead require a case-by-case evaluation under the anti-kickback statute. We have structured our joint ventures to satisfy as many safe harbor requirements as we believe are reasonably possible and we believe that these investments are offered on a fair market value basis and provide returns to the physician investors only in proportion to their actual investment in the venture. We believe that our agreements do not violate the federal anti-kickback statute; however, since the arrangements do not satisfy all of the requirements for safe harbor protection, these arrangements could be challenged. See “Risk Factors—Our arrangements with our nephrologist partners and medical directors do not satisfy all the elements of a safe harbor to the federal anti-kickback statute and certain state anti-kickback laws and as a result may subject us to government scrutiny.”

As required by law, our clinics contract with a nephrologist partner or a group of affiliated nephrologists who are our nephrologist partners to provide medical director services at each of our clinics. Our medical director arrangements are typically for a ten-year term with provision for optional renewals at the end of the term.

Our JV clinics are most commonly de novo clinics. In a typical de novo clinic, the total capital required to develop the clinic is approximately $1.5 million, of which a portion is equity capital funded by us and our nephrologist partners in proportion to our respective ownership interests. Historically, the balance of such development cost was funded primarily through third-party debt financing that we and our nephrologist partners guaranty on a basis proportionate to our respective ownership interests, and in some cases through intercompany loans. We began to finance such balances primarily through intercompany loans in 2008 in part as a response to the unpredictability of the financial market at that time, and we expect to continue financing a significant portion of our clinical development costs through intercompany loans. Historically, our de novo clinics become EBITDA positive within an average of 12 months of opening. Once a clinic becomes EBITDA positive, the JV clinic begins to distribute excess cash to us and our nephrologist partners.

We equip our clinics with technologically advanced dialysis equipment and amenities. Our clinics generally contain between 15 and 20 dialysis stations, one or more nurses’ stations, a patient waiting area, examination rooms, a supply room, a water treatment space to purify water used in hemodialysis treatments, a dialyzer reprocessing room, staff work areas, offices and a staff lounge. Our clinics are also typically outfitted with amenities including personal cable televisions and fully reclining chairs.

Each of our JVs is organized as a limited liability company, typically organized in the state in which the clinics are located. Although the terms on which each JV is owned and operated vary to some extent, our JV arrangements have many common features. See “—JV Operating Agreements” and “—Management Services.”

Our Services

As of September 30, 2010, we owned and operated 88 dialysis clinics treating more than 6,100 patients in 17 states and the District of Columbia. As required by law, our clinics contract with a nephrologist partner or a group of affiliated nephrologists who are our nephrologist partners to provide medical director services at each of our clinics. The duties of the medical director generally include responsibility for the oversight of the clinic, its staff, patient care and treatment. In addition, other nephrologists may apply for practice privileges to treat their patients at our centers.

In addition to a medical director, each clinic has a clinic manager, typically a registered nurse, who supervises the day-to-day operations of the center and its staff. The staff of each center typically consists of registered nurses, patient care technicians, a social worker, a registered dietician, biomedical technician support and other administrative and support personnel.

87

Many of our outpatient dialysis centers offer services for dialysis patients who prefer and are able to receive either hemodialysis treatments in their homes or peritoneal dialysis. Home-based dialysis services consist of providing equipment and supplies, training, patient monitoring, on-call support services and follow-up assistance. Registered nurses train patients and their families or other caregivers to perform either hemodialysis at home or peritoneal dialysis.

Under Medicare regulations, we cannot and do not promote, develop or maintain any kind of contractual relationship with patients that would directly or indirectly obligate a patient to use or continue to use our dialysis services, or which would give us any preferential rights other than those related to collecting payments for our services.

Location and Capacity of Our Clinics

As of September 30, 2010 we owned and operated 88 dialysis clinics treating more than 6,100 patients in 17 states and the District of Columbia, each of which is consolidated in our financial statements. The locations of these clinics at September 30, 2010 were as follows:

State	Centers		State	Centers		State	Centers
Florida		23	Colorado		5	Louisiana		1
Ohio		11	Virginia		4	South Carolina		1
Rhode Island		9	Maryland		2	California		1
Pennsylvania		9	Texas		3	District of Columbia		1
Massachusetts		7	Illinois		2	Missouri		1
Georgia		5	Wisconsin		2	Michigan		1
						TOTAL		88

We have developed our clinics in a manner that we believe promotes high-quality patient care. Our typical clinic is approximately 6,500 to 7,000 square feet. We select clinic locations to maximize appeal and convenience based on demographic and other factors. One of the primary considerations in selecting a clinic location is finding an area with an existing patient base under the current treatment of local nephrologists interested in working with a dialysis clinic. Other considerations include:

• the types of commercial insurance in the area and the dialysis patient census they serve;

• the availability and cost of qualified and skilled personnel, particularly nursing and technical staff;

• the size and condition of the proposed clinic and its equipment;

• the atmosphere for the patients;

• the area’s demographics and population growth estimates;

• state regulation of dialysis and healthcare services; and

• the existence of competitive factors such as existing outpatient dialysis clinics within reasonable proximity to the proposed clinic.

We are able to increase our capacity by extending hours at our existing centers, expanding our existing centers, relocating our centers, developing new centers and by acquiring centers. The development of a typical de novo clinic by us generally requires approximately $1.5 million for leasehold improvements, equipment and first-year working capital. Based on our experience, a de novo clinic typically opens within a year after the property lease is signed and normally achieves operating profitability in the first 12 months after certification. Acquiring an existing clinic or group of clinics requires a substantially greater initial investment, but profitability and cash flow are generally initially more predictable.

Some of our dialysis centers are operating at or near capacity. However, we believe that we have adequate capacity within most of our existing dialysis centers to accommodate additional patient volume through increased hours and/or days of operation, or, if additional space is available within an existing facility, by adding dialysis stations.

88

All of our clinics lease their space on terms that we believe are customary in the industry. We can usually relocate existing centers to larger facilities or open new centers if existing centers reach capacity. With respect to relocating centers or building new centers, we believe that we can generally lease space at economically reasonable rates in the areas planned for each of these centers, although there can be no assurances in this regard. Expansion of existing centers or relocation of our dialysis centers is subject to review for compliance with conditions relating to participation in the Medicare ESRD program. In states that require a certificate of need or center license, additional approvals would generally be necessary for expansion or relocation.

Medical Directors And Other Nephrologists

In order for our clinics to be eligible to participate in the Medicare ESRD program, a qualified physician or group of physicians must act as medical director for each our clinics. We engage practicing, board-certified or board-eligible nephrologists to serve as medical directors. Medical directors also own a noncontrolling interest in the clinic as a result of our JV model. Medical directors are responsible for:

• supervising medical aspects of a clinic’s operations;

• administering and monitoring patient care policies;

• administration of dialysis treatments;

• administration of staff development and training programs; and

• assessment of all patients.

Our medical directors are given autonomy and play an important role in quality assurance activities at our clinics and in coordinating the delivery of care. In addition, at some clinics one or more other nephrologists serve as assistant or associate medical directors or direct specific programs, such as home dialysis training programs. Our medical directors, as well as assistant or associate medical directors, receive fair market value compensation for their services. We base this compensation on independent third-party valuations. Our medical director arrangements are typically for a ten-year term with provision for optional renewals at the end of the term. Our medical director arrangements also include restrictions similar to those of other dialysis service providers that restrict our medical directors from competing with us. These agreements not to compete restrict the physicians from owning or providing medical director services to other dialysis clinics, but do not prohibit our medical directors from providing direct patient care services at other locations. Consistent with federal and state law, such agreements do not require our medical directors to recommend our dialysis clinics to their patients.

Local nephrologists are a key factor in the success of our clinics. Caring for ESRD patients is typically the primary clinical activity of a nephrologist, although a nephrologist may have other clinical activities including the post-surgical care of kidney transplant patients and the diagnosis, treatment and management of kidney disorders other than ESRD. Most nephrologists practice in small single-specialty groups covering a relatively large geographic service area. Most nephrologists also have a significant office practice, consult on numerous hospitalized patients who are not on dialysis and follow the progress of kidney transplant patients. An ESRD patient generally seeks treatment at a clinic where his or her nephrologist has privileges to admit patients. Nephrologists at our clinics typically include our nephrologist partners, as well as other nephrologists that apply for and receive practice privileges to treat their patients at our clinics. As of December 31, 2009, there were 218 nephrologists with privileges to practice at one or more of our clinics.

JV Operating Agreements

Many of the features of our JVs are set forth in agreements we enter with our clinics and our local nephrologist partners. Agreements that we typically enter into in connection with our clinics include a joint venture operating agreement and a management services agreement pursuant to which we provide various support services to our clinics. See “—Management Services” below. These agreements allocate ownership, rights and responsibilities in our clinics. These agreements also provide, among other things, for distributions on

89

the ownership interests in our JVs. Under these JV agreements, the JV’s net profits, if any, or net losses, if any, are typically distributed no less often than annually in proportion to holdings of membership interests. These distributions are made out of the JV’s net cash flows in an amount determined by a majority in interest of the JV members (the Company, as majority member in the JV clinics, can therefore typically determine the distribution amount). Because distributions are limited to net cash flow available, the JV clinics are generally unable to distribute amounts that would result in the JV having insufficient capital to pay debt, interest obligations or general operating expenses or have insufficient working capital reserves. In addition, statutory restrictions including state laws, may prevent the JV clinics from distributing amounts that would result in the JV becoming insolvent. Our JV arrangements do not require the consent of our nephrologist partners prior to the making of any distributions from our JVs, so long as a pro rata distribution is made to our partners with one exception that we do not believe is material.

The operating agreements for some clinics give the nephrologist partners put rights that, when exercised, require us to purchase some or all of that nephrologist partner’s interest in that clinic. Some of these put rights are exercisable upon certain dates, and some are exercisable or accelerable upon the occurrence of certain events, including the transfer of a majority of ARA’s equity interest to a third-party. Nephrologist partners in certain of our clinics have the right to accelerate the exercise date of certain time-based puts. The Transactions triggered the acceleration of the exercise date of the put rights of certain of our nephrologist partners, but these put rights were waived by our partners having such rights.

From time to time our operating agreement may provide that we cannot take certain specified actions affecting a clinic without the consent of the nephrologist partner(s) for that clinic. Such actions may include (i) a sale, transfer, liquidation or reorganization of all or substantially of the clinic, a merger or dissolution of the clinic, (ii) a lease of all or substantially all of the clinic, (iii) the admission of a new or substituted member, (iv) an amendment or modification of the applicable operating agreement or the constituent documents for the clinic, (vi) certain transactions with affiliates, (vii) any capital calls except to the extent specifically provided, (viii) any hiring or firing of employees of the clinic, (ix) entering into borrowing on behalf of the clinic for a principal amount exceeding a specified principal amount, and (x) entering into any lease agreements on behalf of the clinic where annual payments exceed a specified amount.

Management Services

Our executive and senior management team operates out of our Beverly, Massachusetts headquarters. Executive management located at our corporate headquarters includes our Chairman, Chief Executive Officer, President, Chief Financial Officer and General Counsel. Other corporate staff includes personnel responsible for the management of operations, clinical and regulatory services, corporate compliance, technical services, project management and business development. Our national medical director and five regional directors are dispersed geographically throughout the United States.

Our corporate management is focused on supporting the operation of our dialysis clinics and the practices of our nephrologists. Through ARA, we enter agreements to provide management services to our clinics. For these services, we are typically entitled to the greater of $50,000 or 4-7% of the clinic’s net revenues. In addition, depending on state law, these agreements typically provide for us to employ clinical staff and provide them to the clinic. Our management agreements are typically for a ten-year term with provision for optional renewals at the end of the term. Pursuant to these agreements we provide our nephrologist partners with all of the managerial, accounting, financial, technological and administrative support necessary to operate our clinics, which enables our nephrologist partners to focus on delivering high quality healthcare. We strive to improve the clinical outcomes and operating and financial performance of our dialysis clinics, ensure compliance with applicable laws and regulations, and identify opportunities that are consistent with our growth strategy. The management services we provide to our clinics generally include:

• supervising site searches and negotiating leases;

90

• obtaining and maintaining licenses, permits and certifications;

• providing manuals, policies and procedures;

• performing payroll processing, personnel and benefit administration, billing and collection and payment of accounts receivable;

• providing staff training programs;

• recommending and purchasing or leasing equipment;

• preparing and filing cost reports;

• preparing annual operating budgets;

• administering financial and clinical information systems;

• procuring and maintaining insurance policies;

• performing legal and compliance services;

• providing strategic marketing; and

• employing clinical staff.

Quality Care

Our corporate management team promotes a patient and physician-focused corporate culture and other founding philosophies. We believe our culture and founding principles improve the clinical outcomes and operating performance of our dialysis clinics, and ensure our clinics’ compliance with applicable laws and regulations. For example, we believe that our culture of compliance, implemented by facilitating internal compliance audits, compliance hotlines, HIPAA compliance safeguards, as well as through management services such as manuals, policies and procedures and training, has contributed to our clinics’ strong track record in regulatory matters.

We maintain a monthly schedule with senior management and our national medical director to review clinical outcomes on a clinic by clinic basis and individual planning for continuous improvement. Our clinical team works routinely with individual physicians, clinic managers, and dieticians in an effort to optimize clinical outcomes such as anemia management, adequacy of the dialysis treatment (KT/V), nutrition (albumin levels), arterial venous fistula (AV fistula), and other important indicators. Based on the review of outcomes data, action plans, including clinical programs and educational offerings, are developed and implemented. The company has created a clinical ladder system that is used to track key performance data and effect improvement. We believe this system encourages clinic managers to strive for excellence, thereby enhancing quality of care and improving patient outcomes.

EPO and Other Pharmaceuticals

Patients receiving dialysis are also typically administered one or more pharmaceuticals and supplements. Patients are commonly treated with EPO. EPO is a genetically engineered form of a naturally occurring protein that stimulates the production of red blood cells. EPO is used in connection with all forms of dialysis to treat anemia, a medical complication most ESRD patients experience. Anemia involves a shortage of oxygen-carrying red blood cells. Because red blood cells bring oxygen to all the cells in the body, untreated anemia can cause severe fatigue, heart disorders, difficulty concentrating, reduced immune function, and other problems. Anemia is common among renal patients, caused by insufficient erythropoietin, iron deficiency, repeated blood losses, and other factors. Patients are also commonly treated with vitamin D analogs and iron supplements.

EPO is produced by a single manufacturer, Amgen, and any interruption of supply or product cost increases could adversely affect our operations. We purchase EPO from Amgen through a group purchasing organization that negotiates the terms on which we purchase EPO. We have entered into agreements with our group purchasing organization and Amgen that provide for specific rebates based on a combination of factors, including process improvement and data submission.

91

Amgen has also developed and obtained U.S. Food and Drug Administration, or FDA, approval for Aranesp^®, a pharmaceutical used to treat anemia that may replace EPO or reduce its use with dialysis patients. Roche has also developed a drug, Mircera^®, used to treat anemia, although it is currently unavailable to patients in the United States due to Amgen’s patent on EPO.

Unlike EPO, which is generally administered in conjunction with each dialysis treatment, Aranesp^® can be administered less frequently. In the event that alternatives to EPO are marketed for treatment of dialysis patients, we may realize lower margins on the administration of these pharmaceuticals than are currently realized on EPO. A significant increase in the development and use of other or similar alternatives to EPO, or a change in administration practices, could have a material impact on our operating results.

Over the past few years there has been significant media discussion and government scrutiny regarding anemia management practices for ESRD patients in the United States, mainly as a result of clinical studies that identified risks in patient populations related to the utilization of EPO and similar pharmaceuticals. As a result, the FDA required warning labels for EPO and Aranesp^® and changes were made to EPO reimbursement and payment coverage policies. As new information is obtained from research and clinical trials, practice guidelines may change over the next several years. Even though we believe that our anemia management practices have been compliant with existing laws and regulations, we may be subject to further inquiries from a variety of government bodies as these payment policies and practicing guidelines evolve. In addition, reimbursement rates for the administration of EPO and other pharmaceuticals may change in connection with the implementation of bundled reimbursement rates for dialysis services beginning in 2011.

Competition

The dialysis industry is highly competitive. Because of the ease of entry into the dialysis business and the ability of physicians to be medical directors for their own clinics, competition for growth in existing and expanding markets is not limited to large competitors with substantial financial resources. According to the USRDS, there were in excess of 5,200 dialysis clinics in the United States at the end of 2009. We face competition from large and medium-sized providers for the identification and retention of patients and for the acquisition of existing dialysis clinics. We face particularly intense competition for the identification and retention of nephrologists, whether as physicians, medical directors or physician partners. In many instances, our competitors have taken steps to include comprehensive non-competition provisions within their medical director agreements, thereby limiting the ability of physicians to serve as medical directors or potential joint venture partners for competing dialysis clinics. These non-competition provisions often contain both time and geographic limitations during the term of the agreement and for a period of years thereafter. Our competitors have threatened and filed litigation seeking to intervene in our relationships with nephrologists based on alleged violations of these non-competition provisions. The ability to successfully attract and retain nephrologist partners and referring physicians is critical to increasing the number of treatments we perform at our clinics which, in turn, is key to driving revenue growth.

The dialysis services industry has undergone rapid consolidation. As of 2007, Fresenius Medical Care, or Fresenius, and DaVita Inc., or DaVita, accounted for approximately 63% of outpatient dialysis patients in the United States. The largest not-for-profit provider of dialysis services, Dialysis Clinic, Inc., accounted for approximately 0.5% of outpatient dialysis patients in the United States. A number of small and medium sized dialysis companies, including our company, collectively account for the remaining outpatient dialysis patients in the United States, with no company accounting for more than 5% of these outpatient dialysis patients.

Because services to the majority of patients in the United States are primarily reimbursed under government programs, competition for patients is based primarily on quality and accessibility of service and the ability to obtain referrals from physicians and hospitals. However, extension of periods during which commercial insurers are primarily responsible for reimbursement and the growth of managed care has placed greater emphasis on service costs for patients with private insurance coverage.

92

Reimbursement

We derive our revenues from providing both outpatient and inpatient dialysis treatments as well as from ancillary services such as administering dialysis-related pharmaceuticals. The sources of these revenues are principally government-based programs, including Medicare, Medicaid and Medicare-certified HMO plans and commercial insurance plans.

Medicare Reimbursement

Under the Medicare ESRD program, the payment methodology for dialysis services is established by Congress. The Medicare composite rate, currently set by CMS, pays freestanding dialysis clinics for services provided to Medicare beneficiaries under two methods:

• the composite payment which includes a base payment, adjusted for case-mix that links payments more closely with illness severity and regional geography differences, and a drug add-on payment, which is updated annually to account for changes in drug prices and utilization; and

• separately billable ancillary services such as certain physician-ordered tests and pharmaceuticals.

Accordingly, clinics receive a composite payment rate per treatment to cover routine dialysis services, certain pharmaceuticals, routine lab work, and other supplies, as well as a separate payment for some pharmaceuticals, which include EPO, vitamin D analogs and iron supplements that are not included in the composite payment rate. Included in the composite rate payment is a drug add-on adjustment for certain pharmaceuticals, which is based upon average acquisition costs for certain pharmaceuticals used to treat patients with ESRD. Other pharmaceuticals are reimbursed at their average sale price, or ASP, plus 6% based upon prices set by Medicare.

A majority of dialysis patients are covered under Medicare. Dialysis patients become eligible for primary Medicare coverage at various times, depending on their age or disability status, as well as whether they are covered by an employer group health plan. Generally, for a patient not covered by an employer group health plan, Medicare becomes the primary payor either immediately or after a three-month waiting period. For a patient covered by an employer group health plan, Medicare generally becomes the primary payor after 33 months, which includes the coordination of benefits period, or earlier if the patient’s employer group health plan coverage terminates. When Medicare becomes a patient’s primary payor, the payment rate for that patient shifts from the employer group health plan rate to the Medicare payment rate.

For each covered treatment, Medicare pays 80% of the amount set by the Medicare system. The patient is responsible for the remaining 20%. In most cases, a secondary payor, such as Medicare supplemental insurance, a state Medicaid program or a commercial health plan, covers all or part of these balances. Some patients, who do not qualify for Medicaid but otherwise cannot afford secondary insurance, can apply for premium payment assistance from charitable organizations through a program offered by the American Kidney Fund. If a patient does not have secondary insurance coverage, we endeavor to collect payment from the patient using reasonable collection efforts consistent with federal and state law. However, in these cases we are generally unsuccessful in collecting from the patient the 20% portion of the composite rate that Medicare does not pay.

During the year ended December 31, 2009, the Medicare ESRD dialysis reimbursement rates for patients at our clinics were between $126 and $154 per treatment, excluding the administration of separately-billable pharmaceuticals, such as EPO. However, Congress and CMS have addressed the impact of inflation more consistently since 2000, with several increases in the composite rate having occurred through April 2007. In July 2008, the Medicare Improvements for Patients and Providers Act of 2008, or MIPPA, was passed by Congress. This legislation introduced a new payment system for dialysis services beginning in January 2011 whereby ESRD payments will be made under a bundled payment rate which will provide for a fixed rate for all goods and services provided during the dialysis treatment, including laboratory services, the administration of pharmaceuticals and payments for pharmaceuticals such as EPO that are separately billed under the current methodology. On July 23, 2010, CMS released the final rule regarding the new bundled payment rate system. We

93

are still evaluating the various components of the new bundled payment rate system, however, we noted that the initial 2011 bundled rate includes reductions of 2% and 3.1%, respectively, to conform to the provisions of MIPPA and to establish budget neutrality. Further there is a 5.94% reduction tied to an expanded list of case mix adjustors which can be earned back based upon the presence of these co–morbidities at the time of treatment. There are other provisions which may impact payment including an outlier pool and a low volume facility adjustment. Further the new rule requires dialysis facilities to provide new services within the payment bundle such as oral vitamin D medications and an expanded list of laboratory tests. Historically these services were separately billable; now the dialysis facility will be at risk for utilization with reimbursement set at a fixed rate. With regard to the expanded list of case–mix adjustors, these may be difficult or impossible for our dialysis clinics or billing and other systems to document and track resulting in a reduction in the amounts of the payments that we would otherwise be entitled to receive. The rule also requires the new single bundled payment base rate to be adjusted annually for inflation based upon a market basket index, less a productivity adjustment, beginning in 2012. Also, beginning in 2012, the rule provides for up to a 2% withhold that can be earned back by facilities that meet certain defined clinical performance standards.

Medicaid Reimbursement

Medicaid programs are state-administered programs partially funded by the federal government. These programs are intended to provide health coverage for patients whose income and assets fall below state-defined levels and who are otherwise uninsured. These programs also serve as supplemental reimbursement sources for the co-insurance payments due from Medicaid-eligible patients with primary coverage under Medicare. Some Medicaid programs also pay for additional services, including some oral medications that are not covered by Medicare. We are an authorized Medicaid provider in all of the states in which our clinics are located.

Commercial Insurance

Before Medicare becomes the primary payor, a patient’s employer group health plan or private insurance plan, if any, is responsible for payment. Although commercial payment rates vary, average commercial payment rates are generally higher than Medicare reimbursement rates. Commercial payment rates are the result of negotiations between us and insurers or third-party administrators. We are continuously in the process of negotiating agreements with our commercial payors and if our negotiations result in overall commercial rate reductions in excess of our commercial rate increases, our revenues and operating results could be negatively impacted. Payment methods include a single lump-sum per treatment, referred to as bundled rates, and separate payments for treatments and pharmaceuticals, if used as part of the treatment, referred to as fee for service rates. In certain circumstances, we may bill commercial payors as out-of-network providers.

Reimbursement for EPO and Other Pharmaceuticals

Over the past several years, CMS has changed its reimbursement and payment coverage policies for EPO. Effective April 2006, CMS implemented a policy for monitoring the dosage of EPO based on the patient’s hematocrit level and for limiting the quantity of EPO that can be administered in any one month. This policy restricts payments based on EPO doses and hemoglobin levels for certain patients and has resulted in overall decreases in the amount of reimbursement payments that we have received from CMS. In addition, effective January 1, 2008, CMS implemented changes to the existing EPO monitoring policy that further limited reimbursement payments.

Congress passed the Medicare Improvements for Patients and Providers Act of 2008 in July 2008. This statute provides for marginal increases in the dialysis composite rate for 2009 and 2010, but also establishes “bundled” payments for goods and services provided during a dialysis treatment beginning in 2011. By statute, the calculation of the new dialysis bundled rate will include, among other items and services, EPO and other erythropoiesis stimulating agents.

94

Government Regulation

Our operations are subject to extensive federal, state and local governmental regulations. These regulations require us to meet various standards relating to, among other things, government payment programs, dialysis clinics and equipment, management of clinics, personnel qualifications, maintenance of proper records and quality assurance programs and patient care.

Because we are subject to a number of governmental regulations, our business could be adversely impacted by:

• loss or suspension of federal certifications;

• loss or suspension of licenses under the laws of any state or governmental authority from which we generate substantial revenues;

• exclusion from government healthcare programs including Medicare and Medicaid;

• significant reductions or lack of inflation-adjusted increases in payment rates by government programs or reduction of coverage for dialysis and ancillary services and related pharmaceuticals;

• fines, damages and monetary penalties for federal anti-kickback law violations, Stark Law violations, submission of false claims, civil or criminal liability based on violations of law or other failures to meet regulatory requirements, and similar sanctions under applicable state laws;

• claims by or on behalf of patients who believe their protected health information has been used or disclosed in violation of federal and state patient privacy laws, or enforcement fines or penalties for violations of these laws;

• government mandated practice changes that significantly increase our operating expenses or materially alter relationships with our medical directors or nephrologist partners in our dialysis clinics; or

• refunds of payments received from government payors and government healthcare program beneficiaries because of overpayments or any failures to meet applicable requirements.

We expect that our industry will continue to be subject to substantial regulation, the scope and effect of which are difficult to predict. Our activities could be reviewed or challenged by regulatory authorities at any time in the future. This regulation and scrutiny could materially adversely impact us.

Licensure and Certification

Our clinics are certified by CMS, as is required for the receipt of Medicare payments. In some states, we are also required to secure additional state licenses and permits for our clinics. Governmental authorities, primarily state departments of health, periodically inspect our clinics to determine if we satisfy applicable federal and state standards and requirements, including the conditions of participation in the Medicare ESRD program.

To date, we have not experienced significant difficulty in obtaining certifications from CMS or in maintaining our licenses or our Medicare and Medicaid authorizations.

CMS continues to study the regulations applicable to Medicare certification to provide dialysis services. In April 2008, CMS issued new regulations, referred to as Conditions for Coverage, for Medicare-certified ESRD clinics to provide dialysis services. The Conditions for Coverage were effective October 14, 2008, with some provisions having a phased-in implementation date of February 1, 2009 or later. The new regulations are patient, quality and outcomes focused. Among other things, the Conditions for Coverage establish performance expectations for clinics and staff, eliminate procedural requirements and promote continuous quality improvement and patient safety measures. We have established an interdisciplinary work group to facilitate implementation of the Conditions of Coverage and have developed comprehensive auditing processes, policies and procedures to monitor ongoing compliance. We continue to assess the impact these changes will have on our revenues, earnings and cash flows.

95

Federal Anti-kickback Statute

The federal anti-kickback statute contained in the Social Security Act imposes criminal and civil sanctions on persons who receive, make, offer or solicit payments in return for any of the following with respect to items or services that are paid for in whole or in part by Medicare, Medicaid or similar federal and state programs:

• the referral of a Medicare or Medicaid patient for treatment;

• the ordering or purchasing of items or services; or

• arranging for or recommending the ordering or purchasing of these items.

Federal criminal penalties for the violation of these laws include imprisonment, fines and exclusion of the provider from future participation in the Medicare and Medicaid programs. Violations of the anti-kickback statute are punishable by imprisonment for up to five years, fines of up to $250,000 or both. Larger fines can be imposed upon corporations under the provisions of the U.S. Sentencing Guidelines and the Alternate Fines Statute. Individuals and entities convicted of violating the anti-kickback statute are subject to mandatory exclusion from participation in Medicare, Medicaid and other federal healthcare programs for a minimum of five years. Civil penalties for violations of these laws include up to $50,000 in monetary penalties per violation, repayments of up to three times the total payments between the parties and suspension from future participation in Medicare and Medicaid. Some state anti-kickback statutes also include criminal penalties. The federal statute expressly prohibits traditionally criminal transactions, such as kickbacks, rebates or bribes for patient referrals. Court decisions have also held that the statute is violated whenever one of the purposes of remuneration is to induce referrals.

The Department of Health and Human Services regulations create exceptions, known as safe harbors, for some business transactions and arrangements. Transactions and arrangements that satisfy every element of a safe harbor are deemed not to violate the anti-kickback statute. Transactions and arrangements that do not satisfy all elements of a relevant safe harbor do not necessarily violate the statute, but can be subject to greater scrutiny by enforcement agencies.

The medical directors for our clinics refer patients to our clinics. Accordingly, the agreements under which we engage our medical directors must be in compliance with the federal anti-kickback statute. Among the available safe harbors is one for personal services furnished for fair market value. However, most of our agreements with our medical directors do not satisfy all seven of the requirements of the personal services safe harbor. In particular, because of the nature of our medical directors’ duties, we believe it is impossible to satisfy the safe-harbor requirement that if the services are provided on a part-time basis, as they are with our medical directors, the agreement must specify the schedule of intervals of service, their precise length and the exact charge for these intervals. Accordingly, while we believe that our agreements with our medical directors satisfy as many of the elements of the personal services safe harbor as we believe is reasonably possible, our arrangements do not qualify for safe harbor protection. We also note that there is little guidance available as to what constitutes fair market value for medical director services. We believe that our medical director agreements do not violate the federal anti-kickback statute. However, since the arrangements do not satisfy all of the requirements for safe harbor protection, these arrangements could be challenged.

We operate all our clinics in accordance with our JV model, in which we own a controlling interest in our clinics. Our relationships with our nephrologist partners and other referral sources relating to these JVs are required to comply with the anti-kickback statute. Although there is a safe harbor for investment interests in small entities, our JVs do not satisfy every element of this safe harbor. Under current law, physician JVs are not prohibited but instead require a case by case evaluation under the anti-kickback statute. We have structured our JVs to satisfy as many safe harbor requirements as we believe are reasonably possible and we believe that these investments are offered on a fair market value basis. Our JVs provide returns to our nephrologist partners only in proportion to their actual investment in the venture. We believe that our JVs do not violate the federal anti-kickback statute. However, since the arrangements do not satisfy every element of the applicable safe harbors, these arrangements could be challenged.

96

We finance the balance of the capital required to construct and operate the clinics through intercompany loans. Even though there is not a safe harbor for these loans, the intercompany loans do not necessarily violate the anti-kickback statute. They can, however, be subject to greater scrutiny by enforcement agencies. See “Risk Factor—Our arrangements with our nephrologist partners and medical directors do not satisfy all the elements of a safe harbor to the federal anti-kickback statute and certain state anti-kickback laws and as a result may subject us to government scrutiny.”

We lease space for approximately 16 of our clinics from entities in which physicians hold ownership interests and we sublease space to referring physicians at approximately 28 of our dialysis clinics. These arrangements must be in compliance with the anti-kickback statute. We believe that we meet the elements of the safe harbor for space rentals.

Because we purchase and sell items and services in the operation of our clinics that may be paid for, in whole or in part, by Medicare or a state healthcare program and because we acquire items and services at a discount, we must structure these arrangements in compliance with the federal anti-kickback statute. Subject to requirements and limitations, discounts representing reductions in the amounts we are charged or that we charge for items or services based on arm’s-length transactions can qualify for safe harbor protection if we fully and accurately report the discounts in the applicable invoices or Medicare cost reports. While some of the safe harbor elements are subject to interpretation, we believe that our vendor contracts that contain discount provisions are in compliance with the anti-kickback statute and the discount safe harbor.

Stark Law

Another federal law, known as the Stark Law, prohibits a physician who has a financial relationship, or who has an immediate family member who has a financial relationship, with entities, including ESRD providers, providing “designated health services,” from referring Medicare patients to these entities for the furnishing of these services, with limited exceptions. Designated health services under the Stark Law include durable medical equipment and supplies, home health services, outpatient prescription drugs, inpatient and outpatient hospital services and clinical laboratory services.

Dialysis services are not included within the definition of designated health services. However, clinical laboratory services, outpatient prescription drugs and inpatient hospital services sometimes are rendered in connection with dialysis. Accordingly, depending on the relationships between physicians and the providers of these designated health services associated with dialysis, the Stark Law could apply. There are several Stark Law exceptions that apply to these associated services. First, the Stark Law includes an exception for all services that are covered as part of a composite rate payment. Because reimbursement for dialysis services is primarily paid under a composite rate, all services included in those composite payments are excepted from the Stark Law prohibitions. The “bundled” Medicare rate for dialysis reimbursement, described under MIPPA, and which will be implemented in 2011, is a composite rate payment. Second, the Stark Law includes a specific exception for EPO and other dialysis-related drugs, which are identified on a list of Current Procedural Terminology, which is published by CMS and revised on an annual basis.

The Stark Law also prohibits the entity receiving a prohibited referral from filing a claim or billing for the services arising out of the prohibited referral. The prohibition applies regardless of the reasons for the financial relationship and the referral. Therefore, unlike the federal anti-kickback statute, an intention to induce referrals is not required. Sanctions for violations of the Stark Law include denial of payment for the services provided in violation of the law, refunds of amounts collected in violation of the law, a civil penalty of up to $15,000 for each service arising out of the prohibited referral, exclusion from the federal healthcare programs, including Medicare and Medicaid, and a civil penalty of up to $100,000 against parties that enter into a scheme to circumvent the Stark Law. Violations of the Stark law also can form the basis for False Claims Act liability if a person acts with the requisite intent under the False Claims Act. The types of financial arrangements between a physician and an entity that trigger the self-referral prohibitions of the Stark Law are broad and include direct and indirect ownership and investment interests and compensation arrangements.

97

CMS has adopted regulations under the Stark Law implementing the Stark Law’s application to all designated health services. These are commonly referred to as the Stark II regulations.

In August 2008, CMS issued final changes to its Hospital Inpatient Prospective Payment Systems and Fiscal Year 2009 Rates final rules, or IPPS Rules. The IPPS rules contained significant changes to the Stark II regulations. One of these changes will prohibit compensation payable under space or equipment leases based on either:

• a percentage of revenues attributable to services performed in connection with the lease; or

• a per unit of services charge to the extent that charge reflects services provided to patients referred by the lessor to the lessee.

These changes became effective on October 1, 2009. While the final rule only affects equipment and space leases, CMS has indicated that they are concerned about other percentage based compensation arrangements, but at this point they have not proposed regulations to prohibit such arrangements.

In addition, the IPPS rules restrict the provision of certain services furnished “under arrangement” by a provider pursuant to an agreement with a hospital, effective October 1, 2009. Several of our JVs have agreements with acute care hospitals to provide dialysis services to the hospitals’ inpatients. As of October 1, 2009, if covered by the Stark Law, these arrangements likely would have had to be unwound pursuant to the IPPS rules. However, the IPPS rules and prior Stark II regulations contain an exception which allows the JVs to continue providing such services under the agreements with the hospitals. Specifically, dialysis services furnished by a hospital that is not certified to provide ESRD services under applicable law, are not considered designated health services for purposes of the Stark Law. Accordingly, the Stark Law prohibitions do not apply to these services. Thus, the physicians affiliated with the applicable JVs may continue to provide these services to hospital inpatients unless and until the Stark II regulations are modified to prohibit the provision of these services.

We believe that various exceptions under the Stark II regulations apply to our provision of dialysis services in our clinics. However, it is possible that CMS could interpret such exceptions not to apply to aspects of our operations. If that were the case, CMS could determine that the Stark II regulations require us to restructure existing compensation agreements with our medical directors and to repurchase or to request the sale of ownership interests in our JVs held by referring physicians or, alternatively, to refuse to accept referrals for designated health services from these physicians. If CMS were to interpret the Stark II regulations to apply to aspects of our operations and we were not able to achieve compliance with the Stark II regulations, it would have a material adverse effect on our operations.

If any of our business transactions or arrangements including those described above were found to violate the federal anti-kickback statute or the Stark Law, we could face criminal, civil and administrative sanctions, including possible exclusion from participation in Medicare, Medicaid and other state and federal healthcare programs. Any findings that we have violated these laws could have a material adverse impact on our earnings.

Fraud and Abuse Under State Law

Many states in which we operate dialysis clinics have statutes prohibiting physicians from holding financial interests in various types of medical clinics to which they refer patients. Some states also have laws similar to the federal anti-kickback statute that may affect our ability to receive referrals from physicians with whom we have financial relationships, such as our medical directors or nephrologist partners. Some of these statutes include exemptions applicable to our medical directors and other physician relationships or for financial interests in our common stock or interests in our JVs. Some, however, include no explicit exemption for medical director services or other services for which we contract with and compensate referring physicians or for joint ownership interests of the type held by some of our referring physicians or for financial interests in our common stock. If these statutes change or are interpreted to apply to referring physicians with whom we contract for medical

98

director and similar services, to our nephrologist partners or to physicians who hold interests in our common stock, we may be required to terminate or restructure some or all of our relationships with, purchase some or all of the ownership interests of, or refuse referrals from these referring physicians and could be subject to civil and administrative sanctions, refund requirements and exclusions from government healthcare programs, including Medicare and Medicaid. Such events could have a material adverse impact on our business.

Federal Laws Related to Fraud and False Statements Relating to Healthcare.

Federal laws, including HIPAA and the False Claims Act, make it unlawful to make false statements or commit fraud in connection with a health benefit program, including Medicare and Medicaid. These federal laws include a prohibition on false statements in connection with compliance with Medicare conditions for coverage, a prohibition on making false statements or submitting false documents in connection with a healthcare benefit program, and a prohibition on making or attempting to make a scheme or artifice to defraud any healthcare benefit program. Any violation of these laws may lead to significant penalties and may have a material adverse effect upon our business.

The False Claims Act

The federal False Claims Act is a means of policing false bills or false requests for payment in the healthcare delivery system. In part, the False Claims Act authorizes the imposition of civil penalties on any person who:

• knowingly presents or causes to be presented to the federal government, a false or fraudulent claim for payment or approval;

• knowingly makes, uses or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the federal government;

• conspires to defraud the federal government by getting a false or fraudulent claim allowed or paid; or

• knowingly makes, uses or causes to be made or used, a false record or statement to conceal, avoid or decrease an obligation to pay or transmit money or property to the federal government.

Congress revised the False Claims Act in 2009 to make it unlawful knowingly to file a false claim with the federal government or with a government contractor that is spending money on the government’s behalf or to advance a government interest. In addition, Congress revised the False Claims Act to impose a duty on providers to repay to the federal government any overpayments that it receives from the federal government. A provider may incur substantial penalties for knowingly failing to repay an overpayment to the federal government. As amended, the False Claims Act requires that providers allocate resources to identify overpayments and to train employees on the potential repercussions of filing false claims to the federal government or government contractors and monitor employee actions to detect potential false claims.

The penalties for a violation of the False Claims Act range from $5,500 to $11,000 for each false claim plus three times the amount of damages caused by each false claim. The federal government has used the False Claims Act to prosecute a wide variety of alleged false claims and fraud allegedly perpetrated against Medicare and state healthcare programs, including coding errors, billing for services not rendered, the submission of false cost reports, billing for services at a higher payment rate than appropriate, billing under a comprehensive code as well as under one or more component codes included in the comprehensive code and billing for care that is not considered medically necessary. Although still subject to dispute, several courts have also determined that a violation of the federal anti-kickback statute or the Stark Law can form the basis for liability under the False Claims Act. In addition to the provisions of the False Claims Act, which provide for civil enforcement, the federal government can use several criminal statutes to prosecute persons who are alleged to have submitted false or fraudulent claims for payment to the federal government.

99

The Health Insurance Portability and Accountability Act of 1996

The Department of Health and Human Services, or HHS, has enacted extensive regulations under the Health Insurance Portability and Accountability Act of 1996, or HIPAA, relating to the privacy and security of medical information. These regulations require us to maintain extensive policies and procedures and to implement administrative, physical and technical safeguards with respect to protected health information, referred to as PHI, for which we are responsible. HIPAA regulations also include provisions relating to standards for the security of the storage and transmission of electronic-PHI. The regulations were strengthened significantly under the Health Information Technology for Economic and Clinical Health Act, known as the HITECH Act, enacted as part of the American Recovery and Reinvestment Act of 2009. Included in the HITECH Act are significant new requirements for the notification of patients, and other compliance actions, in the event of a breach with respect to unsecured PHI. HHS issued a new breach notification regulation on August 24, 2009, effective on September 23, 2009, that imposes significant notification requirements on covered entity healthcare providers, such as us, that experience breaches of unsecured PHI. On April 27, 2009, HHS provided guidance that set forth elective standards that provide for a “safe harbor” for rendering PHI secure such that an inappropriate use or disclosure involving such PHI would not be subject to the breach notification requirements. We have not yet taken action to meet the safe harbor described under this recently issued guidance. Thus, a breach involving unsecured PHI for which we are responsible, might be subject to the breach notification requirements, which would be expensive. Many of the other requirements set forth in the HITECH Act have not yet been implemented by regulations. If additional implementing regulations under the HITECH Act are especially burdensome, they could have a materially adverse impact on our operations.

State False Claims Laws

Many states have passed their own false claims laws, which generally mirror the False Claims Act and are designed to prevent false claims from being submitted to state healthcare programs and commercial insurers. Violations of these laws may result in monetary penalties or other sanctions to the violator. We believe that we are in material compliance with these laws and regulations. However, violation of these laws and the imposition of related consequences could have a materially adverse impact on our operations.

State Privacy and Medical Record Retention Laws

State patient privacy and confidentiality laws generally require providers to keep confidential certain patient information, including information contained in medical records. Violations of these laws could lead to monetary penalties against providers and sanctions against licensed individuals.

Similarly, medical record retention laws place a duty on providers to retain medical records for certain periods of time and dispose of records in a certain manner. Violations of these duties may result in sanctions from state agencies or from the Medicare program.

We believe that we are in material compliance with these laws and regulations. However, violation of these laws and the imposition of related consequences could have a materially adverse impact on our operations.

Other Regulations

Our operations are subject to various state hazardous waste and non-hazardous medical waste disposal laws and regulations. These laws and regulations do not classify as hazardous most of the waste produced from dialysis services, although we can be subject to liability under both federal and state laws, as well as under contracts with those who haul our wastes, with respect to our waste disposal. Occupational Safety and Health Administration laws and regulations also apply to us, including, for example, those that require employers to provide workers who are occupationally subject to blood or other potentially infectious materials with prescribed protections. These requirements apply to all healthcare clinics, including dialysis clinics, and also require

100

employers to determine which employees may be exposed to blood or other potentially infectious materials and to have in effect a written exposure control plan. In addition, employers are required to provide or employ hepatitis B vaccinations, personal protective equipment and other safety devices, infection control training, post-exposure evaluation and follow-up, waste disposal techniques and procedures and work practice controls, as well as comply with various record-keeping requirements. We are not aware of material liabilities affecting us under any of these requirements.

A few states have certificate of need programs regulating the establishment or expansion of healthcare clinics, including dialysis clinics.

As discussed below, we lease many and own several properties, all in the United States. If contamination is discovered in our buildings or in the surface or subsurface or in the groundwater beneath any of our facilities, whether leased or owned, we may be liable for the investigation or cleanup of the contamination and for damages arising out it, pursuant to applicable state and/or federal law and/or under the terms of our leases. Such liability may arise even when we do not cause or contribute to the contamination (for example, where it is caused by a prior occupant or a neighbor). We believe we take reasonable precautions to avoid contamination in or affecting our facilities, and we are not aware of any such issues that have resulted in material liability to us. We cannot assure you, though, that such conditions will not affect us in the future.

Corporate Compliance Programs

We have adopted and maintain an active corporate compliance program, including a plan document, corporate compliance officer, compliance hotline, the policies and procedures designed to ensure compliance with applicable healthcare laws and proper billing of claims, and employee training regarding such policies and procedures.

In addition, we have adopted and maintained a HIPAA compliance plan document, privacy and security officers, policies and procedures designed to ensure compliance with HIPAA and the privacy and security rules and employee training regarding such policies and procedures.

Properties and Clinics

Our corporate headquarters are located at 66 Cherry Hill Drive, Beverly, MA 01915-1072 in a 30,649 square foot leased portion of an office building. The lease for our headquarters expires on December 31, 2012 and includes a five year renewal option.

As of September 30, 2010 we had 88 dialysis clinics located in California, Colorado, Florida, Georgia, Illinois, Louisiana, Maryland, Massachusetts, Michigan, Missouri, Ohio, Pennsylvania, Rhode Island, South Carolina, Texas, Virginia, Washington, D.C. and Wisconsin. Our dialysis clinics range in average size from approximately 6,500 to 7,000 square feet. We own the land and buildings for one of our dialysis clinics, and our JVs own the land and buildings for two of our dialysis clinics. Our remaining dialysis clinics are located on premises that we lease. The majority of our dialysis clinics are leased under non-cancelable operating leases expiring in various years through 2023. Most lease agreements cover periods from five to ten years, and contain renewal options of five to ten years at the fair rental value at the time of renewal.

Employees

As of September 30, 2010, we had 1,769 employees, consisting of 607 nurses, 771 patient care and equipment technicians and 391 other employees. Our 125 nephrologist partners are not our employees, nor are our medical directors, who are paid pursuant to their contractual arrangements. None of our employees are subject to collective bargaining agreements. We consider our relationships with our employees to be good.

101

Legal Proceedings

We are subject to a Decision and Order entered In the Matter of American Renal Associates Inc. and Fresenius Medical Care Holdings, Inc. by the Federal Trade Commission. The Decision and Order was entered in 2007 following a nonpublic, informal investigation by the Federal Trade Commission into proposed dialysis clinic acquisition activities in Rhode Island and the execution of an Agreement Containing Consent Order by the parties. The Decision and Order prohibits us for a period of ten years from September 7, 2007, without prior notice to the Federal Trade Commission from: (1) acquiring dialysis clinics located in ZIP codes in and around the cities of Cranston and Warwick, Rhode Island, and/or (2) entering into any contract to manage or operate dialysis clinics in ZIP codes in and around the cities of Cranston and Warwick. These prohibitions are subject to a number of exceptions that permit us to develop, own, manage or operate de novo dialysis clinics or dialysis clinics owned or operated as of the date the Decision and Order was entered, or to perform specified services, including offsite laboratory services, bookkeeping services, accounting services, billing services, supply services and purchasing and logistics services with the adherence to confidentiality requirements. We have complied and intend to continue to comply with the terms of the Decision and Order. We do not believe that compliance with the Decision and Order will have a material impact on our revenues, earnings or cash flows.

We are also subject to various claims and legal actions in the ordinary course of our business. Some of these matters include professional liability, employee-related matters and inquiries and investigations by governmental agencies regarding our employment practices. We are not aware of any pending or threatened litigation that we believe is reasonably likely to have a material adverse effect on us.

102

MANAGEMENT AND BOARD OF DIRECTORS

The following table sets forth the name, age and position of each of our executive officers and directors as of September 30, 2010.

Name	Age		Position(s)
Joseph A. Carlucci		57	Chief Executive Officer and Director
Christopher T. Ford		60	Chairman of the Board of Directors
Syed T. Kamal		58	President and Director
John J. McDonough		46	Executive Vice President and Chief Financial Officer
Michael R. Costa		40	Vice President and General Counsel
Steven M. Silver		42	Director
Jared S. Hendricks		30	Director
Michael E. Boxer		49	Director

Christopher T. Ford, 60, Chairman of the Board of Directors. Mr. Ford is a founder and has served as Chairman of our Board of Directors since our inception in 1999. Mr. Ford has more than 37 years of experience in the dialysis services industry. Prior to founding our company, from 1989 to 1997, Mr. Ford served as President of Fresenius Medical Care’s International Services Division. From 1986 to 1989, Mr. Ford served as Senior Vice President of Operations for the Dialysis Services Division of Fresenius Medical Care. Mr. Ford holds a B.S. degree in Business Administration from Northeastern University.

Joseph A. Carlucci, 57, Chief Executive Officer and Director. Mr. Carlucci is a founder and our Chief Executive Officer since 2006. Mr. Carlucci has more than 30 years of experience in the dialysis services industry. Prior to founding our company, Mr. Carlucci served as President and CEO of Optimal Renal Care, a JV in disease management between Fresenius Medical Care North America (FMCNA) and Kaiser Permanente of Southern California. Prior to that, Mr. Carlucci served as Vice President of Administration at Fresenius and was responsible nationally for managed care, medical director relations and facility development. He has operations experience from Facility Administrator to assumption of U.S. Operations at Fresenius. Mr. Carlucci holds a B.S. degree in Accounting from Bentley College.

Syed T. Kamal, 58, President and Director. Mr. Kamal is a founder and has served as our President and as a Director since our inception in 1999. Mr. Kamal has more than 30 years of experience in the dialysis services industry. Prior to founding our company, from 1997 to 1999, Mr. Kamal served as President of Fresenius Medical Care North America’s southern business unit. From 1995 to 1997, Mr. Kamal served as Vice President of Fresenius’ Operations, North America. From 1993 to 1995, Mr. Kamal served as Director and Vice President of Operations for Fresenius’ International division. From 1985 to 1993, Mr. Kamal served as Regional Manager of Fresenius’ Mid-Atlantic and Southeast regions (U.S.). From 1980 to 1985, Mr. Kamal served as Facility Administrator in Louisiana with Fresenius. Mr. Kamal holds B.A. and M.B.A. degrees from the University of Punjab in Pakistan.

John J. McDonough, 46, Executive Vice President and Chief Financial Officer. Mr. McDonough has served as our Executive Vice President and Chief Financial Officer since 2003. Mr. McDonough has more than 20 years of experience in accounting and finance. From 1998 to 2001, Mr. McDonough served as Vice President and Chief Accounting Officer at DaVita Inc. Prior to joining our company, from 1995 to 1997, Mr. McDonough served as Chief Financial Officer at Palatin Technologies, Inc. From 1990 to 1995, Mr. McDonough served as Chief Financial Officer at MedChem Products Inc. From 1986 to 1990, Mr. McDonough served as Audit Manager and held other positions at KPMG Peat Marwick. Mr. McDonough holds a B.S. degree in Accounting from Bentley College and a M.B.A. from the Harvard University Graduate School of Business Administration.

Michael R. Costa, Esq., M.P.H., 40, Vice President and General Counsel. Mr. Costa has served as our Vice President and General Counsel since 2007. Mr. Costa has more than 12 years’ experience as a corporate

103

healthcare attorney. Prior to joining our company, from 2001 to 2005, Mr. Costa served as an Associate and, from 2006 to 2007, as Senior Counsel in the Health Business Group of Greenberg Traurig LLP. From 1999 to 2001, Mr. Costa served as an Associate Healthcare Attorney at Behar & Kalman in Boston, Massachusetts. Mr. Costa holds a B.S. degree in Legal Studies and Business Management from Roger Williams University, an M.P.H. from Boston University School of Public Health and a J.D. from Suffolk University Law School.

Steven M. Silver, 42, Director. Mr. Silver has been a Senior Managing Director at Centerbridge Partners, L.P. since 2006 where he focuses on originating and managing private equity and credit investments in the healthcare and industrial sectors. Prior to joining Centerbridge Partners L.P., Mr. Silver was a Managing Director and Partner of Vestar Capital Partners, a private equity investment firm. At Vestar, Mr. Silver was responsible for originating, negotiating and financing private equity investments in multiple industries including healthcare services and industrial and manufacturing as well as providing ongoing strategic direction to various portfolio companies. Mr. Silver began his career as a member of the Mergers and Acquisitions department of Wasserstein Perella & Co. in New York and London. While at Wasserstein Perella, Mr. Silver focused on managing the firm’s merchant banking portfolio as well as advising corporate clients on all aspects of mergers and acquisitions and corporate finance. Mr. Silver received a B.A. from Yale College and an M.B.A. with high distinction from Harvard Business School in 1995, where he was a George F. Baker Scholar. He currently serves on the Board of Directors of GSI Holdings Corp.

Jared S. Hendricks, 30, Director. Mr. Hendricks joined Centerbridge Partners, L.P. in 2006 and is a Managing Director responsible for originating, negotiating and financing private equity and credit investments across multiple industries. Prior to joining Centerbridge Partners L.P., Mr. Hendricks was an Associate at Silver Lake Partners, a private equity firm focused on investments in technology and related growth companies. Prior to Silver Lake, he was an investment banking analyst within the Global Industrial and Services group at Credit Suisse First Boston. Mr. Hendricks graduated summa cum laude from The Wharton School of the University of Pennsylvania, where he received a B.S. in Economics.

Michael E. Boxer, 49, Director. Mr. Boxer has been a Special Advisor to Centerbridge Partners L.P. since 2009. Mr. Boxer has served as President of The Enterprise Group, Ltd., a health care financial advisory firm, since 2008. Previously, Mr. Boxer served as the Chief Financial Officer of HealthMarkets, Inc., a provider of health and life insurance products to individuals and small groups. Mr. Boxer served as Executive Vice President and Chief Financial Officer of Mariner Health Care, Inc., a provider of skilled nursing and long-term health care services. Prior to Mariner, Mr. Boxer served as Senior Vice President and Chief Financial Officer of Watson Pharmaceuticals, Inc., a NYSE-listed specialty pharmaceuticals company. Mr. Boxer was an investment banker at Furman Selz, LLC, a New York-based investment bank. Mr. Boxer holds an M.B.A. from the University of Chicago Booth School of Business and a B.S. in Business Administration from Colorado State University. He is a Director of Skilled Healthcare Group Inc.

Except as indicated above, none of the directors holds any other directorship.

Equity-Based Arrangements

In connection with the closing of the Merger, the Parent has adopted new equity incentive arrangements for directors, executives and other senior management employees including a new stock incentive plan, the 2010 C.P. Atlas Holdings, Inc. Stock Incentive Plan, and an arrangement for equity contributions from senior management. The 2010 C.P. Atlas Holdings, Inc. Stock Incentive Plan is designed to promote our interests by providing eligible persons with the opportunity to receive an equity interest and/or equity-based awards in one of our direct or indirect parent entities as an incentive for them to remain in our service. New equity awards may also be granted under the new stock incentive plan to members of our senior management.

In addition, consistent with these arrangements, Messrs. Carlucci, Kamal and Ford each executed an equity contribution, exchange and subscription agreement pursuant to which each individual made an equity contribution of approximately $6 million to the Parent, through the rollover of common stock and/or preferred stock of ARH in exchange for common stock of the Parent. Mr. McDonough also entered into an equity

104

contribution, exchange and subscription agreement pursuant to which he contributed approximately $450,000 and Mr. McDonough also contributed and rolled over 25% of the intrinsic value of his outstanding stock options in ARH into options to acquire common stock of the Parent.

New Employment Agreements

In connection with the execution of the Merger Agreement, we have entered into new employment agreements with Messrs. Carlucci, Kamal, Ford, and McDonough, which become effective upon the closing of the Merger. These new employment agreements contain restrictive covenants in our favor and ensure management’s commitment to our interests. We have summarized the terms of these new agreements below.

Joseph A. Carlucci. We entered into a new employment agreement, dated as of March 22, 2010 and effective as of the closing of the Merger, with Mr. Carlucci (the “Carlucci Agreement”) pursuant to which Mr. Carlucci serves as our Chief Executive Officer. The Carlucci Agreement has a three-year term with automatic one-year successive renewals. Mr. Carlucci is entitled to receive a salary of $525,360, an annual bonus opportunity based on achievement of performance goals set by our board of directors, customary employee benefits and payment severance in the event of a termination without cause, for good reason, or due to death or disability (each as defined in the Carlucci Agreement).

The Carlucci Agreement also provides for certain restrictive covenants which apply during the term of the Carlucci Agreement and through the third anniversary of the date of termination of Mr. Carlucci’s employment, provided that solely in the case of a change in control (as defined in the Carlucci Agreement) the restrictive period will end on the later of (i) the third anniversary of the change in control and (ii) the first anniversary of the date of termination of employment, provided further that solely in the case of a change in control, we have the right to extend such period until the later of (a) the fifth anniversary of the change in control and (b) the first anniversary of the date of termination if we make a timely election and pay Mr. Carlucci an amount equal to 300% of his then current base salary.

During the restrictive period, Mr. Carlucci is prohibited from (1) soliciting any employee or contracting physician to terminate his or her relationship with us, (2) hiring any person who was employed by us at any time during Mr. Carlucci’s employment with us, (3) competing, directly or indirectly with us as an owner of any business (x) engaged in the kidney dialysis business and/or the operation of kidney dialysis facilities within 10 miles of any of our facilities, (y) engaged in the kidney dialysis business and/or the operation of kidney dialysis facilities where Mr. Carlucci is involved in a program to establish joint ventures with nephrologists in the United States of America, and (z) in the case of a termination of employment that occurs on or before the third anniversary of the date of the Carlucci Agreement or which occurs after a change in control, engaged in the kidney dialysis business and/or the operation of kidney dialysis facilities in the United States of America, and (4) representing any other entity or business in conducting substantial negotiations with any nephrologists with whom Mr. Carlucci had conducted substantial negotiations on behalf of us during the one year period immediately prior to the termination of Mr. Carlucci’s employment with us.

Mr. Carlucci is also subject to a confidentiality covenant prohibiting him from disclosing our confidential information for an indefinite period and Mr. Carlucci will agree that all inventions, patents, discoveries, and work product created by him while employed by us will belong to us.

Syed T. Kamal. We entered into a new employment agreement, dated March 22, 2010 and effective as of the closing of the Merger, with Mr. Kamal pursuant to which Mr. Kamal serves as our President. Mr. Kamal’s employment agreement has a three-year term with automatic one-year successive renewals. Mr. Kamal is entitled to receive a salary of $525,360, an annual bonus opportunity based on achievement of performance goals set by our board of directors, customary employee benefits and payment severance in the event of a termination without cause, for good reason, or due to death or disability (each as defined in the Carlucci Agreement). Mr. Kamal is also subject to the same restrictive covenants that are contained in the Carlucci Agreement.

105

Christopher T. Ford. We entered into a new employment agreement, dated March 22, 2010 and effective as of the closing of the Merger, with Mr. Ford pursuant to which Mr. Ford serves as our Chairman of the Board on a part-time basis. Mr. Ford’s employment agreement has a two-year term with automatic one-year successive renewals. Mr. Ford is entitled to receive a salary of $175,000, employee benefits accruing on a part-time basis and payment severance in the event of a termination without cause, for good reason, or due to death or disability (each as defined in Mr. Ford’s employment agreement). Mr. Ford will also be subject to the same restrictive covenants that are contained in the Carlucci Agreement.

John J. McDonough. We entered into a new employment agreement, dated March 22, 2010 and effective as of the closing of the Merger, with Mr. McDonough pursuant to which Mr. McDonough serves as our Chief Financial Officer. Mr. McDonough’s employment agreement has a three-year term with automatic one-year successive renewals. Mr. McDonough is entitled to receive a salary of $440,720, an annual bonus opportunity based on achievement of performance goals set by our board of directors, customary employee benefits and payment severance in the event of a termination without cause, for good reason, or due to death or disability (each as defined in the Carlucci Agreement). Mr. McDonough is also subject to the same restrictive covenants that are contained in the Carlucci Agreement.

106

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

The following discussion and analysis of the compensation arrangements of our named executive officers should be read together with the compensation tables and related disclosures regarding our current plans, considerations, expectations and determinations regarding future compensation programs.

Executive Summary

The primary objectives of our executive compensation programs are to attract and retain talented executives to effectively manage and lead our company and create value for our equityholders. The compensation packages for our named executive officers generally include a base salary, annual cash bonuses, equity awards and other benefits and perquisites.

The discussion below includes a review of our compensation decisions with respect to 2009. Our named executive officers for 2009 were Joseph A. Carlucci, our Chief Executive Officer; Christopher T. Ford, our Chairman; Syed T. Kamal, our President; John J. McDonough, our Executive Vice President, Chief Financial Officer and Treasurer and Michael R. Costa, our Vice President, General Counsel and Secretary.

On March 22, 2010, we entered into a Merger Agreement pursuant to which we became a wholly-owned subsidiary of C.P. Atlas Intermediate Holdings, LLC, which is in turn a wholly-owned subsidiary of C.P. Atlas Holdings, Inc. In connection with this transaction: (1) Centerbridge, as sponsor in the Merger Agreement, made an aggregate cash equity investment of $161.5 million in C.P. Atlas Holdings, Inc., subject to certain adjustments, and acquired 87% of the common stock of C.P. Atlas Holdings, Inc; and (2) certain members of our management contributed a portion of their existing equity ownership in us in exchange for cash and newly issued shares of common stock of C.P. Atlas Holdings, Inc.

As further described below, in connection with the Centerbridge merger, C.P. Atlas Holdings, Inc. adopted new equity incentive arrangements applicable to our directors, executives and other senior management employees, including a new stock incentive plan and an arrangement for equity contributions from senior management, and we entered into new employment agreements with Messrs. Carlucci, Kamal, Ford and McDonough. Accordingly, the compensation arrangements for our named executive officers following the Centerbridge merger differ from those in place during 2009.

Compensation Determination Process

Our compensation programs for our named executive officers are designed to reflect our view that all components of executive compensation should be set at levels that are necessary, within reasonable parameters, to successfully attract, retain and motivate optimally talented and experienced executives and that are fair and equitable in light of market practices. We believe that the ownership by management of equity interests in our business is the most effective mechanism for providing incentives to maximize gains for equityholders and that annual cash incentive compensation should be linked to metrics that create value for our equityholders. In setting an individual executive officer’s initial compensation package and the relative allocation among different types of compensation, we consider the nature of the position being filled, the scope of associated responsibilities, the individual’s prior experience and skills and the individual’s compensation expectations, as well as the compensation of existing executive officers at our company and our general impressions of prevailing conditions in the market for executive talent.

The base salary levels for our named executive officers were established by our Compensation Committee at the commencement of each such executive officer’s employment with us and are subject to adjustment by our

107

Compensation Committee based upon the recommendation of the supervising executive officer and/or our Chief Executive Officer. The amounts of the annual cash bonuses for Messrs. Carlucci, Kamal, Ford and McDonough for 2009 were determined on the basis of our Compensation Committee’s allocation of an overall bonus pool, the size of which was calculated in accordance with our achievement of certain EBITDA performance targets and company growth objectives as contemplated in the named executive officers’ respective employment agreements. The amount of Mr. Costa’s annual cash bonus for 2009 was based upon the recommendation of the supervising executive officer and/or our Chief Executive Officer and was approved by our Compensation Committee. The amounts of equity grants to our named executive officers are determined by our Compensation Committee.

Compensation Risk Assessment

We do not believe that risks arising from our compensation policies and practices for our employees are reasonably likely to have a material adverse effect on us.

Elements of Compensation

Base Salaries

Base salaries are intended to provide a fixed level of compensation sufficient to attract and retain an effective management team when considered in combination with other components of our executive compensation programs. We believe that the base salary element of compensation is required to provide our named executive officers with a stable income stream that is commensurate with their experience and responsibilities. Annual base salaries are established on the basis of market conditions at the time we hire an executive. Any subsequent modifications to annual base salaries are influenced by the performance of the executive and by significant changes in market conditions.

During 2009, the base salaries of our named executive officers were as follows: Mr. Carlucci, $420,000; Mr. Costa, $266,200; Mr. Ford, $420,000; Mr. Kamal, $420,000; and Mr. McDonough, $340,000. Following the effectiveness of the new employment agreements entered into with Messrs. Carlucci, Ford, Kamal and McDonough on March 22, 2010 in connection with the Centerbridge merger, the base salaries of our named executive officers are as follows: Mr. Carlucci, $525,360; Mr. Costa, $292,820 (effective August 3, 2010); Mr. Ford, $175,000; Mr. Kamal, $525,360; and Mr. McDonough, $440,720. These increases in base salaries in connection with the Centerbridge merger were attributable to improved operational results, sustained growth and our objective of aligning named executive officer compensation with our impressions of prevailing base salaries for similarly situated executives at companies of our size in our industry, although we did not evaluate base salaries at any specific peer group of companies.

Annual Cash Bonuses

The employment agreements effective during 2009 provided for annual cash bonuses (the “Bonus Plan”) for each of Messrs. Carlucci, Ford, Kamal and McDonough. Each executive was entitled to participate in a bonus pool to be allocated among Messrs. Carlucci, Ford, Kamal and McDonough (the “Bonus Pool”). The aggregate maximum amount of the Bonus Pool was the sum of 50% of the base salary of each of Messrs. Carlucci, Ford, Kamal and McDonough. The actual amount of the Bonus Pool was determined in part (75%) based on our achievement of an annual, fiscal year consolidated EBITDA performance goal set by our Board of Directors and in part (25%) based on our achievement of annual targets with respect to the number of dialysis patients treated during the year. The 2009 target for EBITDA performance was $66,114,738 and our actual EBITDA achievement was $67,050,000. The target for the number of dialysis patients treated during 2009 was 5,351, and our actual achievement was 5,405 patients. In 2009, based upon these performance results, the aggregate amount available in the Bonus Pool was $1,000,000.

The actual portion of the Bonus Pool payable to each of Messrs. Carlucci, Ford, Kamal and McDonough was determined by our Board of Directors based upon the recommendation of our Compensation Committee, subject to the requirement that the entire amount of the Bonus Pool be divided among the four executives. In

108

2009, the annual cash payments made from the Bonus Pool were as follows: Mr. Carlucci, $325,000; Mr. Ford, $75,000; Mr. Kamal, $325,000; and Mr. McDonough, $275,000. Our Board of Directors determined these allocation amounts on a discretionary basis through an informal process in which the Board of Directors assessed the contributions of each executive towards our achievement in surpassing our performance goals for EBITDA and number of dialysis patients treated during 2009, with our founders, Messrs. Carlucci and Kamal, receiving higher payments in recognition of their contributions in building our business from a long-term perspective. Messrs. Carlucci, Kamal and McDonough were primarily responsibile for our number of dialysis patients treated during 2009. Mr. Ford’s allocation reflects substantial changes in his role with us during 2009. Mr. Costa did not participate in the Bonus Pool for 2009 but was awarded a discretionary cash bonus of $100,000 for 2009. All of our Vice Presidents, including Mr. Costa, received such cash bonuses pursuant to their offer letters. Mr. Costa’s bonus, which was based upon the recommendation of the Chief Executive Officer and was approved by the Compensation Committee, reflects his successful performance in handling various transactions, including the Merger, and the strong performance of the law department as a whole.

In connection with the Centerbridge merger, we entered into new employment agreements with Messrs. Carlucci, Kamal, Ford and McDonough which provide for a new bonus plan (the “2010 Bonus Plan”). Under the 2010 Bonus Plan, each of Messrs. Carlucci, Kamal, Ford and McDonough is eligible to earn an annual cash bonus award with a minimum threshold of 37.5% of his base salary, a target bonus of 75% of his base salary and a maximum bonus of 150% of his base salary based upon our achievement of annual, fiscal year consolidated EBITDA performance goals established by our Compensation Committee. To date, no payments have been made under the 2010 Bonus Plan.

Long-Term Equity Incentives

We believe that our long-term financial success is achieved in part through an ownership culture that encourages our named executive officers to focus on our long-term performance through the use of equity-based compensation tools. Our Equity Incentive Plan that was in place during 2009 was initially established in 2005. We adopted this plan to align the interests of our equityholders with those of our employees and to provide for grants of options to key employees, directors, advisors and consultants as either incentive stock options or nonqualified stock options as determined by our Board of Directors. The only equity award granted to a named executive officer during 2009 was a grant of 20,000 stock options made to Mr. Costa on May 20, 2009 in accordance with our practice of granting equity awards to certain employees each year on the anniversary of the date on which we hired each such employee.

In connection with the Centerbridge merger, our parent entered into the 2010 C.P. Atlas Holdings, Inc. Stock Incentive Plan. This 2010 Stock Incentive Plan is designed to promote our interests by providing eligible persons with the opportunity to receive an equity interest and/or equity-based awards in one of our direct or indirect parent entities as an incentive for them to remain in our service. Together with the substantial investments made in our parent by our senior management, these arrangements demonstrate the commitment of our employees and management team to our long-term growth.

Consistent with these arrangements, each of Messrs. Carlucci, Kamal and Ford executed an equity contribution, exchange and subscription agreement pursuant to which each such executive made an equity contribution with a value of $6,000,000 to our parent, C.P. Atlas Holdings, Inc., through the rollover of common stock and/or preferred stock of our company in exchange for common stock of C.P. Atlas Holdings, Inc. Mr. McDonough entered into an equity contribution, exchange and subscription agreement pursuant to which he made an equity contribution with a value of $450,000 to C.P. Atlas Holdings, Inc. through the rollover of common and /or preferred stock of our company in exchange for common stock of C.P. Atlas Holdings, Inc. Mr. McDonough also contributed and rolled over 25% of the spread value of his then outstanding stock options in our company in exchange for options to acquire common stock in C.P. Atlas Holdings, Inc. Mr. Costa entered into an equity contribution, exchange and subscription agreement pursuant to which he made an equity contribution with a value of $125,000 to C.P. Atlas Holdings, Inc. through the rollover of stock options in our company in exchange for stock options in C.P. Atlas Holdings, Inc.

109

In addition to the forgoing, in connection with the Centerbridge merger, each of Messrs. Carlucci, Ford, Kamal and McDonough received approximately $185,899 on May 10, 2010 in exchange for 46,250 shares of our common stock that each of the executives purchased from us pursuant to Notes issued on March 4, 2008. A portion of such sales proceeds were used by the executives to repay their indebtedness to us under the Notes.

Other Compensation

We also provide various other benefits to certain of our named executive officers that are intended to be part of a competitive compensation program. In 2009, these benefits for each of Messrs. Costa, Ford, Kamal and McDonough included director and officer liability insurance as well as a company-provided automobile allowance and reimbursements for related expenses (including insurance, taxes and fuel), provided that the cost of providing such automobile allowance could not exceed $12,000 per fiscal year, plus all costs for insurance and fuel. We believe that these benefits are comparable to those offered by other companies that compete with us for executive talent.

Payments Upon Termination

Each of our named executive officers, other than Mr. Costa, is entitled to certain benefits upon the termination of his employment with us, the terms of which are described below under “Summary of Employment Agreements” and “Potential Payments Upon Termination or Change in Control.” We believe that these benefits are valuable as they address the valid concern that it may be difficult for these executives to find comparable employment in a short period of time in the event of termination and provide an incentive for these executives to comply with non-competition and non-solicitation covenants.

Anticipated Actions

We expect to continue to evaluate and revisit the structure of our executive compensation programs and may make adjustments to them from time to time.

Summary Compensation Table

The following table sets forth the cash and other compensation that we paid to our named executive officers, or that was otherwise earned by our named executive officers, for their services in all capacities during the last fiscal year.

Name and Principal Position	Year		Salary ($)		Bonus ($)		Option Awards ($) (1)		Non-Equity Incentive Plan Compensation ($) (2)		All Other Compensation ($) (3)		Total ($)
Joseph A. Carlucci		2009		420,000		0		0		325,000		18,148		763,148
Chief Executive Officer
Christopher T. Ford		2009		420,000		0		0		75,000		16,571		511,571
Chairman
Syed T. Kamal		2009		420,000		0		0		325,000		17,300		762,300
President
John J. McDonough		2009		340,000		0		0		275,000		0		615,000
Executive Vice President, Chief Financial Officer and Treasurer
Michael R. Costa		2009		266,200		100,000		104,000		0		0		470,200
Vice President, General Counsel and Secretary

(1) The amount set forth in this column represent the aggregate grant date fair value of option awards granted in fiscal year 2009 as calculated pursuant to Financial Accounting Standards Board (FASB) Accounting

110

Standards Codification Topic 718, Compensation—Stock Compensation (FASB ASC Topic 718). This amount has been determined based on the assumptions set forth in Note N to our consolidated financial statements for the fiscal year ended December 31, 2009.

(2) The amounts set forth in this column reflect awards under our Bonus Plan. For more information regarding the Bonus Plan, see the Compensation Discussion and Analysis section above.

(3) See the All Other Compensation Table below.

All Other Compensation

	Car Allowance ($)		Gasoline Allowance ($)		Car Insurance Allowance ($)		Life Insurance Premiums ($)		Total ($)
Mr. Carlucci		12,000		4,629		0		1,519		18,148
Mr. Ford		12,000		2,746		1,825		0		16,571
Mr. Kamal		12,000		3,473		959		868		17,300
Mr. McDonough		0		0		0		0		0
Mr. Costa		0		0		0		0		0

Grants of Plan-Based Awards in 2009

The following table sets forth the individual grants of plan-based awards made to each of our named executive officers during 2009.

Name	Grant Date		Estimated Future Payouts Under Non-Equity Incentive Plan Awards			All Other Option Awards: Number of Securities Underlying Options (#)			Exercise or Base Price of Option Awards ($/Sh)			Grant Date Fair Value of Stock and Option Awards ($)
			Target ($)
Mr. Carlucci				325,000	(1)
Mr. Ford				75,000	(1)
Mr. Kamal				325,000	(1)
Mr. McDonough				275,000	(1)
Mr. Costa		5/20/09					20,000	(2)		5.20	(3)		104,000	(4)

(1) Reflects the anticipated opportunity of each of Messrs. Carlucci, Ford, Kamal and McDonough to participate in the Bonus Plan. There were no threshold, target or maximum awards payable under the Bonus Plan for 2009. Instead, each executive was entitled to participate in a Bonus Pool funded based on our achievement of pre-established performance goals as discussed in the Compensation Discussion & Analysis section above. In 2009, the aggregate amount available in the Bonus Pool to be allocated among Messrs. Carlucci, Ford, Kamal and McDonough was $1,000,000. Actual amounts earned by and paid to Messrs. Carlucci, Ford, Kamal and McDonough are shown in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table. For additional information regarding the Bonus Plan, see the Compensation Discussion and Analysis section above.

(2) Represents an award of time-vesting stock options granted under our 2005 Equity Incentive Plan.

(3) Reflects the per-share exercise price of the options, which is equal to the fair market value of a share of our common stock on the grant date as determined by our Board of Directors. A description of the process used in determining the fair market value of our common stock is set forth above under the subheading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Stock-based Compensation.”

(4) Reflects the aggregate grant date fair value the award of stock options determined pursuant to FASB ASC Topic 718.

111

Summary of Employment Agreements

Employment Agreements Effective During 2009

We maintain employment agreements with each of our named executive officers, with the exception of Mr. Costa. The employment agreements in effect during 2009 were originally executed on August 25, 2004 and were amended on December 16, 2005 and March 1, 2007 respectively. The employment agreements provided for an initial term of five years and automatic renewal for successive one-year periods unless notice of non-renewal was provided in writing by either party at least 60 days before the end of the then-current term.

As of 2009, the employment agreements provided for base salaries in the following amounts subject to increases in the sole discretion of our Compensation Committee: Mr. Carlucci, $420,000; Mr. Ford, $420,000; Mr. Kamal, $420,000; and Mr. McDonough, $340,000. The executives were also entitled to participate in any employee benefit plans that we offered to our executive officers. In addition, each of Messrs. Ford, Kamal and McDonough received a company-provided automobile allowance and reimbursements for related expenses (including insurance, taxes and fuel), provided that the cost of providing such automobile allowance could not exceed $12,000 per fiscal year, plus all costs for insurance and fuel.

The employment agreements also included certain restrictive covenants which applied during their term and through the third anniversary of the date of termination of the employment agreements, provided that, solely in the case of a Sale (as defined therein), the restrictive period would end on the later of (1) the third anniversary of the Sale and (2) the first anniversary of the date of termination of employment, provided further that, solely in the case of a Sale, we would have the right to extend the restrictive covenant periods with each executive (1) until the later of the fifth anniversary of the sale or the first anniversary of the executive’s termination of employment, in the case of Messrs. Carlucci, Ford and Kamal; or (2) through the third anniversary of the termination of the executive’s employment, in the case of Mr. McDonough. In the event that we chose to extend the restrictive covenant periods, Messrs. Carlucci, Ford and Kamal would receive a lump sum payment equal to $751,666, and Mr. McDonough would receive a lump sum payment equal to his then-current base salary.

During the restrictive period, the executive would be prohibited from (1) soliciting any employee or contracting physician to terminate his or her relationship with us; (2) hiring any person who was employed by us at any time during the executive’s employment with us; (3) competing, directly or indirectly with us as an owner of any business (x) engaged in the kidney dialysis business and/or the operation of kidney dialysis facilities within 10 miles of any of our facilities, (y) engaged in the kidney dialysis business and/or the operation of kidney dialysis facilities where the executive is involved in a program to establish joint ventures with nephrologists in the United States of America and (z) in the case of a termination of employment that occurred on or before the third anniversary of the date of the employment agreement or that occurred after a change in control, engaged in the kidney dialysis business and/or the operation of kidney dialysis facilities in the United States of America; and (4) representing any other entity or business in conducting substantial negotiations with any nephrologists with whom the executive had conducted substantial negotiations on behalf of us during the one-year period immediately prior to the termination of the executive’s employment with us.

The executives were also subject to a confidentiality covenant prohibiting them from disclosing our confidential information for an indefinite period, and the executives agreed that all inventions, patents, discoveries and work product created by them while employed by us would belong to us.

Current Employment Agreements

In connection with the execution of the Merger Agreement, we have entered into new employment agreements with Messrs. Carlucci, Kamal, Ford, and McDonough, which become effective upon the closing of the Merger. These new employment agreements contain restrictive covenants in our favor and ensure management’s commitment to our interests. We have summarized the terms of these new agreements below.

112

Joseph A. Carlucci. We entered into a new employment agreement, dated as of March 22, 2010 and effective as of the closing of the Merger, with Mr. Carlucci (the “Carlucci Agreement”) pursuant to which Mr. Carlucci serves as our Chief Executive Officer. The Carlucci Agreement has a three-year term with automatic one-year successive renewals. Mr. Carlucci is entitled to receive a salary of $525,360, an annual bonus opportunity based on achievement of performance goals set by our board of directors, customary employee benefits and payment severance in the event of a termination without cause, for good reason, or due to death or disability (each as defined in the Carlucci Agreement).

The Carlucci Agreement also provides for certain restrictive covenants which apply during the term of the Carlucci Agreement and through the third anniversary of the date of termination of Mr. Carlucci’s employment, provided that solely in the case of a change in control (as defined in the Carlucci Agreement) the restrictive period will end on the later of (i) the third anniversary of the change in control and (ii) the first anniversary of the date of termination of employment, provided further that solely in the case of a change in control, we have the right to extend such period until the later of (a) the fifth anniversary of the change in control and (b) the first anniversary of the date of termination if we make a timely election and pay Mr. Carlucci an amount equal to 300% of his then current base salary.

During the restrictive period, Mr. Carlucci is prohibited from (1) soliciting any employee or contracting physician to terminate his or her relationship with us, (2) hiring any person who was employed by us at any time during Mr. Carlucci’s employment with us, (3) competing, directly or indirectly with us as an owner of any business (x) engaged in the kidney dialysis business and/or the operation of kidney dialysis facilities within 10 miles of any of our facilities, (y) engaged in the kidney dialysis business and/or the operation of kidney dialysis facilities where Mr. Carlucci is involved in a program to establish joint ventures with nephrologists in the United States of America, and (z) in the case of a termination of employment that occurs on or before the third anniversary of the date of the Carlucci Agreement or which occurs after a change in control, engaged in the kidney dialysis business and/or the operation of kidney dialysis facilities in the United States of America, and (4) representing any other entity or business in conducting substantial negotiations with any nephrologists with whom Mr. Carlucci had conducted substantial negotiations on behalf of us during the one year period immediately prior to the termination of Mr. Carlucci’s employment with us.

Mr. Carlucci is also subject to a confidentiality covenant prohibiting him from disclosing our confidential information for an indefinite period and Mr. Carlucci will agree that all inventions, patents, discoveries, and work product created by him while employed by us will belong to us.

Syed T. Kamal. We entered into a new employment agreement, dated March 22, 2010 and effective as of the closing of the Merger, with Mr. Kamal pursuant to which Mr. Kamal serves as our President. Mr. Kamal’s employment agreement has a three-year term with automatic one-year successive renewals. Mr. Kamal is entitled to receive a salary of $525,360, an annual bonus opportunity based on achievement of performance goals set by our board of directors, customary employee benefits and payment severance in the event of a termination without cause, for good reason, or due to death or disability (each as defined in the Carlucci Agreement). Mr. Kamal is also subject to the same restrictive covenants that are contained in the Carlucci Agreement.

Christopher T. Ford. We entered into a new employment agreement, dated March 22, 2010 and effective as of the closing of the Merger, with Mr. Ford pursuant to which Mr. Ford serves as our Chairman of the Board on a part-time basis. Mr. Ford’s employment agreement has a two-year term with automatic one-year successive renewals. Mr. Ford is entitled to receive a salary of $175,000, employee benefits accruing on a part-time basis and payment severance in the event of a termination without cause, for good reason, or due to death or disability (each as defined in Mr. Ford’s employment agreement). Mr. Ford will also be subject to the same restrictive covenants that are contained in the Carlucci Agreement.

John J. McDonough. We entered into a new employment agreement, dated March 22, 2010 and effective as of the closing of the Merger, with Mr. McDonough pursuant to which Mr. McDonough serves as our Chief Financial Officer. Mr. McDonough’s employment agreement has a three-year term with automatic one-year

113

successive renewals. Mr. McDonough is entitled to receive a salary of $440,720, an annual bonus opportunity based on achievement of performance goals set by our board of directors, customary employee benefits and payment severance in the event of a termination without cause, for good reason, or due to death or disability (each as defined in the Carlucci Agreement). Mr. McDonough is also subject to the same restrictive covenants that are contained in the Carlucci Agreement.

Outstanding Equity Awards at 2009 Fiscal Year-End

The following table provides information concerning unexercised options and stock awards outstanding as of December 31, 2009 for each of our named executive officers.

	Option Awards										Stock Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable			Number of Securities Underlying Unexercised Options (#) Unexercisable			Option Exercise Price ($)		Option Expiration Date		Number of Shares or Units of Stock That Have Not Vested (#) (9)		Market Value of Shares or Units of Stock That Have Not Vested ($) (10)
Mr. Carlucci		419,067	(1)		209,533	(1)		3.50		3/1/17		30,833.4		161,567
Mr. Ford		419,067	(1)		209,533	(1)		3.50		3/1/17		30,833.4		161,567
Mr. Kamal		419,067	(1)		209,533	(1)		3.50		3/1/17		30,833.4		161,567
Mr. McDonough		150,000	(2)					0.14		8/4/13		30,833.4		161,567
		100,000	(3)					0.14		04/01/14
		150,000	(4)		50,000	(4)		1.50		12/16/15
		100,000	(5)		300,000	(5)		3.50		05/11/17
Mr. Costa		18,750	(6)		56,250	(6)		3.77		08/06/11
		5,000	(7)		15,000	(7)		4.26		06/10/12
					20,000	(8)		5.20		05/20/13

(1) Reflects stock options granted under our 2005 Equity Incentive Plan to each of Messrs. Carlucci, Ford and Kamal on March 1, 2007, which were scheduled to fully vest on March 5, 2011.

(2) Reflects stock options granted under our 2000 Equity Incentive Plan (post stock split) to Mr. McDonough on August 4, 2003, which were fully vested on August 4, 2007.

(3) Reflects stock options granted under our 2000 Equity Incentive Plan to Mr. McDonough on April 1, 2004, which were fully vested on August 1, 2007.

(4) Reflects stock options granted under our 2000 Equity Incentive Plan to Mr. McDonough on December 16, 2005, which were scheduled to vest in four equal annual installments beginning on the first anniversary of the grant date.

(5) Reflects stock options granted under our 2005 Equity Incentive Plan to Mr. McDonough on May 11, 2007, which were scheduled to vest in four equal annual installments beginning on the first anniversary of the grant date.

(6) Reflects stock options granted under our 2005 Equity Incentive Plan to Mr. Costa on September 6, 2007, which were scheduled to vest in four equal annual installments beginning on August 6, 2007.

(7) Reflects stock options granted under our 2005 Equity Incentive Plan to Mr. Costa on June 11, 2008, which were scheduled to vest in four equal annual installments beginning on the first anniversary of the grant date.

(8) Reflects stock options granted under our 2005 Equity Incentive Plan to Mr. Costa on May 20, 2009, which were scheduled to vest in four equal annual installments beginning on the first anniversary of the grant date.

(9) Reflects the portion of shares of restricted stock granted to each named executive officer, other than Mr. Costa, on March 4, 2008 that were unvested as of December 31, 2009. The awards were scheduled to vest as to one-third of the shares on each of March 5, 2009, March 5, 2010 and March 5, 2011.

(10) Reflects the value as calculated using the fair market value of our common stock as of December 31, 2009 ($5.24 per share).

114

Option Exercises and Stock Vested in 2009

None of our named executive officers had options that were exercised during 2009. The following table summarizes amounts realized upon the vesting of restricted stock for each of our named executive officers during 2009.

	Stock Awards (1)
Name	Number of Shares Acquired on Vesting (#)		Value Realized on Vesting ($)
Mr. Carlucci		15,416.6		72,766
Mr. Ford		15,416.6		72,766
Mr. Kamal		15,416.6		72,766
Mr. McDonough		15,416.6		72,766
Mr. Costa		0		0

(1) Represents the number of restricted shares that vested in 2009 and the aggregate value of such shares of common stock based upon the fair market value of our common stock on the March 5, 2009 vesting date ($4.72 per share).

Pension Benefits for 2009

We do not offer pension benefits to our named executive officers.

Non-Qualified Deferred Compensation for 2009

We do not offer non-qualified deferred compensation to our named executive officers.

Potential Benefits Upon Termination or Change in Control

Termination of Employment

As discussed above, we maintain employment agreements with each of our named executive officers, other than Mr. Costa, that provide for certain payments and benefits upon their termination of employment for various reasons. The following disclosure reflects terms of the employment arrangements in place on December 31, 2009 rather than those provided for in the employment agreements entered into in connection with the Centerbridge merger.

Payments Made Upon Any Termination of Employment. Regardless of the manner in which his employment terminates, each executive officer is entitled to receive amounts earned and accrued during his term of employment, including accrued but unpaid base salary through the date of termination and unreimbursed employment-related expenses owed to the executive officer under our policies. These payments do not differ from payments made upon termination to all employees.

Payments Made Upon Termination Without Cause or Good Reason. Messrs. Carlucci, Ford, Kamal and McDonough’s employment agreements in effect on December 31, 2009 provided that, if we terminated the executive without Cause, or the executive terminated his employment with us for Good Reason, he would be entitled to receive:

• continuation of his base salary, at the then-current level, for a period of 12 months, payable in installments in accordance with our normal payroll practices;

• continuation of employee benefits for 12 months following the date of termination; and

• a pro rata portion of his bonus for the then-current fiscal year based upon actual performance, payable at the time at which bonuses are normally paid.

115

Cause generally means the executive’s (1) conviction of, or plea of guilty to, a crime if, as a result of his continued association with us, such crime is injurious to our business or reputation; (2) breach of duty of loyalty that is detrimental to us and involves his personal profit; (3) willful failure to perform his duties or to follow lawful directives of the Board of Directors; or (4) gross negligence or willful misconduct in the performance of his duties.

Good Reason generally means any substantial diminution of or substantial detrimental change in the executive’s responsibilities, salary or benefits, or re-location of the executive’s principal office from the metropolitan Boston area.

Payments Made Upon Death or Termination of Employment by Reason of Disability. If Messrs. Carlucci, Ford, Kamal or McDonough’s employment was terminated on December 31, 2009 by reason of his death or disability, he would have been entitled to receive the same payments and benefits that he would have received had he been terminated without Cause or for Good Reason, as described above.

Restrictive Covenants. Each of the employment agreements in effect on December 31, 2009 contained confidentiality, non-competition and employee non-solicitation covenants that applied during the executive’s employment with us and for a period of time after his termination of employment (36 months, in the case of Messrs. Carlucci, Ford and Kamal, and 24 months, in the case of Mr. McDonough). In the case of a sale of our company, Messrs. Carlucci, Ford and Kamal’s restrictive covenants would terminate on the later of the third anniversary of the sale or the first anniversary of the executive’s termination of employment.

Upon the occurrence of a sale of our company, we would have the right to extend the restrictive covenant periods with each executive (1) until the later of the fifth anniversary of the sale or the first anniversary of the executive’s termination of employment, in the case of Messrs. Carlucci, Ford and Kamal; or (2) through the third anniversary of the termination of the executive’s employment, in the case of Mr. McDonough. In the event that we chose to extend the restrictive covenant periods, Messrs. Carlucci, Ford and Kamal would receive a lump sum payment equal to $751,666, and Mr. McDonough would receive a lump sum payment equal to his then-current base salary.

Summary of Termination Payments and Benefits. The following table summarizes the approximate value of the termination payments and benefits that each of our named executive officers would have received if his employment had been terminated on December 31, 2009 by the executive for Good Reason, by us without Cause or upon Death or Disability. The table does not include certain amounts that the named executive officer would be entitled to receive under certain plans or arrangements that do not discriminate in scope, terms or operation, in favor of our executive officers and that are generally available to all salaried employees.

	Mr. Carlucci ($)		Mr. Ford ($)		Mr. Kamal ($)		Mr. McDonough ($)		Mr. Costa ($)
Continuation of base salary for 12 months		420,000		420,000		420,000		340,000		0
Continuation of employee benefits for 12 months (1)		14,056		14,056		12,706		13,784		0
Bonus for year despite executive no longer being employed on payment date (2)		325,000		75,000		325,000		275,000		0
Total		759,056		509,056		757,706		628,784		0

(1) These benefits include long-term and short-term disability insurance, dental insurance, medical insurance and life insurance. The amounts in the table above reflect the cost to our company of providing such benefits during 2009 and, accordingly, are only an estimate of the costs our company would have incurred to provide such benefits for 12 months following a termination of employment on December 31, 2009.

116

(2) In the event of a termination by the executive for Good Reason, by us without Cause or upon Death or Disability, the executive would have been entitled to a bonus for the year of termination through the date of termination on a pro-rated basis. In the event of a termination by the executive without good reason or by us for Cause, the executive would not have been entitled to a pro-rated bonus for the fiscal year of termination but would have been entitled to any bonus earned for any fiscal year prior to the year of termination.

Change in Control

As of December 31, 2009, our named executive officers were not entitled to any additional benefits following a change in control of our company or upon a termination of employment following a change in control of our company.

117

DIRECTOR COMPENSATION

The following table sets forth the cash and other compensation paid by us to the members of our Board of Directors for all services in all capacities during 2009. Messrs. Carlucci, Ford and Kamal were named executive officers for 2009 and were not separately compensated for their service as directors. D. Neal Morrison and Scott B. Perper also served on our Board of Directors during 2009 and were not compensated for service during 2009. Dr. Donald Leeber was the only member of our Board of Directors who was compensated for service during 2009. The form of such compensation was cash payments of $7,500 per quarter and a December 17, 2009 grant of options to purchase 5,000 shares of our common stock at an exercise price of $5.24 per share, for an aggregate grant date fair value of $26,200. These options are scheduled to vest in four equal annual installments beginning on December 17, 2010. We have not yet determined what, if any, changes we will make to our director compensation arrangements following the Centerbridge merger.

Name	Fees Earned or Paid in Cash ($)		Option Awards ($) (1)		Total ($)
Messrs. Morrison		0		0		0
Perper		0		0		0
Donald Leeber, M.D		30,000		26,200		56,200

(1) The amount set forth in this column represents the aggregate grant date fair value of option awards granted in fiscal year 2009 as calculated pursuant to FASB ASC Topic 718. This amount has been determined based on the assumptions set forth in Note N to our consolidated financial statements for the fiscal year ended December 31, 2009. As of December 31, 2009, Dr. Leeber held options exercisable into 57,500 shares of our common stock. Of these options, 12,500 had an exercise price of $0.48 per share; 25,000 had an exercise price of $1.50 per share; 10,000 had an exercise price of $3.50 per share; 5,000 had an exercise price of $3.77 per share; and 5,000 had an exercise price of $4.72 per share.

118

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

C.P. Atlas Holdings, Inc. owns 100% of the capital stock of C.P. Intermediate Holdings, LLC, which owns 100% of the capital stock of American Renal Holdings Inc. The following table sets forth information regarding the beneficial ownership of the common stock of C.P. Atlas Holdings, Inc. as of September 7, 2010.

• each person who is known by us to own beneficially more than 5% of the outstanding shares of our common stock;

• each of our directors;

• each of our executive officers named in the Summary Compensation Table; and

• all of our directors and executive officers as a group.

The percentages of shares outstanding provided in the tables are based on 8,855,065 shares of C.P. Atlas Holdings, Inc. common stock, par value $0.01 per share, outstanding as of September 7, 2010. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares issuable upon the exercise of options that are exercisable within 60 days of September 7, 2010 are considered outstanding for the purpose of calculating the percentage of outstanding shares of our common stock held by the individual, but not for the purpose of calculating the percentage of outstanding shares held by any other individual. The address of each of our directors and executive officers listed below is c/o American Renal Holdings Inc., 66 Cherry Hill Drive, Beverly, Massachusetts 01915.

Name of Beneficial Owner	Beneficial Ownership of C.P. Atlas Holdings, Inc. Common Stock			Percentage of C.P. Atlas Holdings, Inc. Common Stock
Centerbridge Capital Partners L.P. and certain affiliated entities1		7,692,505			86.9	%
Christopher T. Ford . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		285,714	2		3.2	%
Syed Kamal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		285,714			3.2	%
Joseph A. Carlucci . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		285,714			3.2	%
John J. McDonough . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		21,429			*
Michael R. Costa. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		5,952			*
Steven M. Silver1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		7,692,505			86.9	%
Jared S. Hendricks1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		7,692,505			86.9	%
Michael E. Boxer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		14,286	3		*
All directors and executive officers as a group (8 persons). . . . . . . .		898,809			10.2	%

* Less than one percent.

¹ C.P. Atlas Holdings, Inc., a Delaware limited liability company, is 83.3% owned by Centerbridge Capital Partners, L.P., 1.0% owned by Centerbridge Capital Partners SBS, L.P., 2.6% owned by Centerbridge Capital Partners Strategic, L.P., and 13.1% owned by other persons. Steven Silver, a Senior Managing Director of Centerbridge Partners, L.P., and Jared Hendricks, a Managing Director of Centerbridge Partners, L.P., both owners of interests in Centerbridge Capital Partners, L.P., Centerbridge Capital Partners SBS, L.P., and Centerbridge Capital Partners Strategic, L.P., disclaim beneficial ownership of such shares, except to the extent of their pecuniary interest therein. The address of C.P. Atlas Holdings, Inc. and each of the entities and individuals listed in this footnote is c/o Centerbridge Partners, L.P., 375 Park Avenue, New York, New York 10152.

² Comprised of 128,790 shares under the Christopher T. Ford 2005 Grantor Retained Annuity Trust and 156,924 shares under the Christopher T. Ford 2008 Grantor Retained Annuity Trust.

³ Beneficially owned through Black Diamond Partners LLC, JJ Bark LLC and Tribeca Investments LLC.

119

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Lease Agreements with Entities Owned by Related Parties

We own the land and buildings of our dialysis clinic located in Chillicothe, Ohio and our JVs own the land and buildings of our dialysis clinics in Beaumont and Jasper, Texas. ARA-Chillicothe Dialysis, the dialysis clinic located in Chillicothe, Ohio in which we have a controlling interest, leases 8,100 square feet of space from ARA-Ohio Holdings LLC. We own all of the outstanding equity of ARA-Ohio Holdings LLC. The lease in Chillicothe, Ohio was entered in 2005 for a term of ten years with five year renewal options. The current minimum annual rent for our dialysis clinic in Chillicothe, Ohio is $72,900. In 2010, the minimum annual rent increases to $81,000.

We have other lease agreements for dialysis clinics with our nephrologist partners or entities under the control of our nephrologist partners in such clinics. The amount of rent expense under these lease arrangements was approximately $2.5 million, $1.5 million and $1.1 million in 2009, 2008 and 2007, respectively.

Indemnification of Officers and Directors

In connection with this offering, we have entered into indemnification agreements with each of our directors and officers, and we have purchased a policy of directors’ and officers’ liability insurance that insures our directors and officers against the cost of defense, settlement or payment of a judgment under certain circumstances.

Transaction Fee and Advisory Services Fee Arrangements with Centerbridge

In connection with the Transactions, we entered into a transaction fee and advisory services agreement with Centerbridge Advisors, L.L.C., the investment manager of Centerbridge, our principal stockholder after the consummation of the Merger. Pursuant to the transaction fee and advisory services agreement, we paid to Centerbridge a fee of $4 million plus out-of-pocket expenses upon the closing of the Merger as consideration for the financial and structural analysis, due diligence investigations, corporate strategy, and other advice and assistance rendered by Centerbridge to us.

In addition, under this agreement, Centerbridge (including through its affiliates) agreed to provide advisory and consulting services related to our affairs and the affairs of our subsidiaries, including, without limitation,

• advice regarding the structure, terms, conditions and other provisions, distribution and timing of debt and equity offerings and advice regarding relationships with us and our subsidiaries’ lenders and bankers,

• advice regarding our strategy,

• advice regarding dispositions and/or acquisitions, and

• such other advice directly related or ancillary to the above advisory services as may be reasonably requested by us.

In consideration for these services, we pay Centerbridge Advisors, L.L.C., commencing upon the closing of the Merger, a per annum advisory services fee (payable quarterly) for each fiscal year from and including fiscal year 2010 of the greater of (i) an amount equal to the greater of (x) $550,000 and (y) the advisory services fee of the previous fiscal year and (ii) an amount equal to 1.25% of our EBITDA, minus a personnel expense deduction, if applicable. In addition, Centerbridge Advisors, L.L.C. is entitled to receive an additional fee equal to 1.0% of the enterprise value and/or aggregate value, as applicable, for any future fundamental or significant transactions (e.g., a sale of, or acquisition by, the Parent or its subsidiaries) in which Centerbridge is involved.

The transaction fee and advisory services agreement will continue until the earliest of (i) the tenth anniversary of the date of the agreement, (ii) the date on which Centerbridge owns less than 20% of the

120

outstanding common stock of the Parent, or (iii) such date as Centerbridge may specify in writing. We have agreed to indemnify Centerbridge and its affiliates partners, members, stockholders, directors, officers, employees, agents and representatives from and against all liabilities relating to the services contemplated by the transaction fee and advisory services agreement.

Upon a change of control in our ownership, an initial public offering or a sale of all or substantially all of the outstanding common stock of the parent or of the businesses and assets of the Parent (or at such other time as Centerbridge and the Company may agree), Centerbridge or Centerbridge Advisors, L.L.C., as the case may be, may elect to receive, in lieu of annual payments of the advisory services and related fees, a single lump sum cash payment equal to the then present value of all then current and future advisory services and related fees payable under this agreement. The indenture governing the notes permits the lump sum payment in the case of a change of control, an initial public offering or a sale of all or substantially all of our assets, but to the extent Centerbridge and the Company agree to pay a lump sum, such payment would only be payable to the extent that it is permitted under the indenture. The lump sum payment is also subject to other agreements governing our indebtedness.

Stockholders Agreement of C.P. Atlas Holdings, Inc.

In connection with the Merger, the Parent entered into a stockholders agreement with Centerbridge and the other holders of common stock of the Parent (the “Stockholders Agreement”). Holders of common stock of the Parent will become party to the Stockholders Agreement from time to time, by executing a joinder to the Stockholders Agreement.

Under the Stockholders Agreement, each of the stockholders of the Parent party thereto agreed to vote in favor of, and to take all other necessary and appropriate actions to cause to occur, the election to the board of directors of Parent of each director designated in accordance with the provisions of the Stockholders Agreement. The parties to the Stockholders Agreement also agreed to vote the securities of Parent as Centerbridge directs in connection with any merger or consolidation of the Parent, the sale of all or substantially all of its assets, the amendment of its organizational documents and certain other matters.

The Stockholders Agreement restricts employee stockholders party thereto from transferring their securities of the Parent prior to the earlier of (i) 180 days after a qualified public offering or (ii) a change of control, subject to certain exceptions. The Stockholders Agreement also provides employee stockholders party thereto customary tag-along rights with respect to sales of securities of the Parent held by Centerbridge and gives Centerbridge customary drag-along rights, each subject to a minimum threshold of securities of the Parent sold by Centerbridge.

121

DESCRIPTION OF OTHER INDEBTEDNESS

New Revolving Credit Facility

Overview

In connection with the Transactions, ARH entered into a senior secured credit agreement with Bank of America, N.A., as administrative agent, the lenders and the other parties thereto.

The senior secured credit facility provided senior secured financing consisting of a $25.0 million revolving credit facility (the New Revolving Credit Facility).

The New Revolving Credit Facility includes borrowing capacity available for letters of credit and for borrowings on same-day notice, referred to as the swingline loans and will be available in U.S. dollars. Currently, the revolving credit facility is undrawn.

Interest Rate and Fees

Borrowings under the New Revolving Credit Facility bear interest at a rate equal to an applicable margin plus, at our option, either (a) a base rate determined by reference to the highest of (1) the corporate base rate of interest of Bank of America, N.A., (2) the federal funds rate plus 0.50% and (3) a Eurodollar rate determined by reference to the costs of funds for deposits in U.S. dollars for the interest period of one month plus 1.00%, or (b) a LIBOR rate determined by reference to the costs of funds for deposits in U.S. dollars for the interest period relevant to such borrowing adjusted for certain additional costs. In no event will the LIBOR rate be less than 2.00% per annum nor will the base rate be less than 3.00% per annum.

ARH is required to pay a commitment fee to the lenders under the revolving credit facility in respect of the unutilized commitments thereunder. The commitment fee rate is 0.75% per annum. ARH must also pay customary letter of credit fees.

Prepayments

The New Revolving Credit Facility requires ARH to prepay outstanding loans under the revolving credit facility at any time the aggregate outstanding amount of loans and letter of credit obligations under the New Revolving Credit Facility exceeds the aggregate commitment of all lenders under the New Revolving Credit Facility, by an amount equal to such excess. ARH may voluntarily repay outstanding loans under the New Revolving Credit Facility at any time without premium or penalty, other than customary “breakage” costs with respect to LIBOR loans.

Prepayments and commitment reductions may be required in connection with certain asset sales and refinancings of intercompany debt.

Repayment

Principal amounts outstanding under the revolving credit facility are due and payable in full at maturity, five years from the date of the closing of the senior secured credit facility.

Guarantees and Security

All obligations under the New Revolving Credit Facility will be unconditionally guaranteed by C.P. Atlas Intermediate Holdings, LLC (“Holdings”) and, subject to certain exceptions, each of Holdings’ existing and future domestic wholly owned subsidiaries (other than ARH) (the “Subsidiary Guarantors” and, together with Holdings, the “Guarantors”).

122

Subject to certain exceptions, all obligations under the New Revolving Credit Facility, and the guarantees of those obligations, are secured by:

• a pledge of 100% of the capital stock of ARH, 100% of the capital stock of each of the Guarantors (other than Holdings) and 65% of the capital stock of each wholly owned foreign subsidiary that is directly owned by any of the Guarantors; and

• a security interest in, and mortgages on, substantially all material tangible and intangible assets of ARH and the Guarantors.

Certain Covenants and Events of Default

The New Revolving Credit Facility contains a number of covenants that, among other things, restrict, subject to certain exceptions, ARH’s ability and the ability of ARH’s subsidiaries to:

• incur additional indebtedness or issue certain preferred stock;

• create liens on assets;

• enter into sale and leaseback transactions;

• engage in mergers or consolidations with or into other companies;

• sell assets;

• pay dividends and distributions or repurchase ARH’s capital stock;

• make investments, loans or advances;

• make certain acquisitions;

• engage in certain transactions with affiliates;

• amend material agreements (including the organizational documents of ARH and its subsidiaries);

• repay certain indebtedness (including the notes offered hereby);

• change its lines of business;

• change its fiscal year; and

• change the status of Holdings as a passive holding company.

• In addition, the revolving credit facility will require ARH to maintain the following financial covenants:

• a maximum consolidated leverage ratio; and

• a minimum fixed charge coverage ratio.

The New Revolving Credit Facility also contains certain customary affirmative covenants and events of default.

Our Assumed Third-Party Clinic Level Debt

From time to time we have and in the future (subject to certain limitations under the indenture governing the notes offered hereby) may incur third-party working capital indebtedness in connection with the development of a clinic. In connection with the Merger we assumed approximately $11.9 million, as of December 31, 2009, of such indebtedness; the remainder of such third-party debt was repaid at the closing. As of September 30, 2010, $8.2 million of this debt is outstanding. Our assumed third-party clinic debt is represented by 40 facilities at 25 clinics and with 8 lending institutions. No assumed third-party debt at a single clinic exceeds $2 million. This assumed debt has variable interest rates, generally based upon a floating rate of interest, and is generally secured by all of the assets of the respective clinic. Further information about this assumed indebtedness is set forth under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Off-Balance Sheet Arrangements, Contractual Obligations and Commitments.”

123

THE EXCHANGE OFFER

Purpose and Effect of the Exchange Offer

We and the guarantors have entered into a registration rights agreement with the initial purchasers of the outstanding notes in which we and the guarantors agreed, under some circumstances, to use all commercially reasonable efforts to (i) no later 180 days after the issuance of the outstanding notes, file a registration statement with respect to a registered exchange offer to exchange the outstanding notes for new exchange notes, (ii) no later than 210 days after the issuance of the outstanding notes, cause the exchange offer registration statement for the exchange notes to become effective and (iii) no later than 240 days after the issuance of the outstanding notes, to consummate the exchange and to hold the exchange offer open for at least 20 days, or longer, if required by the federal securities laws. The exchange notes will have terms substantially identical to the outstanding notes, except that the exchange notes will not contain terms with respect to transfer restrictions, registration rights and special interest for failure to observe certain obligations in the exchange and registration rights agreement. The outstanding notes were issued on May 7, 2010.

Under the circumstances set below, we will use all commercially reasonable efforts to, no later than 240 days after the issuance of the outstanding notes, file with the SEC a shelf registration statement with respect to the resale of the outstanding notes and cause such shelf registration statement to be declared effective and keep such shelf registration statement continuously effective until the second anniversary of the effective date of the shelf registration statement or such earlier time as there are no longer any outstanding notes to be registered. These circumstances include:

• if we and the guarantors are not permitted to consummate the exchange offer because the exchange offer is not permitted by applicable law or SEC policy; and

• if any holder of outstanding notes to be registered notifies us prior to the 20^th business day following consummation of the exchange offer that (A) such holder was prohibited by law or SEC policy from participating in the exchange offer, (B) such holder may not resell the exchange notes acquired by it in the exchange offer to the public without delivering a prospectus and this prospectus is not appropriate or available for such resales by such holder or (C) such holder is a broker-dealer and holds outstanding notes to be registered acquired directly from us or one of our affiliates.

If (i) we have not filed an exchange offer registration statement with the SEC on or prior to the 180th day after the issuance of the outstanding notes, (ii) any such exchange offer registration statement has not been declared effective on or before the 210th day after the issuance of the outstanding notes, (iii) we have not exchanged the exchange notes for all notes validly tendered in accordance with the terms of an exchange offer on or before the 240th day after the issuance of the outstanding notes or, if applicable, (iv) a shelf registration statement covering resales of the notes has not been declared effective or such shelf registration statement ceases to be effective at any time during the shelf registration period (subject to certain exceptions), then additional interest shall accrue on the principal amount of the notes at a rate of 0.25% per annum for the first 180-day period immediately following such date and by an additional 0.25% per annum with respect to each subsequent 90-day period, up to a maximum additional rate of 1.50% per annum thereafter, until the exchange offer is completed, the shelf registration statement is declared effective or, if such shelf registration statement ceased to be effective, again becomes effective or until the second anniversary of the original issue date of the notes, unless such period is extended, as described in the registration rights agreement.

If we fail to comply with certain obligations under the registration rights agreement, we will be required to pay special interest to holders of the outstanding notes.

If you wish to exchange your outstanding notes for exchange notes in the exchange offer, you will be required to make the following written representations:

• you are not our affiliate or an affiliate of any guarantor within the meaning of Rule 405 of the Securities Act;

124

• you have no arrangement or understanding with any person to participate in a distribution (within the meaning of the Securities Act) of the exchange notes in violation of the provisions of the Securities Act;

• you are not engaged in, and do not intend to engage in, a distribution of the exchange notes; and

• you are acquiring the exchange notes in the ordinary course of your business.

Each broker-dealer that receives exchange notes for its own account in exchange for outstanding notes, where the broker-dealer acquired the outstanding notes as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. See “Plan of Distribution.”

Resale of Exchange Notes

Based on interpretations by the SEC set forth in no-action letters issued to third parties, we believe that you may resell or otherwise transfer exchange notes issued in the exchange offer without complying with the registration and prospectus delivery provisions of the Securities Act if:

• you are not our affiliate or an affiliate of any guarantor within the meaning of Rule 405 under the Securities Act;

• you do not have an arrangement or understanding with any person to participate in a distribution of the exchange notes;

• you are not engaged in, and do not intend to engage in, a distribution of the exchange notes; and

• you are acquiring the exchange notes in the ordinary course of your business.

If you are our affiliate or an affiliate of any guarantor, or are engaging in, or intend to engage in, or have any arrangement or understanding with any person to participate in, a distribution of the exchange notes, or are not acquiring the exchange notes in the ordinary course of your business:

• you cannot rely on the position of the SEC set forth in Morgan Stanley & Co. Incorporated (available June 5, 1991) and Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted in the SEC’s letter to Shearman & Sterling, dated July 2, 1993, or similar no-action letters; and

• in the absence of an exception from the position stated immediately above, you must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale of the exchange notes.

This prospectus may be used for an offer to resell, resale or other transfer of exchange notes only as specifically set forth in this prospectus. With regard to broker-dealers, only broker-dealers that acquired the outstanding notes as a result of market-making activities or other trading activities may participate in the exchange offer. Each broker-dealer that receives exchange notes for its own account in exchange for outstanding notes, where such outstanding notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of the exchange notes. Please read “Plan of Distribution” for more details regarding the transfer of exchange notes.

Terms of the Exchange Offer

On the terms and subject to the conditions set forth in this prospectus and in the letter of transmittal, we will accept for exchange in the exchange offer any outstanding notes that are properly tendered and not withdrawn prior to the expiration date. Outstanding notes may only be tendered in minimum denominations of $2,000 and integral multiples of $1,000 in excess of $2,000. We will issue exchange notes in principal amount identical to outstanding notes surrendered in the exchange offer.

125

The form and terms of the exchange notes will be substantially identical to the form and terms of the outstanding notes except the exchange notes will be registered under the Securities Act, will not bear legends restricting their transfer and will not provide for any special interest upon our failure to fulfill our obligations under the exchange and registration rights agreement to complete the exchange offer, or file, and cause to be effective, a registration statement, if required thereby, within the specified time period described above. The exchange notes will evidence the same debt as the outstanding notes. The exchange notes will be issued under and entitled to the benefits of the same indenture that authorized the issuance of the outstanding notes. Consequently, the outstanding notes and the exchange notes will be treated as a single class of debt securities under the indenture. For a description of the indenture, see “Description of the Exchange Notes.”

The exchange offer is not conditioned upon any minimum aggregate principal amount of outstanding notes being tendered for exchange.

As of the date of this prospectus, $250 million aggregate principal amount of the 8.375% Senior Secured Notes due 2018 are outstanding. This prospectus and a letter of transmittal are being sent to all registered holders of outstanding notes. There will be no fixed record date for determining registered holders of outstanding notes entitled to participate in the exchange offer. We intend to conduct the exchange offer in accordance with the provisions of the registration rights agreement, the applicable requirements of the Securities Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations of the SEC. Outstanding notes that are not tendered for exchange in the exchange offer will remain outstanding and continue to accrue interest and will be entitled to the rights and benefits the holders have under the indenture relating to the outstanding and the exchange and registration rights agreement, except for any rights under the registration rights agreement that by their terms terminate upon the consummation of the exchange offer.

We will be deemed to have accepted for exchange properly tendered outstanding notes when we have given oral or written notice of the acceptance to the exchange agent. The exchange agent will act as agent for the tendering holders for the purposes of receiving the exchange notes from us and delivering exchange notes to holders. Subject to the terms of the exchange and registration rights agreement, we expressly reserve the right to amend or terminate the exchange offer and to refuse to accept for exchange any outstanding notes not previously accepted for exchange, upon the occurrence of any of the conditions specified below under “—Conditions to the Exchange Offer.”

If you tender your outstanding notes in the exchange offer, you will not be required to pay brokerage commissions or fees or, subject to the instructions in the letter of transmittal, transfer taxes with respect to the exchange of outstanding notes. We will pay all charges and expenses, other than certain applicable taxes described below in connection with the exchange offer. It is important that you read “—Fees and Expenses” below for more details regarding fees and expenses incurred in the exchange offer.

Expiration Date, Extensions and Amendments

As used in this prospectus, the term “expiration date” means 11:59 p.m., New York City time, on,            , 2010. However, if we, in our sole discretion, extend the period of time for which the exchange offer is open, the term “expiration date” will mean the latest time and date to which we shall have extended the expiration of the exchange offer.

To extend the period of time during which the exchange offer is open, we will notify the exchange agent of any extension by oral or written notice, followed by notification by press release or other public announcement to the registered holders of the outstanding notes no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date.

We reserve the right, in our sole discretion:

• to delay accepting for exchange any outstanding notes (only in the case that we amend or extend the exchange offer);

126

• to extend the exchange offer or to terminate the exchange offer and refuse to accept outstanding notes not previously accepted if any of the conditions set forth below under “—Conditions to the Exchange Offer” have not been satisfied, by giving oral or written notice of such delay, extension or termination to the exchange agent; and

• subject to the terms of the exchange and registration rights agreement, to amend the terms of the exchange offer in any manner. In the event of a material change in the exchange offer, including the waiver of a material condition, we will extend the offer period, if necessary, so that at least five business days remain in such offer period following notice of the material change.

Any delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by oral or written notice to the registered holders of the outstanding notes. If we amend the exchange offer in a manner that we determine to constitute a material change, we will promptly disclose the amendment in a manner reasonably calculated to inform the holders of the outstanding notes of that amendment.

Without limiting the manner in which we may choose to make public announcements of any delay in acceptance, extension, termination or amendment of the exchange offer, we will have no obligation to publish, advertise, or otherwise communicate any public announcement, other than by making a timely release to a financial news service.

Conditions to the Exchange Offer

Despite any other term of the exchange offer, we will not be required to accept for exchange, or to issue exchange notes in exchange for, any outstanding notes and we may terminate or amend the exchange offer as provided in this prospectus prior to the expiration date if in our reasonable judgment:

• the exchange offer or the making of any exchange by a holder violates any applicable law or interpretation of the SEC; or

• any action or proceeding has been instituted or threatened in writing in any court or by or before any governmental agency with respect to the exchange offer that, in our judgment, would reasonably be expected to impair our ability to proceed with the exchange offer.

In addition, we will not be obligated to accept for exchange the outstanding notes of any holder that has not made to us:

• the representations described under “—Purpose and Effect of the Exchange Offer,” “—Procedures for Tendering Outstanding Notes” and “Plan of Distribution”; or

• any other representations as may be reasonably necessary under applicable SEC rules, regulations or interpretations to make available to us an appropriate form for registration of the exchange notes under the Securities Act.

We expressly reserve the right at any time or at various times to extend the period of time during which the exchange offer is open. Consequently, we may delay acceptance of any outstanding notes by giving oral or written notice of such extension to their holders. We will return any outstanding notes that we do not accept for exchange for any reason without expense to their tendering holder promptly after the expiration or termination of the exchange offer.

We expressly reserve the right to amend or terminate the exchange offer and to reject for exchange any outstanding notes not previously accepted for exchange, upon the occurrence of any of the conditions of the exchange offer specified above. We will give oral or written notice of any extension, amendment, non-acceptance or termination to the holders of the outstanding notes as promptly as practicable. In the case of any extension, such notice will be issued no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date.

127

These conditions are for our sole benefit, and we may assert them regardless of the circumstances that may give rise to them or waive them in whole or in part at any or at various times prior to the expiration date in our sole discretion. If we fail at any time to exercise any of the foregoing rights, this failure will not constitute a waiver of such rights. Each such right will be deemed an ongoing right that we may assert at any time or at various times prior to the expiration date.

In addition, we will not accept for exchange any outstanding notes tendered, and will not issue exchange notes in exchange for any such outstanding notes, if at such time any stop order is threatened or in effect with respect to the registration statement of which this prospectus constitutes a part or the qualification of the indenture under the Trust Indenture Act of 1939 (the “TIA”).

Procedures for Tendering Outstanding Notes

To tender your outstanding notes in the exchange offer, you must comply with either of the following:

• complete, sign and date the letter of transmittal, or a facsimile of the letter of transmittal, have the signature(s) on the letter of transmittal guaranteed if required by the letter of transmittal and mail or deliver such letter of transmittal or facsimile thereof to the exchange agent at the address set forth below under “—Exchange Agent” prior to the expiration date; or

• comply with DTC’s Automated Tender Offer Program procedures described below.

In addition, either:

• the exchange agent must receive certificates for the outstanding notes along with the letter of transmittal prior to the expiration date;

• the exchange agent must receive a timely confirmation of book-entry transfer of the outstanding notes into the exchange agent’s account at DTC according to the procedures for book-entry transfer described below or a properly transmitted agent’s message prior to the expiration date; or

• you must comply with the guaranteed delivery procedures described below.

Your tender, if not withdrawn prior to the expiration date, constitutes an agreement between us and you upon the terms and subject to the conditions described in this prospectus and in the letter of transmittal.

The method of delivery of outstanding notes, letter of transmittal and all other required documents to the exchange agent is at your election and risk. We recommend that instead of delivery by mail, you use an overnight or hand delivery service, properly insured. In all cases, you should allow sufficient time to assure timely delivery to the exchange agent before the expiration date. You should not send letters of transmittal or certificates representing outstanding notes to us. You may request that your broker, dealer, commercial bank, trust company or nominee effect the above transactions for you.

If you are a beneficial owner whose outstanding notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender your outstanding notes, you should promptly contact the registered holder and instruct the registered holder to tender on your behalf. If you wish to tender the outstanding notes yourself, you must, prior to completing and executing the letter of transmittal and delivering your outstanding notes, either:

• make appropriate arrangements to register ownership of the outstanding notes in your name; or

• obtain a properly completed bond power from the registered holder of outstanding notes.

The transfer of registered ownership may take considerable time and may not be able to be completed prior to the expiration date.

128

Signatures on the letter of transmittal or a notice of withdrawal, as the case may be, must be guaranteed by a member firm of a registered national securities exchange or of the Financial Industry Regulatory Authority, Inc., a commercial bank or trust company having an office or correspondent in the United States or another “eligible guarantor institution” within the meaning of Rule 17A(d)-15 under the Exchange Act unless the outstanding notes surrendered for exchange are tendered:

• by a registered holder of the outstanding notes who has not completed the box entitled “Special Registration Instructions” or “Special Delivery Instructions” on the letter of transmittal; or

• for the account of an eligible guarantor institution.

If the letter of transmittal is signed by a person other than the registered holder of any outstanding notes listed on the outstanding notes, such outstanding notes must be endorsed or accompanied by a properly completed bond power. The bond power must be signed by the registered holder as the registered holder’s name appears on the outstanding notes, and an eligible guarantor institution must guarantee the signature on the bond power.

If the letter of transmittal, any certificates representing outstanding 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, those persons should also indicate when signing and, unless waived by us, they should also submit evidence satisfactory to us of their authority to so act.

The exchange agent and DTC have confirmed that any financial institution that is a participant in DTC’s system may use DTC’s Automated Tender Offer Program to tender outstanding notes. Participants in the program may, instead of physically completing and signing the letter of transmittal and delivering it to the exchange agent, electronically transmit their acceptance of the exchange by causing DTC to transfer the outstanding notes to the exchange agent in accordance with DTC’s Automated Tender Offer Program procedures for transfer. DTC will then send an agent’s message to the exchange agent. The term “agent’s message” means a message transmitted by DTC, received by the exchange agent and forming part of the book-entry confirmation, which states that:

• DTC has received an express acknowledgment from a participant in its Automated Tender Offer Program that is tendering outstanding notes that are the subject of the book-entry confirmation;

• the participant has received and agrees to be bound by the terms of the letter of transmittal, or in the case of an agent’s message relating to guaranteed delivery, that such participant has received and agrees to be bound by the notice of guaranteed delivery; and

• we may enforce that agreement against such participant. DTC is referred to herein as a “book-entry transfer facility.”

Acceptance of Exchange Notes

In all cases, we will promptly issue exchange notes for outstanding notes that we have accepted for exchange under the exchange offer only after the exchange agent timely receives:

• outstanding notes or a timely book-entry confirmation of such outstanding notes into the exchange agent’s account at the book-entry transfer facility; and

• a properly completed and duly executed letter of transmittal and all other required documents or a properly transmitted agent’s message.

By tendering outstanding notes pursuant to the exchange offer, you will represent to us that, among other things:

• you are not our affiliate or an affiliate of any guarantor within the meaning of Rule 405 under the Securities Act;

129

• you do not have an arrangement or understanding with any person or entity to participate in a distribution of the exchange notes; and

• you are acquiring the exchange notes in the ordinary course of your business.

In addition, each broker-dealer that is to receive exchange notes for its own account in exchange for outstanding notes must represent that such outstanding notes were acquired by that broker-dealer as a result of market-making activities or other trading activities and must acknowledge that it will deliver a prospectus that meets the requirements of the Securities Act in connection with any resale of the exchange notes. The letter of transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. See “Plan of Distribution.”

We will interpret the terms and conditions of the exchange offer, including the letter of transmittal and the instructions to the letter of transmittal, and will resolve all questions as to the validity, form, eligibility, including time of receipt and acceptance of outstanding notes tendered for exchange. Our determinations in this regard will be final and binding on all parties. We reserve the absolute right to reject any and all tenders of any particular outstanding notes not properly tendered or to not accept any particular outstanding notes if the acceptance might, in its or its counsel’s judgment, be unlawful. We also reserve the absolute right to waive any defects or irregularities as to any particular outstanding notes prior to the expiration date.

Unless waived, any defects or irregularities in connection with tenders of outstanding notes for exchange must be cured within such reasonable period of time as we determine. Neither we, the exchange agent nor any other person will be under any duty to give notification of any defect or irregularity with respect to any tender of outstanding notes for exchange, nor will any of them incur any liability for any failure to give notification. Any outstanding notes received by the exchange agent that are not properly tendered and as to which the irregularities have not been cured or waived will be returned by the exchange agent to the tendering holder, unless otherwise provided in the letter of transmittal, promptly after the expiration date.

Book-Entry Delivery Procedures

Promptly after the date of this prospectus, the exchange agent will establish an account with respect to the outstanding notes at DTC and, as the book-entry transfer facility, for purposes of the exchange offer. Any financial institution that is a participant in the book-entry transfer facility’s system may make book-entry delivery of the outstanding notes by causing the book-entry transfer facility to transfer those outstanding notes into the exchange agent’s account at the facility in accordance with the facility’s procedures for such transfer. To be timely, book-entry delivery of outstanding notes requires receipt of a confirmation of a book-entry transfer, a “book-entry confirmation,” prior to the expiration date. In addition, although delivery of outstanding notes may be effected through book-entry transfer into the exchange agent’s account at the book-entry transfer facility, the letter of transmittal or a manually signed facsimile thereof, together with any required signature guarantees and any other required documents, or an “agent’s message,” as defined below, in connection with a book-entry transfer, must, in any case, be delivered or transmitted to and received by the exchange agent at its address set forth on the cover page of the letter of transmittal prior to the expiration date to receive exchange notes for tendered outstanding notes, or the guaranteed delivery procedure described below must be complied with. Tender will not be deemed made until such documents are received by the exchange agent. Delivery of documents to the book-entry transfer facility does not constitute delivery to the exchange agent.

Holders of outstanding notes who are unable to deliver confirmation of the book-entry tender of their outstanding notes into the exchange agent’s account at the book-entry transfer facility or all other documents required by the letter of transmittal to the exchange agent on or prior to the expiration date must tender their outstanding notes according to the guaranteed delivery procedures described below.

130

Guaranteed Delivery Procedures

If you wish to tender your outstanding notes but your outstanding notes are not immediately available or you cannot deliver your outstanding notes, the letter of transmittal or any other required documents to the exchange agent or comply with the procedures under DTC’s Automatic Tender Offer Program in the case of outstanding notes, prior to the expiration date, you may still tender if:

• the tender is made through an eligible guarantor institution;

• prior to the expiration date, the exchange agent receives from such eligible guarantor institution either a properly completed and duly executed notice of guaranteed delivery, by facsimile transmission, mail, or hand delivery or a properly transmitted agent’s message and notice of guaranteed delivery, that (1) sets forth your name and address, the certificate number(s) of such outstanding notes and the principal amount of outstanding notes tendered; (2) states that the tender is being made thereby; and (3) guarantees that, within three New York Stock Exchange trading days after the expiration date, the letter of transmittal, or facsimile thereof, together with the outstanding notes or a book-entry confirmation, and any other documents required by the letter of transmittal, will be deposited by the eligible guarantor institution with the exchange agent; and

• the exchange agent receives the properly completed and executed letter of transmittal or facsimile thereof, as well as certificate(s) representing all tendered outstanding notes in proper form for transfer or a book-entry confirmation of transfer of the outstanding notes into the exchange agent’s account at DTC and all other documents required by the letter of transmittal within three New York Stock Exchange trading days after the expiration date.

Upon request, the exchange agent will send to you a notice of guaranteed delivery if you wish to tender your outstanding notes according to the guaranteed delivery procedures.

Withdrawal Rights

Except as otherwise provided in this prospectus, you may withdraw your tender of outstanding notes at any time prior to 11:59 p.m., New York City time, on the expiration date.

For a withdrawal to be effective:

• the exchange agent must receive a written notice, which may be by telegram, telex, facsimile or letter, of withdrawal at its address set forth below under “—Exchange Agent”; or

• you must comply with the appropriate procedures of DTC’s Automated Tender Offer Program system.

Any notice of withdrawal must:

• specify the name of the person who tendered the outstanding notes to be withdrawn;

• identify the outstanding notes to be withdrawn, including the certificate numbers and principal amount of the outstanding notes; and

• where certificates for outstanding notes have been transmitted, specify the name in which such outstanding notes were registered, if different from that of the withdrawing holder.

If certificates for outstanding notes have been delivered or otherwise identified to the exchange agent, then, prior to the release of such certificates, you must also submit:

• the serial numbers of the particular certificates to be withdrawn; and

• a signed notice of withdrawal with signatures guaranteed by an eligible institution unless you are an eligible guarantor institution.

131

If outstanding notes have been tendered pursuant to the procedures for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at the book-entry transfer facility to be credited with the withdrawn outstanding notes and otherwise comply with the procedures of the facility. We will determine all questions as to the validity, form and eligibility, including time of receipt of notices of withdrawal, and our determination will be final and binding on all parties. Any outstanding notes so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the exchange offer. Any outstanding notes that have been tendered for exchange but that are not exchanged for any reason will be returned to their holder, without cost to the holder, or, in the case of book-entry transfer, the outstanding notes will be credited to an account at the book-entry transfer facility, promptly after withdrawal, rejection of tender or termination of the exchange offer. Properly withdrawn outstanding notes may be retendered by following the procedures described under “—Procedures for Tendering Outstanding Notes” above at any time on or prior to the expiration date.

Exchange Agent

Wilmington Trust FSB has been appointed as the exchange agent for the exchange offers. You should direct all executed letters of transmittal and all questions and requests for assistance, requests for additional copies of this prospectus or of the letter of transmittal and requests for notices of guaranteed delivery to the exchange agent addressed as follows:

By Registered or Certified Mail:	By Regular Mail:	By Overnight Courier or Hand Delivery:
Wilmington Trust FSB c/o Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, DE 19890-1626 Attn: Sam Hamed Telephone: (302) 636-6181	Wilmington Trust FSB c/o Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, DE 19890-1626 Attn: Sam Hamed Telephone: (302) 636-6181	Wilmington Trust FSB c/o Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, DE 19890-1626 Attn: Sam Hamed Telephone: (302) 636-6181
	By Facsimile Transmission (eligible institutions only):
	(302) 636-4139, Attention: Sam Hamed
	Telephone Inquiries: (302) 636-6181

If you deliver the letter of transmittal to an address other than the one set forth above or transmit instructions via facsimile to a number other than the one set forth above, that delivery or those instructions will not be effective.

Fees and Expenses

The registration rights agreement provides that we will bear all expenses in connection with the performance of our obligations relating to the registration of the exchange notes and the conduct of the exchange offer. These expenses include registration and filing fees, accounting and legal fees and printing costs, among others. We will pay the exchange agent reasonable and customary fees for its services and reasonable out-of-pocket expenses. We will also reimburse brokerage houses and other custodians, nominees and fiduciaries for customary mailing and handling expenses incurred by them in forwarding this prospectus and related documents to their clients that are holders of outstanding notes and for handling or tendering for such clients.

We have not retained any dealer-manager in connection with the exchange offer and will not pay any fee or commission to any broker, dealer, nominee or other person, other than the exchange agent, for soliciting tenders of outstanding notes pursuant to the exchange offer.

132

Accounting Treatment

We will record the exchange notes in our accounting records at the same carrying value as the outstanding notes, which is the aggregate principal amount as reflected in our accounting records on the date of exchange. Accordingly, we will not recognize any gain or loss for accounting purposes upon the consummation of the exchange offer. We will record the expenses of the exchange offer as incurred.

Transfer Taxes

We will pay all transfer taxes, if any, applicable to the exchange of outstanding notes under the exchange offer. The tendering holder, however, will be required to pay any transfer taxes, whether imposed on the registered holder or any other person, if:

• certificates representing outstanding notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be issued in the name of, any person other than the registered holder of outstanding notes tendered;

• tendered outstanding notes are registered in the name of any person other than the person signing the letter of transmittal; or

• a transfer tax is imposed for any reason other than the exchange of outstanding notes under the exchange offer.

If satisfactory evidence of payment of such taxes is not submitted with the letter of transmittal, the amount of such transfer taxes will be billed to that tendering holder.

Holders who tender their outstanding notes for exchange will not be required to pay any transfer taxes. However, holders who instruct us to register exchange notes in the name of, or request that outstanding notes not tendered or not accepted in the exchange offer be returned to, a person other than the registered tendering holder will be required to pay any applicable transfer tax.

Consequences of Failure to Exchange

If you do not exchange your outstanding notes for exchange notes under the exchange offer, your outstanding notes will remain subject to the restrictions on transfer of such outstanding notes:

• as set forth in the legend printed on the outstanding notes as a consequence of the issuance of the outstanding notes pursuant to the exemption from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws; and

• as otherwise set forth in the prospectus distributed in connection with the private offering of the outstanding notes.

In general, you may not offer or sell your outstanding notes unless they are registered under the Securities Act or if the offer or sale is exempt from registration under the Securities Act and applicable state securities laws. Except as required by the exchange and registration rights agreement, we do not intend to register resales of the outstanding notes under the Securities Act.

Other

Participating in the exchange offer is voluntary, and you should carefully consider whether to accept. You are urged to consult your financial and tax advisors in making your own decision on what action to take.

We may in the future seek to acquire untendered outstanding notes in open market or privately negotiated transactions, through subsequent exchange offers or otherwise. We have no present plans to acquire any outstanding notes that are not tendered in the exchange offer or to file a registration statement to permit resales of any untendered outstanding notes.

133

REGISTRATION RIGHTS

The Company is filing this registration statement in connection with its obligations under the registration rights agreement, which the Company and its guarantor subsidiaries entered into with the initial purchasers with respect to the outstanding notes on the original issue date of the outstanding notes, pursuant to which the Company and its guarantor subsidiaries have agreed, for the benefit of the holders of the outstanding notes, that they will, at their own expense, (i) file an exchange offer registration statement with the SEC with respect to an offer to exchange the outstanding notes for exchange notes, having certain identical terms in all material respects to the outstanding notes offered hereby and which will evidence the same continuing indebtedness (except that the exchange notes will not contain terms with respect to transfer restrictions or interest rate increases as described under “The Exchange Offer—Purpose and Effect of the Exchange Offer”), (ii) use their reasonable efforts to cause the exchange offer registration statement to be declared effective by the SEC under the Securities Act and (iii) use their reasonable efforts to consummate the exchange offer not later than 240 days following the closing date of the original issuance of the outstanding notes. Once the exchange offer registration statement has been declared effective, we will offer the exchange notes in exchange for surrender of the outstanding notes. We will keep the exchange offer open for at least 20 business days (or longer if required by applicable law) after the date that notice of the exchange offer is mailed to holders of the outstanding notes.

In the event that (i) any changes in law or the applicable interpretations of the staff of the SEC do not permit us to effect the exchange offer, (ii) for any other reason the exchange offer is not consummated within 240 days of the original issue date of the outstanding notes, (iii) under certain circumstances, the initial purchasers shall so request or (iv) any holder of outstanding notes (other than the initial purchasers) is not eligible to participate in the exchange offer, we will, at our expense, (a) promptly after the filing obligation takes effect, file with the SEC a shelf registration statement covering resales of the outstanding notes, (b) use our commercially reasonable efforts to cause the shelf registration statement to be declared effective and (c) use our commercially reasonable efforts to keep the shelf registration statement effective until the earlier of the second anniversary of the closing of this offering and the date all outstanding notes covered by the shelf registration statement have either been sold in the manner set forth and as contemplated in the shelf registration statement or become eligible for resale pursuant to Rule 144 under the Securities Act without volume restrictions. We will, in the event of the filing of the shelf registration statement, provide to each holder of the outstanding notes copies of the prospectus which is a part of the shelf registration statement, notify each such holder when the shelf registration statement has become effective and take certain other actions as are required to permit unrestricted resales of the outstanding notes. A holder of the outstanding notes that sells its outstanding notes pursuant to the shelf registration statement generally (i) will be required to be named as a selling security holder in the related prospectus and to deliver a prospectus to purchasers, (ii) will be subject to certain of the civil liability provisions under the Securities Act in connection with such sales and (iii) will be bound by the provisions of the registration rights agreement that are applicable to such a holder (including certain indemnification rights and obligations thereunder). In addition, each holder of the outstanding notes will be required to deliver information to be used in connection with the shelf registration statement and to provide comments on the shelf registration statement within the time periods set forth in the registration rights agreement to have their outstanding notes included in the shelf registration statement and to benefit from certain provisions regarding liquidated damages.

This summary of certain provisions of the registration rights agreement does not purport to be complete and is subject to, and is qualified in its entirety by, the complete provisions of the registration rights agreement, a copy of which we will make available to holders of outstanding notes upon request.

134

DESCRIPTION OF THE EXCHANGE NOTES

You can find the definitions of certain terms used in this description under the subheading “—Certain Definitions.” In this description, (1) the term “Issuer” refers only to American Renal Holdings Inc. and not to any of its subsidiaries and (2) the term “Notes” refers to the outstanding notes and the exchange notes.

The outstanding notes were, and the exchange notes will be, issued under an Indenture (the “Indenture”), dated as May 7, 2010, among the Issuer, the Guarantors and Wilmington Trust FSB, as trustee (the “Trustee”). The terms of the Notes will 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 “Trust Indenture Act”).

The following description is a summary of the material provisions of the Indenture, the Security Documents and the Intercreditor Agreement. It does not restate the Indenture, the Security Documents and the Intercreditor Agreement in their entirety. We urge you to read the Indenture, the Security Documents and the Intercreditor Agreement because the Indenture, the Security Documents and the Intercreditor Agreement, and not this description, define your rights as holders of the Notes. Copies of the Indenture, the Security Documents and the Intercreditor Agreement are available as set forth below under “—Additional Information.” Certain defined terms used in this description but not defined below under “—Certain Definitions” have the meanings assigned to them in the Indenture.

The registered holder of a note will be treated as the owner of it for all purposes. Only registered holders will have rights under the Indenture. For additional information, see “The Exchange Offer.”

Brief Description of the Notes and the Guarantees of the Notes

The Notes:

• are secured, subject to Permitted Liens, by the Collateral, which will also secure, on an equal and ratable basis, any Pari Passu Lien Indebtedness and the Priority Payment Lien Obligations (although the Holders of Notes will receive proceeds of Collateral after the payment in full of the Priority Payment Lien Obligations in the event of a foreclosure or in any bankruptcy, insolvency or similar event);

• are structurally subordinated to all Indebtedness (other than Indebtedness owing to the Issuer or a Guarantor) of Non-Guarantor Subsidiaries, including all of the Subsidiaries that operate the clinics;

• rank equally in right of payment with any existing and future senior Indebtedness of the Issuer;

• will be effectively senior to any future Indebtedness of the Issuer that is unsecured or secured by Liens that are junior to the Liens securing the Notes, in each case, to the extent of the value of the Collateral (after giving effect to Liens securing the Priority Payment Lien Obligations and any other Lien on the Collateral);

• are senior in right of payment to any future obligations of the Issuer that are expressly subordinated in right of payment to the Notes;

• are subject in right of payment to the prior payment of Priority Payment Lien Obligations in the event of a foreclosure or in any insolvency proceeding with proceeds of the Collateral; and

• are entitled to registration rights pursuant to the Registration Rights Agreement.

The Notes are unconditionally guaranteed, jointly and severally, by Holdings and each of Issuer’s existing and future Subsidiaries other than Excluded Subsidiaries.

135

The Guarantee of each Guarantor:

• are secured, subject to Permitted Liens, by the Collateral, which will also secure, on an equal and ratable basis, any Pari Passu Lien Indebtedness and the Priority Payment Lien Obligations (although the Holders will receive proceeds of Collateral after the payment in full of the Priority Payment Lien Obligations in the event of a foreclosure or in any bankruptcy, insolvency or similar event);

• are subject in right of payment to the prior payment of Priority Payment Lien Obligations in the event of a foreclosure or in any insolvency proceeding with proceeds of the Collateral;

• rank equally in right of payment with all existing and future senior Indebtedness of that Guarantor;

• are effectively senior to any future Indebtedness of that Guarantor that is unsecured or secured by Liens that are junior to the Liens securing the Guarantees, in each case, to the extent of the value of the Collateral (after giving effect to Liens securing the Priority Payment Lien Obligations and any other senior Lien on the Collateral); and

• are senior in right of payment to any future Indebtedness of that Guarantor that is expressly subordinated in right of payment to the Guarantee of that Guarantor.

As of September 30, 2010, the Issuer and the Guarantors had aggregate principal amount of Indebtedness (other than intercompany Indebtedness) of $250.0 million. The Issuer was also been able to borrow up to an additional $25.0 million of secured Indebtedness under the Credit Agreement, which constitutes Priority Payment Lien Obligations.

Holders of the Notes are only creditors of the Issuer and the Guarantors, and not of our Non-Guarantor Subsidiaries. In the event of a bankruptcy, liquidation or reorganization of any of the Non-Guarantor Subsidiaries, the Non-Guarantor Subsidiaries will pay the holders of their debt, including their trade creditors, secured creditors and creditors holding indebtedness or guarantees issued by those subsidiaries, before they will be able to distribute any of their assets to us. As a result, all the existing and future liabilities of our Non-Guarantor Subsidiaries, including any claims of trade creditors, are effectively senior to the Notes.

The Issuer and the Guarantors (other than American Renal Management LLC) are currently holding companies for our joint venture subsidiaries that operate the clinics. Non-Guarantor Subsidiaries account for substantially all of our consolidated revenues, cash flows and assets. As of September 30, 2010, the Non-Guarantor Subsidiaries had approximately $98.4 million of total balance sheet liabilities. Although the Indenture contains limitations on the amount of additional Indebtedness that we and the Restricted Subsidiaries may incur, the amounts of this Indebtedness could be substantial. In addition, because the Indenture does not materially limit our ability to purchase equity interests of Strategic Investors in our Qualified Restricted Subsidiaries, the holders of those interests may have the ability to obtain a return on their investment senior to the holders of the Notes. Our ability to service our debt, including the Notes, is dependent upon the earnings of our Non-Guarantor Subsidiaries and their ability to distribute those earnings to us. See “Risk Factors—Risks Related to the Notes—The right to receive payments on the notes is structurally subordinated to the liabilities of our non-guarantor subsidiaries and substantially all of our operations are conducted through non-guarantor subsidiaries.”

Under the circumstances described below under the caption “—Certain Covenants—Designation of Restricted and Unrestricted Subsidiaries,” we were permitted to designate certain of our Subsidiaries as “Unrestricted Subsidiaries.” Our Unrestricted Subsidiaries will not be subject to many of the restrictive covenants in the Indenture and will not guarantee the Notes. There are no Unrestricted Subsidiaries as of the Issue Date.

136

Principal, Maturity and Interest

The Issuer issued $250.0 million aggregate principal amount of Notes in a private transaction that was not subject to the registration requirements of the Securities Act. The Notes were issued in initial denominations of $2,000 principal amount and integral multiples of $1,000 principal amount in excess thereof. The Notes will mature on May 15, 2018. Subject to our compliance with the covenant described under the subheading “—Certain Covenants—Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock” and “—Certain Covenants—Liens,” we are permitted to issue an unlimited amount of additional Notes under the Indenture (the “Additional Notes”) on the same terms and conditions as the Notes being offered hereby. Any Additional Notes will be secured, equally and ratably with the Notes offered hereby, by liens on the Collateral. The Notes and the Additional Notes, if any, will be treated as a single class for all purposes of the Indenture, including waivers, amendments, redemptions and offers to purchase; provided that, if any Additional Notes subsequently issued are not fungible for U.S. federal income tax purposes or securities law purposes with any Notes previously issued, such Additional Notes shall trade separately from such previously issued Notes under a separate CUSIP number but shall otherwise be treated as a single class with all other Notes issued under the Indenture. Unless the context otherwise requires, for all purposes of the Indenture and this “Description of the Exchange Notes,” references to the Notes include any Additional Notes actually issued.

Interest on the Notes accrues at the rate of 8.375% per annum from May 7, 2010, or from the most recent date to which interest has been paid or provided for, and will be payable semiannually in arrears on May 15 and November 15 of each year, commencing on November 15, 2010. We will make each interest payment to the holders of record of the Notes on the immediately preceding May 1 and November 1. We will pay interest on overdue principal at 2% per annum in excess of the above rate and will pay interest on overdue installments of interest at such higher rate to the extent lawful. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.

Methods of Receiving Payments on the Notes

Principal of, premium, if any, and interest and Additional Interest on the Notes are payable, and the Notes may be exchanged or transferred, at the office or agency of the Issuer (which initially will be an office of an affiliate of the Trustee); provided, however, payment of interest and Additional Interest may, at the option of the Issuer, be made by check mailed to the address of the holders as such address appears in the register of holders, and in addition, if a holder of at least $1.0 million in aggregate principal amount of Notes has given wire transfer instructions to us prior to the record date for a payment, the Issuer will make such payment of principal of, premium, if any, and interest and Additional Interest on such holder’s Notes in accordance with those instructions. Payment of principal of, premium, if any, and interest and Additional Interest on, Notes in global form registered in the name of or held by DTC or any successor depositary or its nominee will be made by wire transfer of immediately available funds to such depositary or its nominee, as the case may be, as the registered holder of such global note.

Paying Agent and Registrar for the Notes

The Trustee will initially act as paying agent and registrar. The Issuer may change the paying agent or registrar without prior notice to the holders of the Notes, and the Issuer or any of its Subsidiaries may act as paying agent or registrar.

Transfer and Exchange

A holder may transfer or exchange Notes in accordance with the provisions of the Indenture. The registrar and the Trustee may require a holder, among other things, to furnish appropriate endorsements and transfer documents in connection with a transfer of Notes. No service charge will be made for any registration of transfer or exchange of Notes, but the Issuer may require payment of a sum sufficient to cover any transfer tax or other

137

similar governmental charge payable in connection therewith. The Issuer is not be required to transfer or exchange any note selected for redemption. Also, the Issuer is not be required to transfer or exchange any note for a period of 15 days before a selection of Notes to be redeemed.

Optional Redemption

Prior to May 15, 2013, not more than once in each twelve-month period, the Issuer may, at its option, redeem up to 10% of the aggregate principal amount of the Notes issued under the Indenture at a redemption price equal to 103% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest and Additional Interest thereon, if any, to the date of redemption.

At any time prior to May 15, 2013, the Issuer may, on one or more occasions, redeem up to 35% of the aggregate principal amount of Notes issued under the Indenture at a redemption price of 108.375% of the principal amount, plus accrued and unpaid interest and Additional Interest, if any, to the redemption date, with the net cash proceeds of one or more Equity Offerings by the Issuer or a cash contribution to the equity capital of the Issuer (other than Disqualified Stock) from the net cash proceeds of one or more Equity Offerings by the Issuer, Holdings or any other direct or indirect parent of the Issuer; provided that:

(1) at least 65% of the aggregate principal amount of Notes issued under the Indenture (excluding Notes held by the Issuer and its Affiliates) remains outstanding immediately after the occurrence of such redemption; and

(2) the redemption occurs within 90 days of the date of the closing of such Equity Offering.

On or after May 15, 2013, the Issuer may, on one or more occasions, redeem all or any portion of the Notes, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Additional Interest, if any, on the Notes to be redeemed, to the applicable redemption date, if redeemed during the twelve-month period beginning on May 15 of the years indicated below, subject to the rights of holders of Notes on the relevant record date to receive interest on the relevant interest payment date:

Year	Percentage
2013		104.188	%
2014		102.094	%
2015 and thereafter		100.000	%

Before May 15, 2013, the Issuer may, on one or more occasions, redeem all or any portion of the Notes, at a redemption price equal to 100% of the principal amount thereof plus the Applicable Premium as of, and accrued and unpaid interest and Additional Interest, if any, to, the date of redemption (a “Make-Whole Redemption Date”).

“Applicable Premium” means, with respect to any Note on any Make-Whole Redemption Date, the greater of (i) 1.0% of the principal amount of such Note and (ii) the excess of (A) the present value at such Make-Whole Redemption Date of (1) the redemption price of such Note at May 15, 2013 as set forth in the table above (exclusive of accrued interest), plus (2) all scheduled interest payments due on such Note from the Make-Whole Redemption Date through May 15, 2013, computed using a discount rate equal to the Treasury Rate at such Make-Whole Redemption Date, plus 50 basis points over (B) the principal amount of such Note.

“Treasury Rate” means, with respect to any Make-Whole Redemption Date, the yield to maturity at the time of computation of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15(519) that has become publicly available at least two business days prior to such Make-Whole Redemption Date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from such Make-Whole Redemption Date to May 15, 2013; provided, however, that if the period from such Make-Whole Redemption

138

Date to May 15, 2013 is not equal to the constant maturity of a United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the period from such Make-Whole Redemption Date to May 15, 2013 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used.

Unless the Issuer defaults in the payment of the redemption price, interest and Additional Interest will cease to accrue on the Notes or portions thereof called for redemption on the applicable redemption date.

The Issuer or any of its Restricted Subsidiaries may acquire Notes by means other than a redemption, whether pursuant to a tender offer, open market purchase, privately negotiated purchase or otherwise, so long as the acquisition does not otherwise violate the terms of the Indenture.

Selection and Notice

If less than all of the Notes are to be redeemed at any time, the Trustee will select Notes for redemption on a pro rata basis unless otherwise required by law or applicable stock exchange requirements; provided, however, that no Notes in an unauthorized denomination will be redeemed in part.

No Notes of $2,000 or less can be redeemed in part. Notices of redemption will be mailed by first class mail at least 30 but not more than 60 days before the redemption date to each holder of Notes to be redeemed at its registered address, except that redemption notices may be mailed more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Notes or a satisfaction and discharge of the Indenture. Notices of redemption may be conditional.

If any Note is to be redeemed in part only, the notice of redemption that relates to that Note will state the portion of the principal amount of that Note that is to be redeemed. A new Note in principal amount equal to the unredeemed portion of the original Note will be issued in the name of the holder of Notes upon cancellation of the original Note. Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest and Additional Interest will cease to accrue on Notes or portions of Notes called for redemption.

Mandatory Redemption

The Issuer is not required to make mandatory redemption or sinking fund payments with respect to the Notes.

Guarantees

The Notes are guaranteed, on a senior secured basis, by Holdings and each of the Issuer’s Subsidiaries, other than Excluded Subsidiaries. Future Subsidiaries (other than Excluded Subsidiaries) will also become Guarantors under the Indenture governing the Notes. The Guarantees are joint and several, irrevocable and unconditional obligations of the Guarantors. The obligations of each Subsidiary Guarantor under its Guarantee are limited to the extent practicable to prevent that Guarantee from constituting a fraudulent conveyance under applicable law. The validity of this “savings clause,” however, is not free from doubt. See “Risk Factors—Risks Related to the Notes—A court could void our subsidiaries’ guarantees of the notes under fraudulent transfer laws.”

139

A Guarantor may not sell or otherwise dispose of all or substantially all of its assets to, or consolidate with or merge with or into (whether or not such Guarantor is the surviving Person) another Person, other than the Issuer or a Subsidiary Guarantor, unless:

(1) the Person (if other than the Issuer or a Subsidiary Guarantor) acquiring the property in any such sale or disposition or the Person (if other than the Issuer of a Subsidiary Guarantor) formed by or surviving any such consolidation or merger assumes all the obligations of that Guarantor under its Guarantee, the Indenture, the Security Documents and the Registration Rights Agreement pursuant to a supplemental indenture satisfactory to the Trustee; or

(2) such transaction does not violate the provisions of the Indenture and the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the Indenture; and

(3) immediately after such transaction, no Default or Event of Default exists.

The Guarantee of a Subsidiary Guarantor will be automatically released:

(1) in connection with any sale or other disposition of all or substantially all of the assets of that Guarantor (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) the Issuer or a Subsidiary Guarantor, if the sale or other disposition does not violate the provisions of the Indenture;

(2) in connection with any sale or other disposition of the Capital Stock of that Guarantor to a Person that is not (either before or after giving effect to such transaction) the Issuer or a Guarantor after which the Guarantor whose Capital Stock is sold or otherwise disposed of is no longer a Restricted Subsidiary, if the sale or other disposition does not violate the provisions of the Indenture;

(3) if the Issuer designates any Restricted Subsidiary that is a Guarantor to be an Unrestricted Subsidiary in accordance with the applicable provisions of the Indenture;

(4) upon payment in full, legal defeasance, covenant defeasance or satisfaction and discharge of the Indenture as provided below under the captions “—Legal Defeasance and Covenant Defeasance” or “—Satisfaction and Discharge,” respectively; or

(5) upon such Subsidiary Guarantor becoming an Excluded Subsidiary in a transaction not prohibited by the Indenture.

If any Subsidiary Guarantor is released from its Guarantee, any of its Subsidiaries that are Guarantors will be released from their Guarantees, if any, and it and any of its Subsidiaries will be released from their obligations under the Security Documents.

Collateral

Subject to the limitations described under “—Intercreditor Agreement” below, the obligations of the Issuer with respect to the Notes, the obligations of the Guarantors under the Guarantees, and the performance of all other obligations of the Issuer and the Guarantors under the Indenture are secured equally and ratably with the obligations of the Issuer and the Guarantors under any Pari Passu Lien Indebtedness and Priority Payment Lien Obligations by a security interest (subject only to Permitted Liens and a prior right of payment afforded to Priority Payment Lien Obligations in the event of a foreclosure or in any bankruptcy, insolvency or similar event) in the following assets of the Issuer and the Guarantors, in each case whether now owned or hereafter acquired (other than Excluded Property) (the “Collateral”):

(a) 100% of the Equity Interests in Subsidiaries (other than CFCs) owned by the Issuer or any Guarantor and 66% of the voting stock and 100% of the non-voting stock of CFCs owned by the Issuer or any Guarantor;

(b) all accounts, chattel paper, certain deposit accounts, documents, general intangibles (including contract rights, including an assignment of benefits of physician guarantees of intercompany loans),

140

instruments, inventory, equipment, cash, investment property, letter-of-credit rights and any supporting obligations related to any of the foregoing (each as defined in the Uniform Commercial Code);

(c) present and future intercompany debt owed to the Issuer or any Guarantor;

(d) certain commercial tort claims;

(e) all books and records pertaining to Collateral;

(f) owned real properties owned by the Issuer or any Guarantor with a cost or book value (whichever is greater) in excess of $2.0 million (“Material Real Property”);

(g) all intellectual property and intellectual property licenses of the Issuer or any Guarantor (including without limitation patents, trademarks and copyrights);

(h) all other tangible and intangible assets of the Issuer or any Guarantor other than Excluded Property;

(i) all property of the Issuer or any Guarantor held by the Collateral Agent or any collateral agent for any class of Pari Passu Lien Indebtedness or Priority Payment Lien Obligations, including all property of every description, in the custody of or in transit to the Collateral Agent or any such collateral agent for any purpose, including safekeeping, collection or pledge, for the account of the Issuer or such Guarantor as to which the Issuer or such Guarantor may have any right or power, including, but not limited to, cash; and

(j) to the extent not otherwise included, all proceeds of the foregoing.

“Excluded Property” means, collectively,

(i) any rights or interests in any permit, license, lease or contract entered into by the Issuer or any Guarantor (A) that prohibits, or requires the consent of any Person other than the Issuer and its Affiliates which has not been obtained as a condition to, the creation by the Issuer or the applicable Guarantor of a Lien on any right, title or interest in such permit, license, lease or contract or (B) to the extent that any requirement of law applicable thereto prohibits the creation of a Lien thereon, but only, with respect to the prohibition in clauses (A) and (B), to the extent, and for as long as, such prohibition is not terminated or rendered unenforceable or otherwise deemed ineffective by the Uniform Commercial Code, any other requirement of law or principles of equity;

(ii) the Equity Interests of and other assets of Persons that are not Wholly Owned Subsidiaries to the extent and for so long as the granting of security interests in such Equity Interests and assets would be prohibited by a shareholders agreement or similar contract governing such Persons to the extent, and for as long as, such prohibition is not terminated or rendered unenforceable or otherwise deemed ineffective by the Uniform Commercial Code, any other requirement of law or principles of equity;

(iii) property owned by the Issuer or any Guarantor that is subject to a Lien permitted by clause (5) of the definition of “Permitted Liens” if the contractual obligation pursuant to which such Lien is granted (or in the document providing for such Lien) prohibits or requires the consent of any Person other than the Issuer and its Affiliates which has not been obtained as a condition to the creation of any other Lien on such item of property;

(iv) motor vehicles and other assets subject to certificates of title;

(v) any real property owned by the Issuer or any Guarantor that is not a Material Real Property;

(vi) leasehold real property interests;

(vii) any Equity Interests consisting of voting stock in any CFC directly owned by the Issuer or any Guarantor in excess of 66% of the outstanding voting stock of such CFC;

(viii) any “intent-to-use” application for registration of a trademark filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. Section 1051, prior to the filing of a “Statement of Use” pursuant to Section 1(d) of the Lanham Act or an “Amendment to Allege Use” pursuant to Section 1(c) of the Lanham Act with respect

141

thereto, solely to the extent, if any, that, and solely during the period, if any, in which, the grant of a security interest therein would impair the validity or enforceability of any registration that issues from such intent-to-use application under applicable federal law;

(ix) Excluded Deposit Accounts; and

(x) those assets as to which (x) the collateral agent under the Credit Agreement determines that the cost of obtaining such a security interest or perfection thereof is excessive in relation to the benefit to the lenders under the Credit Agreement of the security to be afforded thereby and (y) the Issuer reasonably and in good faith determines that the cost of obtaining such a security interest or perfection thereof is excessive in relation to the benefit to the lenders under the Credit Agreement and the holders of the security to be afforded thereby, such determinations to be certified in a Officers’ Certificate delivered by the Issuer to the Trustee.

For the avoidance of doubt, “Excluded Property” shall not include any proceeds, products, substitutions or replacements of Excluded Property (unless such proceeds, products, substitutions or replacements would otherwise constitute Excluded Property).

The Collateral was pledged pursuant to Security Documents substantially identical to the security documents to secure the Priority Payment Lien Obligations, with such conforming changes necessary to reflect that the obligations secured by the Security Documents are the Notes Obligations and other changes, if any, requested by the Collateral Agent or the Trustee. For the avoidance of doubt, no assets of any Subsidiary that is not a Guarantor (including any Equity Interests owned by any such Subsidiary) shall constitute Collateral.

In addition, in the event that Rule 3-16 of Regulation S-X under the Securities Act (as amended or modified from time to time) is interpreted by the SEC to require (or is replaced with another rule or regulation, or any other law, rule or regulation is adopted, which would require) the filing with the SEC (or any other governmental agency) of separate financial statements of any Subsidiary of the Issuer due to the fact that such Subsidiary’s Capital Stock secures the Notes, then the Capital Stock of such Subsidiary shall automatically be deemed not to be part of the Collateral but only to the extent necessary to not be subject to such requirement (the “Rule 3-16 Exception”). In such event, the Security Documents may be amended or modified, without the consent of any Holder, to the extent necessary to release the security interests in favor of the Collateral Agent on the shares of Capital Stock that are so deemed to no longer constitute part of the Collateral. In the event that Rule 3-16 of Regulation S-X under the Securities Act (as amended or modified from time to time) is interpreted by the SEC to permit (or are replaced with another rule or regulation, or any other law, rule or regulation is adopted, which would permit) such Subsidiary’s Capital Stock to secure the Notes in excess of the amount then pledged without the filing with the SEC (or any other governmental agency) of separate financial statements of such Subsidiary, then the Capital Stock of such Subsidiary shall automatically be deemed to be a part of the Collateral but only to the extent necessary to not be subject to any such financial statement requirement.

We may not have taken the actions required to perfect the security interests in all of the Collateral by the Issue Date. To the extent not completed by the Issue Date, such actions are required to be taken after the Issue Date within periods specified in the Indenture or the Security Documents.

Certain Limitations on the Collateral. The right of the Collateral Agent to take possession and dispose of the Collateral following an Event of Default is likely to be significantly impaired by applicable bankruptcy law if a bankruptcy proceeding were to be commenced by or against the Issuer or any Guarantor prior to the Collateral Agent having taken possession and disposed of the Collateral. Under the U.S. Bankruptcy Code, a secured creditor is prohibited from taking its security from a debtor in a bankruptcy case, or from disposing of security taken from such debtor, without bankruptcy court approval. Moreover, the U.S. Bankruptcy Code permits the debtor in certain circumstances to continue to retain and to use collateral owned as of the date of the bankruptcy filing (and the proceeds, products, offspring, rents or profits of such collateral) even though the debtor is in default under the applicable debt instruments, provided that the secured creditor is given “adequate protection.”

142

The meaning of the term “adequate protection” may vary according to circumstances. In view of the lack of a precise definition of the term “adequate protection” and the broad discretionary powers of a bankruptcy court, it is impossible to predict how long payments under the Notes could be delayed following commencement of a bankruptcy case, whether or when the Collateral Agent could repossess or dispose of the Collateral, or whether or to what extent Holders would be compensated for any delay in payment or loss of value of the Collateral pursuant to the requirement of “adequate protection.”

Furthermore, in the event a U.S. bankruptcy court determines the value of the Collateral (after giving effect to any prior Liens) is not sufficient to repay all amounts due on the Priority Payment Lien Obligations, the Notes and any Pari Passu Lien Indebtedness, the Priority Payment Lien Obligations would be repaid in full prior to any payments being made on the Notes and any Pari Passu Lien Indebtedness and then the holders of the Notes and any Pari Passu Lien Indebtedness would hold secured claims to the extent of the remaining value of the Collateral, and would hold unsecured claims with respect to any shortfall. Applicable U.S. bankruptcy laws permit the payment and/or accrual of post-petition interest, costs and attorneys’ fees during a debtor’s bankruptcy case only to the extent the claims are oversecured or the debtor is solvent at the time of reorganization. In addition, if the Issuer or any Guarantor were to become the subject of a bankruptcy case, the bankruptcy court, among other things, may avoid certain pre-petition transfers made by the entity that is the subject of the bankruptcy filing, including, without limitation, transfers held to be preferences or fraudulent conveyances.

The Issuer and the Guarantors generally are not required to take any actions to perfect the security interest of the Collateral Agent in the Collateral beyond the filing of UCC financing statements, mortgages on Material Real Properties, delivery of certificates and instruments evidencing pledges of Equity Interests and Indebtedness and delivering control agreements as described in the second paragraph under “—Use and Release of Collateral” and filings with respect to U.S. registered intellectual property. To the extent the Collateral Agent does not have a perfected security interest in any Collateral, the Collateral Agent’s security interest will not be enforceable against third parties.

Use and Release of Collateral

Unless an Event of Default shall have occurred and be continuing and the Collateral Agent shall have commenced enforcement of remedies under the Security Documents, the Issuer and the Guarantors have the right to remain in possession and retain exclusive control of the Collateral, to freely operate the Collateral and to collect, invest and dispose of any income thereon.

The Indenture and the Security Documents does, however, generally require the Issuer and the Guarantors to deliver to the collateral agent under the Credit Agreement or, if the Credit Agreement is not in effect, other Priority Payment Lien Obligations and for such collateral agent to maintain in its possession certificates and instruments evidencing pledges of Equity Interests and Indebtedness and, subject to exceptions specified in the Indenture and the Security Documents, to maintain all cash and cash equivalents of the Issuer and the Guarantors at an account or accounts with a financial institution that has entered into a control agreement in favor of the Collateral Agent with respect to such account(s).

Release of Collateral. The Indenture provides that the Liens on the Collateral securing the Notes will automatically and without the need for any further action by any Person be released:

(1) in whole or in part, as applicable, as to all or any portion of property subject to such Liens which has been taken by eminent domain, condemnation or other similar circumstances;

(2) in whole upon:

(a) satisfaction and discharge of the Indenture as described below under “—Satisfaction and Discharge”; or

143

(b) legal defeasance or covenant defeasance of the Indenture as described below under “—Legal Defeasance and Covenant Defeasance”;

(3) in part, as to any property that (a) is sold, transferred or otherwise disposed of by the Issuer or any Guarantor (other than to the Issuer or another Guarantor) in a transaction not prohibited by the Indenture at the time of such sale, transfer or disposition or (b) is owned or at any time acquired by a Guarantor that has been released from its Guarantee in accordance with the Indenture, concurrently with the release of such Guarantee (including in connection with the designation of a Guarantor as an Unrestricted Subsidiary);

(4) as set forth under “—Amendment, Supplement and Waiver,” as to property that constitutes less than all or substantially all of the Collateral, with the consent of holders of at least a majority in aggregate principal amount of the Notes outstanding (or, in the case of a release of all or substantially all of the Collateral, with the consent of the holders of at least seventy-five percent (75%) in aggregate principal amount of the Notes outstanding), including consents obtained in connection with a tender offer or exchange offer for, or purchase of, Notes; and

(5) in part, in accordance with the applicable provisions of the Security Documents and as described below with respect to the Intercreditor Agreement.

To the extent applicable, the Issuer will cause Trust Indenture Act § 313(b), relating to reports, and Trust Indenture Act § 314(d), relating to the release of property or securities or relating to the substitution therefor of any property or securities to be subjected to the Lien of the security documents, to be complied with. Any certificate or opinion required by Trust Indenture Act § 314(d) may be made by an officer of the Issuer except in cases where Trust Indenture Act § 314(d) requires that such certificate or opinion be made by an independent Person, which Person will be an independent engineer, appraiser or other expert selected or reasonably satisfactory to the Trustee.

Notwithstanding anything to the contrary in the preceding paragraph, the Issuer is not required to comply with all or any portion of Trust Indenture Act § 314(d) if it determines, in good faith based on advice of counsel, that under the terms of Trust Indenture Act § 314(d) and/or any interpretation or guidance as to the meaning thereof of the SEC and its staff, including “no action” letters or exemptive orders, all or any portion of Trust Indenture Act § 314(d) is inapplicable to one or a series of released Collateral.

Notwithstanding anything to the contrary contained in the preceding two paragraphs, the Trustee and Collateral Agent shall be entitled to receive an officer’s certificate and opinion of counsel stating that the release is authorized or permitted by the terms of the Indenture and that all conditions precedent to such release required by the Indenture have been complied with.

Intercreditor Agreement

On the Issue Date, the Collateral Agent and the collateral agent under the Credit Agreement entered into an intercreditor agreement (the “Intercreditor Agreement”) that was acknowledged by the Issuer and the Guarantors. Following the Issue Date, additional collateral agents for the holders of Pari Passu Lien Indebtedness may become party to the Intercreditor Agreement subject to compliance with certain procedural requirements in the Intercreditor Agreement. The Notes and other obligations secured by the Liens in favor of the Collateral Agent and the Priority Payment Lien Obligations secured by Liens in favor of the collateral agent under the Credit Agreement and the obligations in respect of any Pari Passu Lien Indebtedness secured by Liens in favor of any other collateral agent that becomes party to the Intercreditor Agreement are each referred to as a “class” of First Lien Obligations in this section.

The Intercreditor Agreement provides that, notwithstanding the date, time, method, manner or order of grant, attachment or perfection of any liens on any Collateral in which the Collateral Agent and one or more collateral agents for any class of Priority Payment Lien Obligations or Pari Passu Lien Indebtedness have

144

perfected security interests (any such Collateral as to which the Collateral Agent and any other collateral agent have such a perfected security interest being referred to as “Shared Collateral”), the Collateral Agent and each other collateral agent with respect to such Shared Collateral has equal rights to enforce the respective security interests in the Shared Collateral subject to certain other provisions of the Intercreditor Agreement; provided that the Priority Payment Lien Obligations have priority in right of payment upon a foreclosure or a bankruptcy, insolvency or similar event and will be repaid prior to payment of the Notes Obligations and the Pari Passu Lien Indebtedness.

The Intercreditor Agreement provides that none of the Collateral Agent, the collateral agent under the Credit Agreement, any additional collateral agent for the holders of Pari Passu Lien Indebtedness or any holders of First Lien Obligations shall contest or support any person in contesting in any proceeding (including a bankruptcy proceeding) the perfection, priority, validity, attachment or enforceability of a lien held by or on behalf of any other collateral agent or any holders of First Lien Obligations in the Shared Collateral; provided that the foregoing shall not impair the right of any collateral agent or holder of First Lien Obligations to enforce the Intercreditor Agreement. In addition, the Intercreditor Agreement provides that the Issuer and the Guarantors shall not, and shall not permit any Subsidiary to, grant or permit or suffer to exist any additional liens on any asset or property to secure the Priority Payment Lien Obligations, the Notes Obligations or any class of Pari Passu Lien Indebtedness unless it has granted a lien on such asset or property to secure the Priority Payment Lien Obligations, the Notes Obligations and each other class of Pari Passu Lien Indebtedness, as the case may be; provided that the foregoing shall not prohibit the Priority Payment Lien Obligations and any Pari Passu Lien Obligations from being secured by any Capital Stock that does not secure the Notes Obligations or any Pari Passu Lien Obligations due to the Rule 3-16 Exception.

If (i) an event of default under any document governing any First Lien Obligations shall have occurred and be continuing and any of the Collateral Agent, the collateral agent for the Credit Agreement or the collateral agent for any class of Pari Passu Lien Indebtedness or any secured party in respect of any class of First Lien Obligations is taking action to enforce rights or exercise remedies in respect of any Shared Collateral, (ii) any distribution is made in respect of any Shared Collateral in any insolvency or liquidation proceeding of the Issuer or any Guarantor or (iii) the Collateral Agent, any other such collateral agent or any such secured party receives any payment with respect to any Shared Collateral pursuant to any intercreditor agreement (other than the Intercreditor Agreement), then the proceeds of any sale, collection or other liquidation of any Shared Collateral obtained by such Collateral Agent, any other such collateral agent or any such secured party in respect of any First Lien Obligations on account of such enforcement of rights or exercise of remedies, and any such distributions or payments received by such Collateral Agent, any other such collateral agent or any such secured party in respect of any First Lien Obligations shall be applied as follows (1) first, to (a) the payment of all amounts owing to such collateral agent (in its capacity as such) pursuant to the terms of any document related to the First Lien Obligations, (b) in the case of any such enforcement of rights or exercise of remedies, to the payment of all costs and expenses incurred by such collateral agent or any of its related secured parties in respect of First Lien Obligations in connection therewith and (c) in the case of any such payment pursuant to any such intercreditor agreement, to the payment of all costs and expenses incurred by such collateral agent or any of its related secured parties in enforcing its rights thereunder to obtain such payment, (2) second, to the payment in full of any Priority Payment Lien Obligations (including any post-petition interest with respect thereto, whether or not allowable in any bankruptcy case) and the termination of any commitments thereunder, (3) third, to the payment in full of the Notes Obligations and all Pari Passu Lien Indebtedness secured by a valid and perfected lien on such Shared Collateral at the time due and payable (the amounts so applied to be distributed, as among such classes of First Lien Obligations, ratably in accordance with the amounts of the First Lien Obligations of each such class on the date of such application), (4) fourth, after payment in full of all the First Lien Obligations secured by such Shared Collateral, to the holders of junior liens on the Shared Collateral and (5) fifth, to the Issuer and the other Guarantors or their successors or assigns or as a court of competent jurisdiction may direct.

Nothing in the Intercreditor Agreement shall affect the ability of any of the Collateral Agent, the collateral agent for the Credit Agreement, other collateral agent in respect of any class of Pari Passu Lien Indebtedness or

145

any of the secured parties in respect of any First Lien Obligations (i) to enforce any rights and exercise any remedies with respect to any Shared Collateral available under the documents related to such Priority Payment Lien Obligations, Notes Obligations or the Pari Passu Lien Indebtedness or applicable law or (ii) to commence any action or proceeding with respect to such rights or remedies; provided that, notwithstanding the foregoing, (a) each collateral agent and its related secured parties shall remain subject to, and bound by, all covenants or agreements made in the Intercreditor Agreement, (b) each collateral agent has agreed, on behalf of itself and its related secured parties, that, prior to the commencement of any enforcement of rights or any exercise of remedies with respect to any Shared Collateral by such collateral agent or any of its related secured parties, such collateral agent or its related secured party, as the case may be, shall provide written notice thereof to each other collateral agent as far in advance of such commencement as reasonably practicable, and shall consult with each collateral agent on a regular basis in connection with such enforcement or exercise, and (c) each collateral agent agrees, on behalf of itself and its related secured parties, that such collateral agent and its related secured parties shall cooperate in a commercially reasonable manner with each other collateral agent and its related secured parties in any enforcement of rights or any exercise of remedies with respect to any Shared Collateral.

With respect to any Shared Collateral on which a Lien can be perfected by the possession or control of such Shared Collateral or of any deposit, securities or other account in which such Shared Collateral is held, then the applicable collateral agent in respect of Priority Payment Lien Obligations, Notes Obligations or the Pari Passu Lien Indebtedness that holds or controls such Shared Collateral shall also hold such Shared Collateral as gratuitous bailee and sub-agent for each other collateral agent in respect of the Notes Obligations, Pari Passu Lien Indebtedness and Priority Payment Lien Obligations. Any such collateral agent that holds Shared Collateral as gratuitous bailee and sub-agent shall be entitled to deal with the applicable pledged or controlled Shared Collateral as if the liens thereon of the collateral agent or secured parties of any other class of First Priority Obligations did not exist; provided that any proceeds arising from such pledged or controlled Shared Collateral shall be subject to the waterfall provisions set forth in the fourth paragraph of this section. Until the payment in full of the obligations under the Credit Agreement, the collateral agent under the Credit Agreement shall hold all such Collateral (for itself and as bailee for the Collateral Agent) which can be perfected by control or possession and, after the payment in full of such obligations, the collateral agent with respect to the class of First Priority Obligations of the largest principal amount at such time shall hold such Collateral.

The Intercreditor Agreement provides that the Collateral Agent and each collateral agent under the First Priority Obligations will have a right to exercise any remedies under any control agreement over a deposit account or securities account to which it is party; provided that the proceeds of any such exercise of remedies will be subject to the terms of the Intercreditor Agreement.

The Intercreditor Agreement shall not limit the Issuer’s ability to amend or refinance the Notes, Priority Payment Lien Obligations or Pari Passu Lien Indebtedness (although the Issuer will remain subject to the restrictions contained in the Credit Agreement, the Indenture and the documents governing any Priority Payment Lien Obligations or Pari Passu Lien Indebtedness).

Sufficiency of Collateral

There can be no assurance that the proceeds from the sale of the Collateral in whole or in part pursuant to the Security Documents following an Event of Default would be sufficient to satisfy the Notes Obligations. The fair market value of the Collateral is subject to fluctuations based on factors that include, among others, the condition of the dialysis industry, the ability to sell the Collateral in an orderly sale, general economic conditions, the availability of buyers and similar factors. The amount to be received upon a sale of the Collateral will also be dependent on numerous factors, including, but not limited to, the actual fair market value of the Collateral at such time and the timing and the manner of the sale. By their nature, portions of the Collateral may be illiquid and may have no readily ascertainable market value. In addition, the fact that the lenders under the Priority Payment Lien Obligations will receive proceeds from enforcement of the Collateral before holders of the Notes and that other Persons may have first-priority Liens in respect of Collateral pursuant to Permitted Liens could have a

146

material adverse effect on the amount that holders of the Notes would receive upon a sale or other disposition of the Collateral. Accordingly, there can be no assurance that the Collateral can be sold in a short period of time or in an orderly manner. If the proceeds from a sale or other disposition of the Collateral were not sufficient to repay all amounts due on the Notes, the holders of the Notes (to the extent not repaid from the proceeds of the sale of the Collateral) would have only an unsecured claim against the remaining assets of the Issuer and the Guarantors. See “Risk Factors—Risk Related to the Notes—The value of the Collateral securing the Notes may not be sufficient to satisfy our obligations under the Notes and the other obligations secured by an equal and ratable lien on the Collateral.”

To the extent that third parties hold Liens permitted by the Security Documents and the Indenture, such third parties will have rights and remedies with respect to the assets subject to such Liens that, if exercised, could adversely affect the value of the Collateral or the ability of the Collateral Agent acting for the benefit of the Trustee or the holders of the Notes to realize or foreclose on the Collateral. In addition, the ability of the Collateral Agent acting for the benefit of the Trustee and the holders of Notes to realize on the Collateral may be subject to certain bankruptcy law limitations in the event of a bankruptcy. See “—Collateral—Certain Limitations on the Collateral.”

In addition, as noted above, the Issuer and the Guarantors (other than American Renal Management LLC) are holding companies for our joint venture subsidiaries that operate the clinics. Our joint venture subsidiaries are not Guarantors, and their assets do not secure the Notes Obligations.

Further Assurances; After-Acquired Collateral

Subject to the limitations described above, the Security Documents and the Indenture provides that the Issuer and the Guarantors shall, at their expense, duly execute and deliver, or cause to be duly executed and delivered, such further agreements, documents and instruments, and do or cause to be done such further acts as may be necessary or proper, or which the Collateral Agent may reasonably request, to evidence, perfect, maintain and enforce the lien in the Collateral granted to the Collateral Agent and the priority thereof and benefits intended to be conferred as contemplated by, and to otherwise effectuate the provisions or purposes of, the Indenture and the Security Documents.

Upon the acquisition by the Issuer or any Guarantor after the Issue Date of (1) any after-acquired assets, including, but not limited to, any after-acquired Material Real Property or any equipment or fixtures which constitute accretions, additions or technological upgrades to the equipment or fixtures or any working capital assets that, in any such case, form part of the Collateral, or (2) any replacement assets in compliance with the covenant described below under “—Repurchase at the Option of Holders—Asset Sales,” the Issuer or such Guarantor shall execute and deliver, (i) with regard to any Material Real Property, a mortgage and supporting documentation specified in the Indenture within 90 days of the date of acquisition, and (ii) to the extent required by the Security Documents, any information, documentation, financing statements or other certificates and opinions of counsel as may be necessary to vest in the Collateral Agent a perfected security interest, subject only to Permitted Liens, in such after-acquired property (other than Excluded Property) and to have such after-acquired property added to the Collateral, and thereupon all provisions of the Indenture, the Security Documents and the Intercreditor Agreement relating to the Collateral shall be deemed to relate to such after-acquired property to the same extent and with the same force and effect.

Repurchase at the Option of Holders

Change of Control

If a Change of Control occurs, each holder of Notes will have the right to require the Issuer to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000 in excess thereof) of that holder’s Notes pursuant to a Change of Control Offer on the terms set forth in the Indenture. In the Change of Control Offer, the Issuer will

147

offer a change of control payment (the “Change of Control Payment”) in cash equal to 101% of the aggregate principal amount of Notes repurchased plus accrued and unpaid interest and Additional Interest, if any, on the Notes repurchased to the date of purchase, subject to the rights of holders of Notes on the relevant record date to receive interest due on the relevant interest payment date. Within 30 days following any Change of Control, the Issuer will mail a notice to each holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase Notes on the date specified in the notice (the “Change of Control Payment Date”), which date will be no earlier than 30 days and no later than 60 days from the date such notice is mailed, pursuant to the procedures required by the Indenture and described in such notice. The Issuer will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with the Change of Control provisions of the Indenture, the Issuer will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Change of Control provisions of the Indenture by virtue of such compliance.

On the Change of Control Payment Date, the Issuer will, to the extent lawful:

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

(2) deposit with the paying agent an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes properly tendered; and

(3) deliver or cause to be delivered to the Trustee the Notes properly accepted together with and Officers’ Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by the Issuer.

The paying agent will promptly mail to each holder of Notes properly tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any. The Issuer will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.

The provisions described above that require the Issuer to make a Change of Control Offer following a Change of Control are applicable whether or not any other provisions of the Indenture are applicable. Except as described above with respect to a Change of Control, the Indenture does not contain provisions that permit the holders of the Notes to require that the Issuer repurchase or redeem the Notes in the event of a takeover, recapitalization or similar transaction.

The Issuer will not be required to make a Change of Control Offer upon a Change of Control if (1) 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 the Issuer and purchases all Notes properly tendered and not withdrawn under the Change of Control Offer or (2) notice of redemption has been given pursuant to the Indenture as described above under the caption “—Optional Redemption,” unless and until there is a default in payment of the applicable redemption price. Notwithstanding anything to the contrary herein, a Change of Control Offer may be made in advance of a Change of Control, conditional upon such Change of Control, if a definitive agreement is in place for the Change of Control at the time of making of the Change of Control Offer.

The definition of Change of Control includes a phrase relating to the direct or indirect sale, lease, transfer, conveyance or other disposition of “all or substantially all” of the properties or assets of the Issuer and its Subsidiaries taken as a whole. Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a

148

holder of Notes to require the Issuer to repurchase its Notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of the assets of the Issuer and its Subsidiaries taken as a whole to another Person or group may be uncertain.

Asset Sales

The Issuer will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:

(1) the Issuer (or the Restricted Subsidiary, as the case may be) receives consideration at the time of the Asset Sale at least equal to the Fair Market Value of the assets or Equity Interests issued or sold or otherwise disposed of;

(2) if such Asset Sale involves the disposition of Collateral, the Issuer or such Restricted Subsidiary has complied with the provisions of the Indenture and the Security Documents; and

(3) at least 75% of the consideration received in the Asset Sale by the Issuer or such Restricted Subsidiary is in the form of cash. For purposes of this paragraph (3), each of the following will be deemed to be cash:

(a) Cash Equivalents;

(b) any liabilities (as shown on the Issuer’s most recent consolidated balance sheet) of the Issuer or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Notes or any Guarantee) that are assumed by the transferee of any such assets pursuant to an agreement that releases the Issuer or such Restricted Subsidiary from further liability;

(c) any securities, notes or other obligations received by the Issuer or any such Restricted Subsidiary from such transferee that are converted by the Issuer or such Restricted Subsidiary into cash within 180 days of receipt, to the extent of the cash received in that conversion;

(d)(i) any Designated Noncash Consideration received by the Issuer or a Restricted Subsidiary; provided, however, that (x) any such Designated Noncash Consideration that is converted into Cash Equivalents shall be treated as Net Proceeds in the manner set forth below and (y) in the event such Designated Noncash Consideration is an Investment, such Designated Noncash Consideration shall reduce amounts available under clause (16) of the definition of “Permitted Investments,” as determined by the Issuer, and (ii) any Designated Noncash Consideration the Fair Market Value of which, when taken together with all other Designated Noncash Consideration received pursuant to this clause (ii) (and not subsequently converted into Cash Equivalents that are treated as Net Proceeds of an Asset Sale), does not exceed the greater of $15.0 million and 3% of Total Assets at the time of receipt since the Issue Date, with the Fair Market Value of each item of Designated Noncash Consideration being measured at the time received and without giving effect to subsequent changes in value; and

(e) any Capital Stock, Investments or assets permitted by clause (2) or (4) of the next paragraph.

Within 365 days after the receipt of any Net Proceeds from an Asset Sale the Issuer (or the applicable Restricted Subsidiary, as the case may be) may apply such Net Proceeds at its option:

(1) to repay or prepay any (x) Priority Payment Lien Obligations; provided that if the Priority Payment Lien Obligation is revolving credit Indebtedness, the Issuer shall effect a corresponding reduction of commitments with respect thereto or (y) Indebtedness secured by a Permitted Lien on the assets sold whose prepayment is required by its terms upon such Asset Sale;

(2) to (x) acquire Capital Stock of a Person primarily engaged in a Permitted Business, if, after giving effect thereto, such Person is or becomes a Subsidiary Guarantor or a Qualified Restricted Subsidiary of the Issuer or (y) make Investments pursuant to clause (16) of the definition of “Permitted Investments”;

149

(3) to make capital expenditures; or

(4) to acquire assets (other than Indebtedness and Capital Stock) to be used by the Issuer or the applicable Restricted Subsidiary in a Permitted Business;

provided that (i) the requirements of clauses (2) through (4) above shall be deemed to be satisfied if an agreement (including a lease, whether a capital lease or an operating lease) committing to make the acquisitions or expenditures referred to in any of clauses (2) through (4) above is entered into by the Issuer or the applicable Restricted Subsidiary within 365 days after the receipt of such Net Proceeds with the good faith expectation that such Net Proceeds will be applied to satisfy such commitment in accordance with such agreement within 180 days of such commitment and if such Net Proceeds are not so applied within such 180-day period, then such Net Proceeds shall constitute Excess Proceeds (as defined below), and (ii) the requirement of clause (2)(x) shall be deemed to be satisfied with respect to any Net Proceeds from the sale or issuance of Equity Interests of a Qualified Restricted Subsidiary to the extent an amount equal to such Net Proceeds was used as described in clause (2)(x) within 365 days prior to the receipt of such Net Proceeds. In addition, to the extent that the assets that were the subject of the Asset Sale constituted Collateral, the assets acquired with the proceeds pursuant to any of clauses (2) through (4) above or acquired as consideration for such Assets Sale shall constitute Collateral.

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

Any Net Proceeds from Asset Sales that are not applied or invested as provided in the third paragraph of this covenant will constitute “Excess Proceeds.” When the aggregate amount of Excess Proceeds exceeds $10.0 million, within ten business days thereof, the Issuer will make an Asset Sale Offer to:

(i) in the case of Net Proceeds from Collateral, all holders of First Lien Obligations, and

(ii) in the case of any other Net Proceeds, all holders of First Lien Obligations and all holders of other Indebtedness that ranks pari passu with the Notes containing provisions similar to those set forth in this Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets (“Pari Passu Debt”).

The offer price in any Asset Sale Offer will be equal to 100% of the principal amount plus accrued and unpaid interest and Additional Interest, if any, to the date of purchase, and will be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Issuer may use those Excess Proceeds for any purpose not otherwise prohibited by the Indenture. If the aggregate principal amount of First Lien Obligations (in the case of Net Proceeds from Collateral) or First Lien Obligations and Pari Passu Debt (in the case of any other Net Proceeds) tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee will select the Notes to be purchased, and the representative(s) for the holders of other First Lien Obligations shall select such other First Lien Obligations to be purchased and prepaid, on a pro rata basis. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds will be reset at zero.

The Issuer will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with each repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the Asset Sale provisions of the Indenture, the Issuer will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Asset Sale provisions of the Indenture by virtue of such compliance.

The Credit Agreement provides that certain change of control or asset sale events with respect to the Issuer or repurchases of or other prepayments in respect of the Notes would constitute a default under the Credit Agreement. Any future credit agreements or other agreements relating to Indebtedness to which the Issuer becomes a party may contain similar restrictions and provisions. In the event a Change of Control or Asset Sale

150

occurs at a time when the Issuer is prohibited from purchasing Notes, the Issuer could seek the consent of its senior lenders to the purchase of Notes or could attempt to refinance the borrowings that contain such prohibition. If the Issuer does not obtain such a consent or repay such borrowings, the Issuer will remain prohibited from purchasing Notes. In such case, the Issuer’s failure to purchase tendered Notes would constitute an Event of Default under the Indenture which would, in turn, constitute a default under the Credit Agreement and other agreements governing the Issuer’s Indebtedness.

Intercompany Loan Refinancing

Subject to the following proviso, promptly following receipt of Net Proceeds from any Intercompany Loan Refinancing, the Issuer shall, to the extent thereof:

(1) prepay, or make an offer to prepay term loans that are Priority Payment Lien Obligations, and prepay such term loans to the extent the lenders thereof shall accept such offer in accordance with the terms of the applicable credit agreement, or reduce, or make an offer to reduce, the commitments under any revolving credit facility that is a Priority Payment Lien Obligation (and prepay any borrowings thereunder to the extent that the aggregate amount of credit exposures thereunder exceeds the aggregate amount of commitments) and, in the case of an offer to reduce, reduce the commitments of the lenders that accept such offer (and prepay such borrowings); and/or

(2) make an offer to purchase the Notes at a price in cash equal to 100% of the principal amount thereof, plus accrued and unpaid interest and Additional Interest, if any, to the date of purchase and if applicable, to make an offer to purchase or prepay to the holders of other First Lien Obligations that by their terms require the Issuer to make an offer to purchase or prepay such First Lien Obligations upon an Intercompany Loan Refinancing (the “Intercompany Loan Refinancing Offer”), and to purchase or prepay such First Lien Obligations on a pro rata basis with the Notes;

provided that the Issuer is not required to prepay, reduce commitments, make offers to prepay, reduce commitments or purchase Notes pursuant to clauses (1) and/or (2) above until the aggregate amount of proceeds received from one or more Intercompany Loan Refinancings (“Proceeds Amount”) exceeds $4.0 million.

Pending the final application of any such proceeds, the Issuer may temporarily reduce revolving credit borrowings or otherwise invest such proceeds in any manner that is not prohibited by the Indenture. If any such proceeds remain after consummation of the offer(s), as applicable, referred to above, the Issuer may use those proceeds for any purposes not prohibited by the Indenture and the Proceeds Amount shall be reset at zero.

Agreements relating to Indebtedness to which the Issuer becomes a party in the future may contain restrictions on the Issuer’s ability to purchase Notes. In the event an Intercompany Loan Refinancing occurs at a time when the Issuer is prohibited from purchasing Notes, the Issuer could seek the consent of its senior lenders to the purchase of Notes or could attempt to refinance the borrowings that contain such prohibition. If the Issuer does not obtain such a consent or repay such borrowings, the Issuer will remain prohibited from purchasing Notes. In such case, the Issuer’s failure to purchase tendered Notes would constitute an Event of Default under the Indenture which would, in turn, constitute a default under the Credit Agreement and other agreements governing the Issuer’s Indebtedness.

The Issuer will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws or regulations are applicable in connection with the purchase of Notes pursuant to an Intercompany Loan Refinancing Offer. To the extent that the provisions of any applicable securities laws or regulations conflict with the Intercompany Loan Refinancing Offer provisions of the Indenture, the Issuer will comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under the Intercompany Loan Refinancing Offer provisions of the Indenture by virtue of such compliance.

151

Certain Covenants

Restricted Payments

The Issuer will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:

(A) declare or pay any dividend or make any other payment or distribution on account of the Issuer’s or any of its Restricted Subsidiaries’ Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Issuer or any of its Restricted Subsidiaries) or to the direct or indirect holders of the Issuer’s or any of its Restricted Subsidiaries’ Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Issuer);

(B) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Issuer) any Equity Interests of the Issuer, Holdings or any other direct or indirect parent of the Issuer;

(C) make any payment on or with respect to, or purchase, repurchase, redeem, defease or otherwise acquire or retire for value any Indebtedness of the Issuer or any Guarantor that is contractually subordinated to the Notes or to any Guarantee (excluding any intercompany Indebtedness between or among the Issuer and any of its Restricted Subsidiaries), except (i) a payment of interest or principal at the Stated Maturity thereof or (ii) the purchase, repurchase, redemption, defeasance or other acquisition or retirement of any such subordinated Indebtedness purchased in anticipation of satisfying a sinking fund obligation, principal installment or payment at final maturity, in each case within one year of the date of such purchase, repurchase, redemption, defeasance or other acquisition or retirement; or

(D) make any Restricted Investment

(all such payments and other actions set forth in these clauses (A) through (D) above being collectively referred to as “Restricted Payments”), unless, at the time of and after giving effect to such Restricted Payment:

(1) no Default or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment;

(2) the Issuer would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the Measurement Period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described below under the caption “—Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”; and

(3) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Issuer and its Restricted Subsidiaries since the Issue Date (including Restricted Payments permitted by clauses (1) and (14) of the next succeeding paragraph, but excluding all other clauses of next succeeding paragraph), is less than the sum, without duplication, of:

(a) 50% of the Consolidated Net Income of the Issuer for the period (taken as one accounting period) from the beginning of the fiscal quarter commencing after the Issue Date to the end of the Issuer’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit); plus

(b) 100% of the aggregate Qualified Proceeds received by the Issuer since the Issue Date as a contribution to its equity capital (other than Disqualified Stock) or from the issue or sale (other than to a Subsidiary of the Issuer) of Equity Interests of the Issuer (other than Disqualified Stock and Excluded Contributions) or from the issue or sale (other than to a Subsidiary of the Issuer) of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities of the Issuer that have been converted into or exchanged for such Equity Interests of the Issuer (other than Disqualified Stock); plus

152

(c) an amount equal to the net reduction in Investments by the Issuer and its Restricted Subsidiaries resulting from (A) the sale or other disposition (other than to the Issuer or a Restricted Subsidiary) of any Restricted Investment that was made after the Issue Date and (B) repurchases, redemptions and repayments of such Restricted Investments and the receipt of any dividends or distributions from such Restricted Investments (other than, in each case, to the extent such Investment was made by the Issuer or any Restricted Subsidiary of the Issuer pursuant to clause (15) or (18) below and such amounts received have been applied to increase availability under either such clause); plus

(d) to the extent that any Unrestricted Subsidiary of the Issuer designated as such after the Issue Date is redesignated as a Restricted Subsidiary after the Issue Date, an amount equal to the lesser of (A) the Fair Market Value of the Issuer’s interest in such Subsidiary immediately prior to such redesignation and (B) the aggregate amount of the Issuer’s Investments in such Subsidiary that was previously treated as a Restricted Payment (other than, in each case, to the extent such Investment was made by the Issuer or any Restricted Subsidiary of the Issuer pursuant to clause (15) or (18) below and such amounts received have been applied to increase availability under either such clause); plus

(e) in the event the Issuer and/or any Restricted Subsidiary of the Issuer makes any Investment in a Person that, as a result of or in connection with such Investment, becomes a Restricted Subsidiary of the Issuer, an amount equal to the existing Investment of the Issuer and/or any of its Restricted Subsidiaries in such Person that was previously treated as a Restricted Payment (other than to the extent such Investment was made by the Issuer or any Restricted Subsidiary of the Issuer pursuant to clause (15) or (18) below and such amounts received have been applied to increase availability under either such clause).

The preceding provisions will not prohibit:

(1) the payment of any dividend or other distribution or the consummation of any irrevocable redemption within 60 days after the date of declaration of the dividend or giving of the redemption notice, as the case may be, if at the date of declaration or notice, the dividend or redemption payment would have complied with the provisions of the Indenture;

(2) the making of any Restricted Payment in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Subsidiary of the Issuer) of, Equity Interests of the Issuer (other than Disqualified Stock) or from the substantially concurrent contribution of equity capital to the Issuer (other than Disqualified Stock); provided that the amount of any such net cash proceeds that are utilized for any such Restricted Payment will be excluded from clause (3)(b) of the preceding paragraph;

(3) the repurchase, redemption, defeasance or other acquisition or retirement for value of Indebtedness of the Issuer or any Subsidiary Guarantor that is contractually subordinated to the Notes or to any Guarantee with the net cash proceeds from a substantially concurrent incurrence of Permitted Refinancing Indebtedness, or from the substantially concurrent sale (other than to a Subsidiary of the Issuer) of, Equity Interests of the Issuer (other than Disqualified Stock) or from the substantially concurrent contribution of equity capital to the Issuer (other than Disqualified Stock); provided that the amount of any such net cash proceeds that are utilized for any such Restricted Payment will be excluded from clause (3)(b) of the preceding paragraph;

(4) the declaration and payment of regularly scheduled or accrued dividends to holders of any class or series of Disqualified Stock of the Issuer or any Restricted Subsidiary of the Issuer which Disqualified Stock was issued after the Issue Date in accordance with the provisions of the covenant described below under the caption “—Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”;

(5) the repurchase, redemption or other acquisition or retirement for value of Disqualified Stock of the Issuer or any Restricted Subsidiary of the Issuer made by exchange for, or out of the proceeds of the substantially concurrent sale of Replacement Preferred Stock that is permitted to be incurred pursuant to the covenant described below under “—Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”;

153

(6) the payment of any dividend (or any similar distribution) by a Restricted Subsidiary of the Issuer to the holders of its Equity Interests, including payments to non-Affiliates on a pro rata basis;

(7) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of a Qualified Restricted Subsidiary owned by a Strategic Investor if such repurchase, redemption or other acquisition or retirement for value is made for consideration not in excess of the Fair Market Value of such Equity Interests (a) pursuant to any repurchase obligation to such Strategic Investor or (b) if no Default exists or would result therefrom;

(8) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Issuer or any Restricted Subsidiary of the Issuer held by any current or former officer, director, employee or consultant of the Issuer or any of its Restricted Subsidiaries, and any dividend payment or other distribution by the Issuer or a Restricted Subsidiary to Holdings or any other direct or indirect parent holding company of the Issuer utilized for the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of Holdings or such other direct or indirect parent holding company held by any current or former officer, director, employee or consultant of the Issuer or any of its Restricted Subsidiaries or Holdings or such other parent holding company, in each case, pursuant to any equity subscription agreement, stock option agreement, shareholders’ agreement or similar agreement or benefit plan or other agreement of any kind; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests may not exceed $5.0 million in any fiscal year (it being understood, however, that unused amounts permitted to be paid pursuant to this proviso are available to be carried over to subsequent fiscal years but in no event shall the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests exceed $10.0 million in any year); provided further that such amount in any fiscal year may be further increased by an amount not to exceed:

(a) the net cash proceeds from the sale of Equity Interests of the Issuer (other than Disqualified Stock) and, to the extent contributed to the Issuer as equity capital (other than Disqualified Stock), Equity Interests of Holdings or any other direct or indirect parent company of the Issuer, in each case to members of management, directors or consultants of the Issuer, any of its Subsidiaries, Holdings or any other direct or indirect parent company of the Issuer that occurs after the Issue Date, to the extent the cash proceeds from the sale of such Equity Interests have not otherwise been applied to the payment of Restricted Payments by virtue of clause (3)(b) of the preceding paragraph (and, to the extent utilized pursuant to this clause (8), such amount will be excluded from clause (3)(b) of the preceding paragraph), and excluding Excluded Contributions, plus

(b) the cash proceeds of key man life insurance policies received by the Issuer and its Restricted Subsidiaries after the Issue Date, less

(c) the amount of any Restricted Payments previously made pursuant to clauses (a) and (b) of this clause (8);

and provided, further, that cancellation of Indebtedness owing to the Issuer or any Restricted Subsidiary from members of management of the Issuer, any of the Issuer’s direct or indirect parent companies or any of the Issuer’s Restricted Subsidiaries in connection with a repurchase of Equity Interests of the Issuer or any of its direct or indirect parent companies will not be deemed to constitute a Restricted Payment for purposes of this covenant or any other provision of the Indenture;

(9) the repurchase of Equity Interests deemed to occur upon the exercise of options, rights or warrants to the extent such Equity Interests represent a portion of the exercise price of those options, rights or warrants;

(10) the repurchase, redemption, defeasance or other acquisition or retirement for value of Indebtedness of the Issuer or any Subsidiary Guarantor that is contractually subordinated to the Notes or to any Guarantee with any Excess Proceeds that remain after consummation of an Asset Sale Offer;

(11) after the occurrence of a Change of Control and within 60 days after the completion of the offer to repurchase the Notes pursuant to the covenant described above under “—Repurchase at the Option of

154

Holders—Change of Control” (including the purchase of the Notes tendered), any purchase or redemption of Indebtedness of the Issuer or any Subsidiary Guarantor that is contractually subordinated to the Notes or to any Guarantee required pursuant to the terms thereof as a result of such Change of Control at a purchase or redemption price not to exceed 101% of the outstanding principal amount thereof, plus any accrued and unpaid interest;

(12) cash payments in lieu of fractional shares issuable as dividends on preferred stock or upon the conversion of any preferred stock or convertible debt securities of the Issuer or any of its Restricted Subsidiaries;

(13) Permitted Payments to Parent;

(14) the payment:

(a) by the Issuer or any Restricted Subsidiary to Holdings or any other direct or indirect parent of the Issuer, which payment is used by the Person receiving such payment, following the first initial public offering of common Equity Interests by such Person, to pay dividends of up to 6% per annum of the net proceeds received by such Person in such public offering (or any subsequent public offering of common Equity Interests of such Person) that are contributed to the Issuer as equity capital (other than Disqualified Stock), or

(b) by the Issuer, following the first initial public offering of common Equity Interests by the Issuer, to pay dividends of up to 6% per annum of the net proceeds received by or contributed to the Issuer in such public offering (or any subsequent public offering of common Equity Interests by the Issuer)

(excluding, in the case of both clause (a) and clause (b), public offerings of common Equity Interests registered on Form S-8 and any other public sale to the extent the proceeds thereof are Excluded Contributions);

(15) Investments that are made with Excluded Contributions;

(16) payment of fees and reimbursement of other expenses to the Permitted Holders in connection with the Transactions as described in this prospectus under the caption “Certain Relationships and Related Transactions” or dividends to any direct or indirect parent of the Issuer to fund such payments;

(17) all payments to be made under the Merger Agreement and all other payments made or to be made in connection with the Transactions (including payments made to C.P. Atlas Holdings, Inc. to permit it to make such payments) as set forth in this prospectus, including payments to stockholders, and holders of options and warrants for common stock, of the merger consideration (or, in the case of options and warrants, the merger consideration less the exercise price thereof), and all payments made to former stockholders of the Issuer who have validly exercised appraisal rights, in connection with the Transactions;

(18) other Restricted Payments in an aggregate amount taken together with all other Restricted Payments made pursuant to this clause (18) not to exceed the greater of (a) $15.0 million and (b) 3.0% of Total Assets at the time made; and

(19) purchases of receivables pursuant to a Receivables Repurchase Obligation and distributions or payments of Receivables Fees and any other payments, in each case, in connection with a Qualified Receivables Transaction;

provided that in the case of clause (4), (10), (11), (14) or (18), no Default shall exist or result therefrom.

The amount of all Restricted Payments (other than cash) will be the Fair Market Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Issuer or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The Fair Market Value of any assets or securities that are required to be valued by this covenant will, if the Fair Market Value thereof exceeds $15.0 million, be determined by the Board of Directors of the Issuer, whose resolution with respect thereto will be delivered to the Trustee.

155

For purposes of determining compliance with the provisions set forth above, in the event that a Restricted Payment meets the criteria of more than one of the types of Restricted Payments described in the above clauses, the Issuer, in its sole discretion, may order and classify, and from time to time may reorder and reclassify, such Restricted Payment if it would have been permitted at the time such Restricted Payment was made and at the time of any such reclassification.

Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock

The Issuer will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Issuer will not issue any Disqualified Stock and will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Issuer or any Guarantor may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock or preferred stock, if the Fixed Charge Coverage Ratio would be at least 2.00 to 1.00.

The first paragraph of this covenant will not prohibit the incurrence of any of the following items of Indebtedness or the issuance of any of the following items of Disqualified Stock or preferred stock (collectively, “Permitted Debt”):

(1) the incurrence by the Issuer and/or any Guarantor of Indebtedness under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1) not to exceed the greater of (a) $25.0 million and (b) an amount equal to 50% of Consolidated EBITDA, calculated on a Pro Forma basis, for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date of any incurrence under this clause (1); less the aggregate amount of all Net Proceeds of Asset Sales of the Issuer or any Restricted Subsidiary applied since the Issue Date to repay any Indebtedness under a Credit Facility pursuant to the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales,” less the aggregate amount of term loans prepaid or revolving commitments reduced pursuant to the covenant described above under the caption “—Repurchase at the Option of Holders—Intercompany Loan Refinancings”;

(2) the incurrence by the Issuer and the Subsidiary Guarantors of the Existing Indebtedness outstanding on the Issue Date;

(3) the incurrence by the Issuer and the Guarantors of Indebtedness represented by the Notes to be issued on the Issue Date, the Guarantees of all of the Notes and the Exchange Notes, and the Exchange Notes to be issued pursuant to the Registration Rights Agreement;

(4)(x) Acquired Debt or Disqualified Stock or preferred stock of any Person that is acquired by the Issuer or any of its Restricted Subsidiaries or that consolidates or merges with or into a Restricted Subsidiary in accordance with the terms of the Indenture; provided, however, that (i) such Acquired Debt, Disqualified Stock or preferred stock existed prior to such acquisition, consolidation or merger and was not incurred or issued in connection therewith, or in contemplation thereof; and (ii) after giving effect thereto, the Issuer would be permitted to incur at least $1.00 of additional Indebtedness under the first paragraph of this covenant; or

(y) Acquired Debt or Disqualified Stock or preferred stock of any Person that consolidates or merges into the Issuer or any Guarantor in accordance with the terms of the Indenture; provided, however, that (i) such Acquired Debt, Disqualified Stock or preferred stock existed prior to such consolidation or merger and was not incurred or issued in connection therewith, or in contemplation thereof; and (ii) after giving effect thereto, the Consolidated Fixed Charge Coverage Ratio of the Issuer and the Restricted Subsidiaries is equal to or greater than immediately prior to the incurrence of such Acquired Debt, Disqualified Stock or preferred stock;

(5) the incurrence by the Issuer or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness or Replacement Preferred Stock in exchange for, or the net proceeds of which are used to

156

renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) or any Disqualified Stock or preferred stock that was permitted by the Indenture to be incurred under the first paragraph of this covenant or clause (2) or (3) of this paragraph or this clause (5);

(6) the incurrence by the Issuer, any Subsidiary Guarantor, any Qualified Restricted Subsidiary or any Restricted Subsidiary that meets the requirements of clauses (1), (2) and (3) of the definition of “Qualified Restricted Subsidiary” of Indebtedness owing to the Issuer, any Subsidiary Guarantor and any Qualified Restricted Subsidiary; provided, however, that:

(a) if the Issuer or any Subsidiary Guarantor is the obligor on such Indebtedness and the payee is not the Issuer or a Subsidiary Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Notes, in the case of the Issuer or the Guarantee, in the case of a Guarantor, except to the extent such subordination would violate any applicable law, rule or regulation; and

(b)(i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being owed to a Person other than the Issuer, a Subsidiary Guarantor or a Qualified Restricted Subsidiary of the Issuer and (ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Issuer, a Subsidiary Guarantor or a Qualified Restricted Subsidiary of the Issuer, will be deemed, in each case, to constitute a new incurrence of such Indebtedness by the Issuer or such Restricted Subsidiary, as the case may be, which new incurrence is not permitted by this clause (6);

(7) the issuance by any Subsidiary Guarantor or any Qualified Restricted Subsidiary to the Issuer, any Subsidiary Guarantor or to any Qualified Restricted Subsidiary of shares of preferred stock; provided, however, that:

(a) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Issuer, a Subsidiary Guarantor or a Qualified Restricted Subsidiary of the Issuer, and

(b) any sale or other transfer of any such preferred stock to a Person that is not either the Issuer, a Subsidiary Guarantor or a Qualified Restricted Subsidiary of the Issuer,

will be deemed, in each case, to constitute a new issuance of such preferred stock by such Restricted Subsidiary which new issuance is not permitted by this clause (7);

(8) the incurrence by the Issuer or any of its Restricted Subsidiaries of Hedging Obligations for the purpose of limiting interest rate, currency or commodity risk;

(9) the guarantee:

(a) by the Issuer or any Subsidiary Guarantor of Indebtedness of the Issuer or a Guarantor that was permitted to be incurred by another provision of this covenant; provided that if the Indebtedness being guaranteed is subordinated to the Notes, then the guarantee shall be subordinated to the same extent as the Indebtedness guaranteed;

(b)(i) by any Non-Guarantor Subsidiary that is a Qualified Restricted Subsidiary of Indebtedness of a Non-Guarantor Subsidiary that is a Qualified Restricted Subsidiary and (ii) by any Non-Guarantor Subsidiary that is not a Qualified Restricted Subsidiary of Indebtedness of a Non-Guarantor Subsidiary that is not a Qualified Restricted Subsidiary; and

(c) by the Issuer or any Subsidiary Guarantor of Indebtedness of any Qualified Restricted Subsidiary incurred pursuant to clause (15) or (16) of this covenant (up to the indirect or indirect proportionate ownership interest in such Qualified Restricted Subsidiary by the Issuer);

(10) the incurrence by the Issuer or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, letters of credit, performance bonds, surety bonds, appeal bonds or other similar bonds in the ordinary course of business;

157

(11) the incurrence by the Issuer or any of its Restricted Subsidiaries of 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, so long as such Indebtedness is extinguished within five business days;

(12) the incurrence of Indebtedness arising from agreements of the Issuer or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, holdback, contingency payment obligations or similar obligations, in each case, incurred or assumed in connection with the disposition or acquisition of any business, assets or Capital Stock of the Issuer or any Restricted Subsidiary;

(13) Indebtedness of the Issuer or any of its Restricted Subsidiaries supported by a letter of credit issued pursuant to any Credit Facilities, in a principal amount not in excess of the stated amount of such letter of credit;

(14) the incurrence of Indebtedness resulting from endorsements of negotiable instruments for collection in the ordinary course of business;

(15) the incurrence of Indebtedness or Disqualified Stock by Qualified Restricted Subsidiaries, in an aggregate amount not to exceed (net of unrestricted cash and Cash Equivalents held by any Qualified Restricted Subsidiary not included in the calculation under clause (16) below, up to the amount of Indebtedness of such Qualified Restricted Subsidiary under this clause (15)) at any time outstanding, the greater of (i) $25.0 million and (ii) an amount equal to 50% of Consolidated EBITDA for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date of any incurrence under this clause (15);

(16) if the Consolidated Leverage Ratio of the Issuer and its Restricted Subsidiaries would not be greater than 4.50 to 1.00, (a) the incurrence of Permitted Refinancing Indebtedness or Replacement Preferred Stock by Qualified Restricted Subsidiaries incurred to refinance Indebtedness owed, or Disqualified Stock issued, to the Issuer or a Subsidiary Guarantor in accordance with clause (6) of this paragraph, or (b) the sale to any Person that is not Holdings or any of its Subsidiaries of any Indebtedness owed, or Disqualified Stock issued, by a Qualified Restricted Subsidiary to the Issuer or a Subsidiary Guarantor in accordance with clause (6) of this paragraph (either clause (a) or (b), an “Intercompany Loan Refinancing”), in an aggregate principal amount under this clause (16) not to exceed (net of unrestricted cash and Cash Equivalents held by any Qualified Restricted Subsidiary not included in the calculation under clause (15) above, up to the amount of Indebtedness of such Qualified Restricted Subsidiary under this clause (16)) at any time outstanding, the greater of (i) $25.0 million and (ii) an amount equal to 50% of Consolidated EBITDA, calculated on a Pro Forma Basis, for the most recently ended of four full fiscal quarters for which internal financial statements are available immediately preceding the date of any incurrence under this clause (16);

(17) Indebtedness of the Issuer or a Restricted Subsidiary in respect of netting services, overdraft protection and otherwise in connection with deposit accounts; provided that such Indebtedness remains outstanding for ten business days or less;

(18) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and refinancings thereof, in an aggregate amount not to exceed at any time outstanding $15.0 million;

(19) the incurrence or issuance by the Issuer or any of its Restricted Subsidiaries of additional Indebtedness, Disqualified Stock or preferred stock in an aggregate principal amount (or accreted value or liquidation preference, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness and all Replacement Preferred Stock incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness, Disqualified Stock and preferred stock incurred or issued pursuant to this clause (19), not to exceed $15.0 million;

(20) Indebtedness in respect of promissory notes issued to Strategic Investors in connection with repurchases of Equity Interests permitted by clause (7) of the second paragraph under the caption “—Restricted Payments”;

158

(21) Indebtedness owed by the Issuer or any Restricted Subsidiary to future, current or former officers, directors, employees or consultants thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of the Issuer or any direct or indirect parent company of the Issuer to the extent described in clause (8) of the second paragraph under the caption “—Restricted Payments”;

(22) Indebtedness representing deferred compensation to employees of the Issuer and the Restricted Subsidiaries incurred in the ordinary course of business;

(23) Indebtedness of the Issuer or any Restricted Subsidiary consisting of (i) the financing of insurance premiums or (ii) take-or-pay obligations contained in supply arrangements, in each case, in the ordinary course of business;

(24) Indebtedness incurred by the Issuer or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, health, disability or other employee benefits, or property, casualty or liability insurance, or other Indebtedness with respect to reimbursement-type obligations regarding workers’ compensation claims; provided that upon the drawing of such letters of credit or the incurrence of such Indebtedness, such obligations are reimbursed within 45 days following such drawing or incurrence;

(25) Indebtedness of the Issuer or any Restricted Subsidiary to the extent the proceeds of such Indebtedness are substantially concurrent with the incurrence thereof deposited and used to defease the Notes as provided for below under “—Legal Defeasance and Covenant Defeasance” or “—Satisfaction and Discharge”;

(26) incurrence by the Issuer or any of its Restricted Subsidiaries of Contribution Indebtedness;

(27) Indebtedness in respect of bid, performance or surety bonds or obligations of a similar nature issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance or surety obligations (in each case other than for an obligation for money borrowed);

(28) Indebtedness in the form of earn-outs, contingent payments, seller notes, indemnification, incentive, non-compete, consulting or similar arrangements in connection with Permitted Investments or in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Equity Interests for the purpose of financing or in contemplation of any such acquisition; provided that (a) any amount of such obligations included on the face of the balance sheet of the Issuer or any Restricted Subsidiary shall not be permitted under this clause (28) and (b) in the case of a disposition, the maximum aggregate liability in respect of all such obligations outstanding under this clause (28) shall at no time exceed the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition; or

(29) Standard Securitization Undertakings incurred in a Qualified Receivables Transaction permitted under the Indenture.

For purposes of determining compliance with this “Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock” covenant, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (29) above, or is entitled to be incurred pursuant to the first paragraph of this covenant, the Issuer will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this covenant except that Indebtedness under the Credit Agreement outstanding on the Issue Date will be deemed to have been incurred in reliance on the exception provided by clause (1) of the definition of “Permitted Debt” above. The accrual of interest, the accretion or amortization of original issue

159

discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock or preferred stock in the form of additional shares of the same class of Disqualified Stock or preferred stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock or preferred stock for purposes of this covenant; provided, in each such case, that the amount thereof is included in Fixed Charges of the Issuer as accrued (other than the reclassification of preferred stock as Indebtedness due to a change in accounting principles).

The amount of any Indebtedness outstanding as of any date will be:

(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;

(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and

(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:

(a) the Fair Market Value of such assets at the date of determination; and

(b) the amount of the Indebtedness of the other Person.

No Layering of Debt

The Issuer will not, and will not permit any Guarantor to, directly or indirectly, incur any Indebtedness that is or purports to be by its terms (or by the terms of any agreement governing such Indebtedness) subordinated to any other Indebtedness of the Issuer or of such Guarantor, as the case may be, unless such Indebtedness is also by its terms (or by the terms of any agreement governing such Indebtedness) made expressly subordinate to the Notes or the Guarantee of such Guarantor, to the same extent and in the same manner as such Indebtedness is subordinated to such other Indebtedness of the Issuer or such Guarantor, as the case may be.

For purposes of the foregoing, no Indebtedness will be deemed to be subordinated in right of payment to any other Indebtedness of the Issuer or any Guarantors solely by virtue of being unsecured or secured by a junior priority Lien or by virtue of the fact that the holders of such Indebtedness have entered into intercreditor agreements or other arrangements giving one or more of such holders priority over the other holders in the collateral held by them.

Liens

The Issuer will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind, on or with respect to the Collateral except Permitted Collateral Liens. Subject to the immediately preceding sentence, the Issuer will not, and will not permit any of the Restricted Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind securing Indebtedness upon any of their property or assets, now owned or hereafter acquired, other than Permitted Liens.

Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries

The Issuer will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to:

(1) pay dividends or make any other distributions on its Capital Stock to the Issuer or any of its Restricted Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits, or pay any indebtedness owed to the Issuer or any of its Restricted Subsidiaries;

160

(2) make loans or advances to the Issuer or any of its Restricted Subsidiaries; or

(3) sell, lease or transfer any of its properties or assets to the Issuer or any of its Restricted Subsidiaries.

However, the preceding restrictions will not apply to encumbrances or restrictions existing under or by reason of:

(1) agreements governing Existing Indebtedness and the Credit Agreement as in effect on the Issue Date;

(2) the Indenture, the Notes, the Guarantees, the Security Documents and the Intercreditor Agreement;

(3) applicable law, rule, regulation or order, including any requirement of any governmental healthcare programs;

(4) any instrument or agreement governing Indebtedness or Capital Stock of a Restricted Subsidiary acquired by the Issuer or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness or Capital Stock was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person or any of its Subsidiaries, or the property or assets of the Person or any of its Subsidiaries, so acquired; provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of the Indenture to be incurred;

(5) customary non-assignment provisions in contracts, leases, subleases, licenses and sublicenses entered into in the ordinary course of business;

(6) customary restrictions in leases (including capital leases), security agreements or mortgages or other purchase money obligations for property acquired in the ordinary course of business that impose restrictions on the property purchased or leased of the nature described in clause (3) of the preceding paragraph;

(7) any agreement for the sale or other disposition of all or substantially all the Capital Stock or the assets of a Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending the sale or other disposition;

(8) any instrument or agreement governing Permitted Refinancing Indebtedness; provided that the restrictions contained therein are not materially more restrictive (as determined in good faith by the Issuer), taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced;

(9) Liens permitted to be incurred under the provisions of the covenant described above under the caption “—Liens” that limit the right of the debtor to dispose of the assets subject to such Liens;

(10) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business;

(11) customary provisions imposed on the transfer of copyrighted or patented materials;

(12) customary provisions restricting dispositions of real property interests set forth in any reciprocal easement agreements of the Issuer or any Restricted Subsidiary;

(13) contracts entered into in the ordinary course of business, not relating to any Indebtedness, and that do not, individually or in the aggregate, detract from the value of property or assets of the Issuer or any Restricted Subsidiary of the Issuer in any manner material to the Issuer or any Restricted Subsidiary of the Issuer;

(14) restrictions on the transfer of property or assets required by any regulatory authority having jurisdiction over the Issuer or any Restricted Subsidiary of the Issuer or any of their businesses;

(15) any instrument or agreement governing Indebtedness or preferred stock of any Restricted Subsidiary that is incurred or issued subsequent to the Issue Date and not in violation of the covenant

161

described under “—Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”; provided that the Issuer’s Board of Directors determines in good faith that restrictions are not reasonably likely to have a materially adverse effect on the Issuer’s and/or Guarantors’ ability to make principal and interest payments on the Notes;

(16) customary provisions in joint venture and other similar agreements, including agreements related to the ownership and operation of dialysis clinics, relating solely to such joint venture or facilities or the Persons who own Equity Interests therein;

(17) any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the Indebtedness, preferred stock, Liens, agreements, contracts, licenses, leases, subleases, instruments or obligations referred to in clauses (1), (2), (4) and (15) above; provided, however, that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are not materially more restrictive, taken as a whole, (as determined by the Issuer in good faith) than those restrictions contained in the Indebtedness, preferred stock, Liens, agreements, contracts, licenses, leases, subleases, instruments or obligations referred to in clauses (1), (2), (4) and (15) above, as applicable prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing;

(18) customary provisions in connection with a Qualified Receivables Transaction; and

(19) restrictions in Management Agreements that require the payment of management fees to the Issuer or one of its Restricted Subsidiaries prior to payment of dividends or distributions.

For purposes of determining compliance with this covenant, (i) the priority of any preferred stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on common stock shall not be deemed a restriction on the ability to make distributions on Capital Stock and (ii) the subordination of loans or advances made to the Issuer or a Restricted Subsidiary of the Issuer to other Indebtedness incurred by the Issuer or any such Restricted Subsidiary shall not be deemed a restriction on the ability to make loans or advances.

Distributions by Qualified Restricted Subsidiaries

Except to the extent restricted pursuant to any Permitted Payment Restrictions, the Issuer shall, and shall cause each Restricted Subsidiary to, cause each Qualified Restricted Subsidiary to declare and pay regular monthly, quarterly, semiannual or annual dividends or distributions to the holders of its Capital Stock in an amount equal to substantially all of the available cash flow of such Restricted Subsidiary for such period as determined in good faith by the board of directors, board of governors or such other individuals performing similar functions, subject to fiduciary duties applicable to such board or individual and such ordinary and customary reserves and other amounts as, in the good faith judgment of such individuals, may be necessary so that the business of such Restricted Subsidiary may be properly and advantageously conducted at all times, including amounts necessary for operations, capital expenditures, debt service and other needs.

If, at any time, any Restricted Subsidiary would fail to meet the requirements set forth in the definition of “Qualified Restricted Subsidiary,” it will thereafter cease to be a Qualified Restricted Subsidiary for purposes of the Indenture governing the Notes and any Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted Subsidiary that is not a Qualified Restricted Subsidiary as of such date and, if such Indebtedness is not permitted to be incurred as of such date under the covenant described under the caption “—Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock,” the Issuer will be in default of such covenant. The Board of Directors of the Issuer may at any time designate any Restricted Subsidiary not to be a Qualified Restricted Subsidiary; provided that such designation will be deemed to be an incurrence of Indebtedness by such Restricted Subsidiary of any outstanding Indebtedness of such Restricted Subsidiary, and such designation will only be permitted if (1) such Indebtedness is permitted under the covenant described under

162

the caption “—Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock,” and (2) no Default would be in existence following such designation. In the event (x) a Restricted Subsidiary fails to meet the requirements to be a Qualified Restricted Subsidiary or (y) the Board of Directors designates a Qualified Restricted Subsidiary not to be a Qualified Restricted Subsidiary, then all Investments in such Subsidiary since the Issue Date shall be deemed to have been acquired and consequently reduce the amount available for Restricted Payments under the covenant described above under the caption “—Restricted Payments” or the amount available for Restricted Investments under clause (16) of the definition of “Permitted Investments,” as determined by the Issuer. As of the Issue Date, all of the Issuer’s Restricted Subsidiaries are Qualified Restricted Subsidiaries.

Merger, Consolidation or Sale of Assets

The Issuer will not, directly or indirectly: (1) consolidate or merge with or into another Person (whether or not the Issuer is the surviving Person); or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Issuer and its Restricted Subsidiaries taken as a whole, in one or more related transactions, to another Person, unless:

(1) either: (a) the Issuer is the surviving Person; or (b) the Person formed by or surviving any such consolidation or merger (if other than the Issuer) or to which such sale, assignment, transfer, conveyance or other disposition has been made (collectively, the “Successor”) is a corporation or a limited liability company organized or existing under the laws of the United States, any state of the United States or the District of Columbia;

(2) the Successor assumes all the obligations of the Issuer under the Notes, the Indenture, the Security Documents and the Registration Rights Agreement pursuant to a supplement indenture and other agreements reasonably satisfactory to the Trustee; provided, however, that at all times, a corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia must be a co-issuer or the issuer of the Notes if such surviving Person is not a corporation;

(3) immediately after such transaction, no Default exists;

(4) the Issuer or the Successor would, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period:

(a) be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described above under the caption “—Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”; or

(b) have a Fixed Charge Coverage Ratio that is greater than the Fixed Charge Coverage Ratio of the Issuer immediately prior to such transaction;

(5) the Successor promptly causes such amendments, supplements or other instruments to be executed, delivered, filed and recorded in such jurisdictions as may be required by applicable law to preserve and protect the Liens of the Security Documents on the Collateral owned by or transferred to the Successor, together with such financing statements as may be required to perfect any security interests in such Collateral which may be perfected by filing of a financing statement under the Uniform Commercial Code of the relevant states;

(6) the Issuer shall have delivered to the Trustee an Officers’ Certificate stating that such consolidation, merger, amalgamation or transfer and such supplemental indenture, if any, comply with the Indenture and that such supplemental indenture, amendments, supplements or other instruments relating to the applicable Security Documents, if any, comply with the Indenture and an Officers’ Certificate and an Opinion of Counsel in a customary form including customary qualifications to the effect that such amendments, supplements or other instruments are enforceable;

163

(7) the Collateral owned by or transferred to the Successor shall:

(a) continue to constitute Collateral under the Indenture and the Security Documents,

(b) be subject to the Liens in favor of the Collateral Agent for its benefit and the benefit of the holders of the First Lien Obligations, and

(c) not be subject to any Lien other than Permitted Liens; and

(8) the property and assets of the Person which is merged or consolidated with or into the Successor, to the extent that they are property or assets of the types that would constitute Collateral under the Security Documents, shall be treated as after acquired property and the Successor shall take such action as may be reasonably necessary to cause such property and assets to be made subject to the Lien of the Security Documents in the manner and to the extent required in the Indenture.

In addition, the Issuer will not, directly or indirectly, lease all or substantially all of the properties and assets of it and its Restricted Subsidiaries taken as a whole, in one or more related transactions, to any other Person.

Clauses (3) and (4) above will not apply to:

(1) a merger of the Issuer with an Affiliate for the sole purpose and effect of reincorporating the Issuer in another jurisdiction;

(2) any consolidation or merger, or any sale, assignment, transfer, conveyance, lease or other disposition of assets between or among the Issuer and the Subsidiary Guarantors; and

(3) the consolidation or merger, or sale, assignment, transfer, conveyance, lease or other disposition of all or part of its assets, by any Restricted Subsidiary to the Issuer or a Subsidiary Guarantor.

Holdings will not, directly or indirectly: (1) consolidate or merge with or into another Person (whether or not the Holdings is the surviving Person); or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of Holdings and its Subsidiaries taken as a whole, in one or more related transactions, to another Person, unless:

(1) either: (a) Holdings is the surviving Person; or (b) the Person formed by or surviving any such consolidation or merger (if other than the Issuer) or to which such sale, assignment, transfer, conveyance or other disposition has been made (collectively, the “Successor Holdings”) is a corporation or a limited liability company organized or existing under the laws of the United States, any state of the United States or the District of Columbia;

(2) the Successor Holdings assumes all the obligations of Holdings under the Notes, the Indenture, the Security Documents and the Registration Rights Agreement pursuant to a supplemental indenture and other agreements reasonably satisfactory to the Trustee;

(3) immediately after such transaction, no Default exists;

(4) the Successor Holdings promptly causes such amendments, supplements or other instruments to be executed, delivered, filed and recorded in such jurisdictions as may be required by applicable law to preserve and protect the Liens of the Security Documents on the Collateral owned by or transferred to the Successor Holdings, together with such financing statements as may be required to perfect any security interests in such Collateral which may be perfected by filing of a financing statement under the Uniform Commercial Code of the relevant states;

(5) Holdings shall have delivered to the Trustee an Officers’ Certificate stating that such consolidation, merger, amalgamation or transfer and such amendments, supplements or other instruments, if any, comply with the Indenture and that such amendments, supplements or other instruments, relating to the applicable Security Documents, if any, comply with the Indenture and an Officers’ Certificate and an Opinion of Counsel in a customary form including customary qualifications to the effect that such amendments, supplements or other instruments are enforceable;

164

(6) the Collateral owned by or transferred to the Successor Holdings shall:

(a) continue to constitute Collateral under the Indenture and the Security Documents,

(b) be subject to the Liens in favor of the Collateral Agent for its benefit and the benefit of the holders of the First Lien Obligations, and

(c) not be subject to any Lien other than Permitted Liens; and

(7) the property and assets of the Person which is merged or consolidated with or into the Successor Holdings, to the extent that they are property or assets of the types that would constitute Collateral under the Security Documents, shall be treated as after acquired property and the Successor Holdings shall take such action as may be reasonably necessary to cause such property and assets to be made subject to the Lien of the Security Documents in the manner and to the extent required in the Indenture.

Transactions with Affiliates

The Issuer will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Issuer involving aggregate consideration in excess of $2.5 million (each, an “Affiliate Transaction”), unless:

(a) the Affiliate Transaction is on terms that, taken as a whole, are not materially less favorable to the Issuer or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Issuer or such Restricted Subsidiary with an unrelated Person; and

(b) the Issuer delivers to the Trustee (i) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $15.0 million, an Officers’ Certificate certifying that such Affiliate Transaction complies with this covenant and that such Affiliate Transaction has been approved by a majority of the members of the Board of Directors of the Issuer, together with a certified copy of the resolutions of the Board of Directors of the Issuer approving such Affiliate Transaction or Affiliate Transactions; and (ii) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $20.0 million, an opinion as to the fairness to the Issuer or such Restricted Subsidiary of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing.

The following items will not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of the prior paragraph:

(1) any employment agreement, employee benefit plan, officer or director indemnification agreement or any similar arrangement entered into by the Issuer or any of its Restricted Subsidiaries in the ordinary course of business and payments pursuant thereto;

(2) transactions between or among the Issuer and/or its Restricted Subsidiaries;

(3) transactions with a Person (other than an Unrestricted Subsidiary of the Issuer) that is an Affiliate of the Issuer solely because the Issuer owns, directly or through a Restricted Subsidiary, an Equity Interest in, or controls, such Person;

(4) payment of reasonable directors’ fees;

(5) any issuance of Equity Interests (other than Disqualified Stock) of the Issuer to Affiliates of the Issuer;

(6) Permitted Investments or Restricted Payments that do not violate the provisions of the Indenture described above under the caption “—Restricted Payments”;

165

(7) payment of fees and the reimbursement of other expenses to the Permitted Holders in connection with the Transactions as described in this prospectus under the caption “Certain Relationships and Related Transactions”;

(8) loans (or cancellation of loans) or advances to employees in the ordinary course of business;

(9) transactions with joint ventures, Unrestricted Subsidiaries, customers, suppliers, contractors, joint venture partners (including, without limitation, physicians) or purchasers or sellers of goods or services, in each case which are in the ordinary course of business (including, without limitation, pursuant to joint venture agreements) and otherwise in compliance with the terms of the Indenture, and which are fair to the Issuer or its Restricted Subsidiaries, as applicable, in the reasonable determination of the Board of Directors, chief executive officer or chief financial officer of the Issuer or its Restricted Subsidiaries, as applicable, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party;

(10) the existence of, or the performance by the Issuer or any Restricted Subsidiary of their obligations, if any, or obligations of Holdings under the terms of, any subscription, registration rights or stockholders agreement, partnership agreement or limited liability company agreement or similar agreement to which Holdings, the Issuer or any Restricted Subsidiary is a party as of the Issue Date and any similar agreements which the Issuer, any Restricted Subsidiary, Holdings or any other direct or indirect parent company of the Issuer may enter into thereafter; provided, however, that the entering into by the Issuer or any Restricted Subsidiary or the performance by the Issuer or any Restricted Subsidiary of obligations under any future amendment to any such existing agreement or under any similar agreement entered into after the Issue Date will only be permitted by this clause to the extent that the terms of any such amendment or new agreement, taken as a whole, are not materially disadvantageous to the holders of the Notes, as determined in good faith by the Board of Directors, chief executive officer or chief financial officer of the Issuer;

(11) the Transactions, including all payments made or to be made in connection with the Transactions as described in this prospectus;

(12) the entering into of any tax sharing agreement or arrangement and any Permitted Payments to Parent;

(13)(i) payments by the Issuer or any of its Restricted Subsidiaries to the Sponsor and/or any of its Affiliates for any financial advisory, financing, underwriting or placement services or in respect of other investment banking activities, including, without limitation, in connection with acquisitions or divestitures, which payments are approved by the majority of the disinterested members of the Board of Directors of the Issuer in good faith in an aggregate amount for all such fees for any transaction not to exceed 2.00% of the aggregate value of such transaction and (ii) fees payable pursuant to the Sponsor Management Agreement as in effect on the Issue Date or as amended in a manner not adverse in any material respect to the holders of Notes;

(14) the issuance of Equity Interests (other than Disqualified Stock) in the Issuer or any Restricted Subsidiary for compensation purposes in the ordinary course of business;

(15) any lease or sublease entered into between the Issuer or any Restricted Subsidiary, as lessee, and any Affiliate of the Issuer, as lessor or sublessor, which is approved by a majority of the disinterested members of the Board of Directors of the Issuer in good faith;

(16) intellectual property licenses in the ordinary course of business;

(17) Existing Indebtedness and any other obligations pursuant to an agreement existing on the Issue Date as described in this prospectus, including any amendment thereto (so long as such amendment is not adverse to the holders of the Notes in any material respect);

(18) transactions in which the Issuer or any Restricted Subsidiary delivers to the Trustee a letter from an accounting, appraisal or investment banking firm of national standing stating that such transaction is fair

166

to the Issuer or such Restricted Subsidiary from a financial point of view and which are approved by a majority of the disinterested members of the Board of Directors of the Issuer in good faith; and

(19) customary transactions pursuant to a Qualified Receivables Transactions.

Business Activities

The Issuer will not, and will not permit any of its Restricted Subsidiaries to, engage in any business other than Permitted Businesses, except to such extent as would not be material to the Issuer and its Restricted Subsidiaries taken as a whole.

Activities of Holdings

Holdings may not hold any material assets, become liable for any material obligations, engage in any trade or business, or conduct any business activity, other than (1) the issuance of its Equity Interests to its shareholders, (2) the incurrence of Indebtedness as a guarantor of the Notes, the Credit Agreement and any other Indebtedness that is permitted to be incurred by the Issuer under the covenant described under “—Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”; provided that the net proceeds of such Indebtedness are received by the Issuer as primary obligor and not retained by Holdings, and (3) activities incidental thereto. Neither the Issuer nor any Restricted Subsidiary shall engage in any transactions with Holdings in violation of the immediately preceding sentence.

Additional Guarantors

If, after the Issue Date, (i) the Issuer shall, directly or indirectly, create a Subsidiary (other than an Excluded Subsidiary), (ii) any Person shall become a Subsidiary of the Issuer that is not an Excluded Subsidiary (including by way of acquisition of Equity Interests of such Person by the Issuer or a Restricted Subsidiary of the Issuer or redesignation of any Unrestricted Subsidiary as a Restricted Subsidiary) or (iii) the Issuer otherwise elects to have any Restricted Subsidiary become a Guarantor, then, in each such case, and, in the case of clauses (i) and (ii), within 30 days of the creation of such Subsidiary or such Person becoming a Subsidiary that is not an Excluded Subsidiary, the Issuer shall cause such Restricted Subsidiary to: (a) execute and deliver to the Trustee a Guarantee Agreement and any joinders to the Security Documents and/or additional Security Documents and effect all filings and other actions, in each case, necessary to grant valid and perfected security interests in the Collateral of such Restricted Subsidiary to secure the First Lien Obligations, and (b) deliver an Opinion of Counsel to the Trustee that such Guarantee Agreement and Security Documents (x) have been duly authorized, executed and delivered by such Restricted Subsidiary and (y) constitute valid and legally binding obligations of such Restricted Subsidiary in accordance with its terms.

Designation of Restricted and Unrestricted Subsidiaries

The Board of Directors of the Issuer may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would not cause a Default. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding Investments owned by the Issuer and its Restricted Subsidiaries in the Subsidiary designated as an Unrestricted Subsidiary will be deemed to be an Investment made as of the time of the designation and will reduce the amount available for Restricted Payments under the covenant described above under the caption “—Restricted Payments” or under one or more clauses of the definition of Permitted Investments, as determined by the Issuer. That designation will only be permitted if the Investment would be permitted at that time and if the Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.

Any designation of a Subsidiary of the Issuer as an Unrestricted Subsidiary will be evidenced to the Trustee by filing with the Trustee a certified copy of a resolution of the Board of Directors of the Issuer giving effect to

167

such designation and an Officers’ Certificate certifying that such designation complied with the preceding conditions and was permitted by the covenant described above under the caption “—Restricted Payments.” If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted Subsidiary of the Issuer as of such date and, if such Indebtedness is not permitted to be incurred as of such date under the covenant described under the caption “—Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock,” the Issuer will be in default of such covenant. The Board of Directors of the Issuer may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary of the Issuer; provided that such designation will be deemed to be an incurrence of Indebtedness and Liens by a Restricted Subsidiary of the Issuer of any outstanding Indebtedness and Liens of such Unrestricted Subsidiary, and such designation will only be permitted if (1) such Indebtedness and Liens are permitted under the covenants described under the captions “—Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock” and “ —Liens” and (2) such designation would not cause a Default.

Payments for Consent

Holdings will not, and will not permit any of its Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any holder of Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the Indenture, the Notes, the Guarantees, the Security Documents, the Intercreditor Agreement or the Registration Rights Agreement unless such consideration is offered to be paid and is paid to all holders of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement.

Reports

From and After the Exchange Offer Filing Date

From and after the Exchange Offer Filing Date, and whether or not required by the rules and regulations of the SEC, so long as any Notes are outstanding, the Issuer will furnish to the Trustee and to Cede & Co., the nominee of DTC, and the holders of Notes, within the time periods that are applicable to the Issuer (or, if not applicable, would be if the Issuer were required to file such reports under Section 13(a) or 15(d) of the Exchange Act as a non-accelerated filer):

(1) all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K, if the Issuer were required to file such Forms, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” that describes the Issuer’s consolidated financial condition and results of operation and, with respect to the annual information only, a report thereon by the Issuer’s independent registered public accountants but not any assessment, attestation or audit of internal controls pursuant to Section 404 of the Sarbanes-Oxley Act or rules and regulations promulgated thereunder; and

(2) all current reports that would be required to be filed with the SEC on Form 8-K if the Issuer were required to file such reports.

In addition, the Issuer agrees that, for so long as any Notes remain outstanding, the Issuer will furnish to any beneficial owner of Notes or to any prospective purchaser of Notes in connection with any sale thereof, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. The Issuer shall also comply with the provisions of Section 314(a) of the Trust Indenture Act.

In addition, whether or not required by the SEC, the Issuer will file a copy of all of the information and reports referred to in clauses (1) and (2) above with the SEC for public availability within the time periods specified in the SEC’s rules and regulations for a company required to file reports under Section 13(a) or 15(d) of

168

the Exchange Act (unless the SEC will not accept such a filing) and make such information available to securities analysts and prospective investors upon request. The Issuer agrees that it will not take any action for the purpose of causing the SEC not to accept such filings. If, notwithstanding the foregoing, the SEC will not accept such filings for any reason, the Issuer will post the reports specified in the preceding sentence on its website within the time periods that would apply if the Issuer were required to file those reports with the SEC.

Notwithstanding the foregoing, such requirements shall be deemed satisfied prior to the commencement of the Exchange Offer or the effectiveness of the shelf registration statement described in the Registration Rights Agreement (1) by the filing with the SEC of the exchange offer registration statement or shelf registration statement (or any other similar registration statement), and any amendments thereto, with such financial information that satisfies Regulation S-X, subject to exceptions consistent with the presentation of financial information in this prospectus, to the extent filed within the times specified above, or (2) by posting reports that would be required to be filed substantially in the form required by the SEC (subject to the limitations set forth above) on the Issuer’s website (or that of any of its parent companies) or providing such reports to the Trustee within 15 days after the time the Issuer would be required to file such information with the SEC if it were subject to Section 13 or 15(d) of the Exchange Act, the financial information (including a “Management’s Discussion and Analysis of Financial Condition and Results of Operation”) that would be required to be included in such reports, subject to exceptions consistent with the presentation of financial information in this prospectus, to the extent filed within the times specified above.

Before and After the Exchange Offer Filing Date

For so long as any notes are outstanding, the Issuer shall:

(1) beginning with the fiscal quarter ended September 30, 2010, within 15 business days after filing with the Trustee or filing with the SEC the annual and quarterly information required pursuant to the above, hold a conference call for Permitted Parties to discuss such reports and the results of operations for the relevant reporting period; and

(2) issue a press release to any U.S. nationally recognized wire service or employ other means commercially reasonably expected to reach Permitted Parties no fewer than three business days prior to the date of the conference call required to be held in accordance with clause (1) above, announcing the time and date of such conference call and either including all information necessary to access the call or directing Permitted Parties to contact the appropriate person at the Issuer to obtain such information;

provided that, after an initial public offering of common stock of the Issuer or any direct or indirect parent company of the Issuer, no separate press release or conference call shall be required to comply with the foregoing if the Issuer or any direct or indirect parent company of the Issuer conducts customary earnings conference calls and issues press releases in connection therewith.

Events of Default and Remedies

Each of the following is an Event of Default:

(1) default for 30 days in the payment when due of interest on, or Additional Interest, if any, with respect to, the Notes;

(2) default in the payment when due (at maturity, upon redemption or otherwise) of the principal of, or premium, if any, on, the Notes;

(3) failure by the Issuer or any of its Restricted Subsidiaries to comply with the provisions described above under the caption “—Certain Covenants—Merger, Consolidation or Sale of Assets”;

(4) failure by the Issuer or any of its Restricted Subsidiaries for 60 days after notice to the Issuer by the Trustee or the holders of at least 25% in aggregate principal amount of the Notes then outstanding to comply with any of the other agreements or covenants in the Indenture or the Security Documents;

169

(5) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Issuer or any of its Significant Subsidiaries (or the payment of which is guaranteed by the Issuer or any of its Significant Subsidiaries), whether such Indebtedness or guarantee now exists, or is created after the Issue Date, if that default;

(a) is caused by a failure to pay principal at the final Stated Maturity of such Indebtedness (a “Payment Default”); or

(b) results in the acceleration of such Indebtedness prior to its express maturity;

and, in each case, the principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $10.0 million or more;

(6) with respect to any judgment or decree for the payment of money (net of any amount covered by insurance issued by a reputable and creditworthy insurer that has not contested coverage or reserved rights with respect to an underlying claim) in excess of $10.0 million or its foreign currency equivalent against the Issuer or any Significant Subsidiary, the failure by the Issuer or such Significant Subsidiary, as applicable, to pay such judgment or decree, which judgment or decree has remained outstanding for a period of 60 days after such judgment or decree became final and nonappealable without being paid, discharged, waived or stayed;

(7) except as permitted by the Indenture, any Guarantee of any Significant Subsidiary is declared to be unenforceable or invalid by any final and nonappealable judgment or decree or ceases for any reason to be in full force and effect, or any Guarantor or any Person acting on behalf of any Guarantor denies or disaffirms its obligations in writing under its Guarantee and such Default continues for 10 days after receipt of the notice specified in the Indenture;

(8) certain events of bankruptcy or insolvency described in the Indenture with respect to the Issuer, Holdings or any Subsidiary that is a Significant Subsidiary;

(9) any written repudiation or disaffirmation by the Issuer or any Guarantor of any of its obligations under the Security Documents or the Issuer or any Guarantor asserts, in any pleading in any court of competent jurisdiction, that any security interest in the Collateral is invalid and unenforceable; and

(10) with respect to any Collateral having a fair market value in excess of $3.0 million, individually or in the aggregate:

(a) the security interest under the Security Documents, at any time, ceases to be in full force and effect for any reason other than in accordance with the terms of the Indenture, the Security Documents and the Intercreditor Agreement, or

(b) any security interest created thereunder or under the Indenture is declared invalid or unenforceable by a court of competent jurisdiction.

In the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to Holdings, the Issuer or any Guarantor that is a Significant Subsidiary, all outstanding Notes will become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the Trustee or the holders of at least 25% in aggregate principal amount of the then outstanding Notes may direct the Trustee to declare all the Notes to be due and payable immediately.

Subject to certain limitations, holders of a majority in aggregate principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from holders of the Notes notice of any continuing Default or Event of Default if it determines that withholding notice is in their interest, except a Default or Event of Default relating to the payment of principal, interest or premium or Additional Interest, if any.

170

Subject to the provisions of the Indenture relating to the duties of the Trustee, in case an Event of Default occurs and is continuing, the Trustee will be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any holders of Notes unless such holders have offered to the Trustee indemnity or security satisfactory to it against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium, if any, or interest or Additional Interest, if any, when due, no holder of a note may pursue any remedy with respect to the Indenture or the Notes unless:

(1) such holder has previously given the Trustee notice that an Event of Default is continuing;

(2) holders of at least 25% in aggregate principal amount of the then outstanding Notes have requested the Trustee to pursue the remedy;

(3) such holders have offered the Trustee security or indemnity satisfactory to it against any loss, liability or expense;

(4) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity; and

(5) holders of a majority in aggregate principal amount of the then outstanding Notes have not given the Trustee a written direction inconsistent with such request within such 60-day period.

The holders of a majority in aggregate principal amount of the then outstanding Notes by written notice to the Trustee may, on behalf of the holders of all of the Notes, rescind an acceleration or waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest or premium or Additional Interest, if any, on, or the principal of, the Notes.

The Issuer is required to deliver to the Trustee annually a statement regarding compliance with the Indenture. Upon becoming aware of any Default or Event of Default, the Issuer is required to deliver to the Trustee within 30 days a statement specifying such Default or Event of Default.

No Personal Liability of Directors, Officers, Employees and Stockholders

No director, officer, employee, incorporator, stockholder, member, partner or other holder of Equity Interests of the Issuer or any Guarantor, as such, will have any liability for any obligations of the Issuer or the Guarantors under the Notes, the Indenture, the Guarantees, the Security Documents, the Intercreditor Agreement or the Registration Rights Agreement or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each holder of Notes by accepting a note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. The waiver may not be effective to waive liabilities under the federal securities laws.

Legal Defeasance and Covenant Defeasance

The Issuer may at any time, elect to have all of its obligations discharged with respect to the outstanding Notes and all obligations of the Guarantors discharged with respect to their Guarantees (“Legal Defeasance”) except for:

(1) the rights of holders of outstanding Notes to receive payments in respect of the principal of, or interest or premium and Additional Interest, if any, on, such Notes when such payments are due from the trust referred to below;

(2) the Issuer’s obligations with respect to the Notes concerning issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust;

(3) the rights, powers, trusts, duties and immunities of the Trustee, and the Issuer’s and the Guarantors’ obligations in connection therewith; and

(4) the Legal Defeasance provisions of the Indenture.

171

In addition, the Issuer may, at its option and at any time, elect to have the obligations of the Issuer and the Guarantors released (“Covenant Defeasance”) with respect to the Security Documents and the covenants described under “—Repurchase at the Option of Holders—Change of Control,” “—Repurchase at the Option of Holders—Asset Sales,” “—Repurchase at the Option of Holders—Intercompany Loan Refinancing,” and “—Certain Covenants” and with respect to certain Events of Default (including bankruptcy default with respect to Significant Subsidiaries, cross-default and judgment default) and thereafter any omission to comply with those covenants will not constitute a Default or Event of Default with respect to the Notes. In the event Covenant Defeasance occurs, certain events (not including nonpayment and bankruptcy, receivership, rehabilitation and insolvency events with respect to the Issuer) described under “—Events of Default and Remedies” will no longer constitute an Event of Default with respect to the Notes.

In order to exercise either Legal Defeasance or Covenant Defeasance:

(1) the Issuer must irrevocably deposit with the Trustee, in trust, for the benefit of the holders of the Notes, cash in U.S. dollars, non-callable Government Securities, or a combination of cash in U.S. dollars and non-callable Government Securities, in amounts as will be sufficient (without consideration of any reinvestment of interest), in the opinion of a nationally recognized investment bank, appraisal firm or firm of independent public accountants, to pay the principal of, or interest and premium and Additional Interest, if any, on, the outstanding Notes on the stated date for payment thereof or on the applicable redemption date, as the case may be, and the Issuer must specify whether the Notes are being defeased to such stated date for payment or to a particular redemption date;

(2) in the case of Legal Defeasance, the Issuer must deliver to the Trustee an Opinion of Counsel confirming that (a) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling or (b) since the Issue Date, 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 will confirm that, the holders of the outstanding 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;

(3) in the case of Covenant Defeasance, the Issuer must deliver to the Trustee an Opinion of Counsel confirming that the holders of the outstanding 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;

(4) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under, any material agreement (including, without limitation, the Credit Agreement) or instrument (other than the Indenture) to which the Issuer or any of its Subsidiaries is a party or by which the Issuer or any of its Subsidiaries is bound;

(5) the Issuer must deliver to the Trustee an Officers’ Certificate stating that the deposit was not made by the Issuer with the intent of preferring the holders of Notes over the other creditors of the Issuer with the intent of defeating, hindering, delaying or defrauding any creditors of the Issuer or others; and

(6) the Issuer must deliver to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with.

Amendment, Supplement and Waiver

Subject to certain exceptions below, the Indenture, the Notes, the Guarantees, the Intercreditor Agreement or the Security Documents may be amended or supplemented with the consent of the holders of at least a majority in aggregate principal amount of the Notes then outstanding (including, without limitation, consents

172

obtained in connection with a purchase of, or tender offer or exchange offer for, Notes), and any existing Default or Event of Default or compliance with any provision of the Indenture or 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 (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes); provided that such amendments may not, without the consent of the holders of 75% in principal amount of the Notes outstanding, release all or substantially all of the Collateral other than in accordance with the Indenture, the Intercreditor Agreement and the Security Documents.

Without the consent of each holder of Notes affected, an amendment, supplement or waiver may not (with respect to any Notes held by a non-consenting holder):

(1) reduce the principal amount of Notes whose holders must consent to an amendment, supplement or waiver;

(2) reduce the principal of or change the fixed maturity of any Note or alter the provisions with respect to the optional redemption of the Notes as described under the caption “—Optional Redemption” (other than provisions relating to the notice period for consummating an optional redemption of the Notes);

(3) reduce the rate of or change the time for payment of interest, including default interest, on any Note;

(4) waive a Default or Event of Default in the payment of principal of, or interest or premium, or Additional Interest, if any, on, the Notes (except a rescission of acceleration of the Notes by the holders of at least a majority in aggregate principal amount of the then outstanding Notes and a waiver of the payment default that resulted from such acceleration);

(5) make any note payable in money other than that stated in the Notes;

(6) make any change in the provisions of the Indenture relating to waivers of past Defaults or the rights of holders of Notes to receive payments of principal of, or interest or premium or Additional Interest, if any, on, the Notes;

(7) make the Notes or the Guarantees subordinated in right of payment to any other obligations or subordinate the Lien securing the Notes Obligations to any other obligations;

(8) release Holdings or any Subsidiary Guarantor that is a Significant Subsidiary from any of its obligations under its Guarantee or the Indenture, except as permitted by the Indenture;

(9) make any change in the preceding amendment and waiver provisions; or

(10) after the obligation to make an Asset Sale Offer, Intercompany Loan Refinancing Offer or Change of Control Offer, as applicable, arises, amend, change or modify the obligations of the Issuer to make and consummate an Asset Sale Offer with respect to any Asset Sale in accordance with the “Repurchase at the Option of Holders—Asset Sales” covenant, obligations of the Issuer to make and consummate an Intercompany Loan Refinancing Offer with respect to any Intercompany Loan Refinancing in accordance with the “Repurchase at the Option of Holders—Intercompany Loan Refinancing” covenant or obligation of the Issuer to make and consummate a Change of Control Offer in the event of a Change of Control in accordance with the “Repurchase at the Option of Holders— Change of Control” covenant including, in each case, amending, changing or modifying any definition relating thereto.

Notwithstanding the preceding, without the consent of any holder of Notes, the Issuer, the Guarantors and the Trustee may amend or supplement the Indenture, the Notes, the Guarantees, the Intercreditor Agreement or the Security Documents:

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

(2) to provide for uncertificated Notes in addition to or in place of certificated Notes;

173

(3) to provide for the assumption of the Issuer’s or a Guarantor’s obligations to holders of Notes and Guarantees in the case of a merger or consolidation or sale of all or substantially all of the Issuer’s or such Guarantor’s assets, as applicable;

(4) to make any change that would provide any additional rights or benefits to the holders of Notes or that does not adversely affect the legal rights under the Indenture of any such holder;

(5) to comply with requirements of the SEC in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act;

(6) to conform the text of the Indenture, the Guarantees or the Notes to any provision of this Description of the Exchange Notes;

(7) to allow any Guarantor to execute a supplemental indenture and/or a Guarantee with respect to the Notes;

(8) to add to the Collateral securing the Notes, to add a Guarantor or to release a Guarantor in accordance with the Indenture;

(9) to release Collateral from the Lien of the Indenture and the Security Documents where permitted by the Indenture and by the Security Documents; or

(10) to appoint a successor collateral agent with respect to the Collateral in favor of the holders of Notes, in accordance with the Indenture and the Security Documents.

In connection with any amendment, the Trustee shall be entitled to receive an Officer’s Certificate and Opinion of Counsel each stating that such amendment is authorized or permitted by the terms of the Indenture and that all conditions precedent to such amendment required by the Indenture have been complied with.

Satisfaction and Discharge

The Indenture and the Security Documents and related Liens will be discharged and will cease to be of further effect as to all Notes issued thereunder, when:

(1) either:

(a) all Notes that have been authenticated, except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has been deposited in trust and thereafter repaid to the Issuer, have been delivered to the Trustee for cancellation; or

(b) all Notes that have not been delivered to the Trustee for cancellation have become due and payable by reason of the mailing of a notice of redemption or otherwise or will become due and payable within one year and the Issuer or any Guarantor has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the holders, cash in U.S. dollars, non-callable Government Securities, or a combination of cash in U.S. dollars and non-callable Government Securities, in amounts as will be sufficient, without consideration of any reinvestment of interest, to pay and discharge the entire Indebtedness on the Notes not delivered to the Trustee for cancellation for principal, premium and Additional Interest, if any, and accrued interest to the date of maturity or redemption;

(2) no Default or Event of Default has occurred and is continuing on the date of the deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit) and the deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Issuer or any Guarantor is a party or by which the Issuer or any Guarantor is bound;

(3) the Issuer or any Guarantor has paid or caused to be paid all sums payable by it under the Indenture; and

(4) the Issuer has delivered irrevocable instructions to the Trustee under the Indenture to apply the deposited money toward the payment of the Notes at maturity or on the redemption date, as the case maybe.

174

In addition, the Issuer must deliver an Officers’ Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.

Concerning the Trustee

If the Trustee becomes a creditor of the Issuer or any Guarantor, the Indenture limits the right of the Trustee to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The Trustee is permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as Trustee (if the Indenture has been qualified under the Trust Indenture Act) or resign.

The holders of a majority in aggregate principal amount of the then outstanding Notes have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee, subject to certain exceptions. The Indenture provides that in case an Event of Default occurs and is continuing, the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any holder of Notes, unless such holder has offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense.

Additional Information

Anyone who receives this prospectus may obtain a copy of the Indenture without charge by writing to American Renal Holdings Inc., 66 Cherry Hill Drive, Beverly, MA 01915, Attention: Secretary.

Certain Definitions

Set forth below are certain defined terms used in the Indenture. Reference is made to the Indenture for a full disclosure of all defined terms used therein, as well as any other capitalized terms used herein for which no definition is provided.

“Acquired Debt” means, with respect to any specified Person:

(1) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Restricted Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Restricted Subsidiary of, such specified Person; and

(2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

“Additional Interest” means all additional interest then owing pursuant to the Registration Rights Agreement.

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control,” as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” have correlative meanings. No Person in whom a Receivables Subsidiary makes an Investment in connection with a Qualified Receivables Transaction will be deemed to be an Affiliate of the Issuer or any of its Subsidiaries solely by reason of such Investment.

“Applicable Premium” has the meaning set forth under “—Optional Redemption.”

175

“Asset Sale” means:

(1) the sale, lease (other than operating leases), conveyance or other disposition of any assets or rights outside of the ordinary course of business (including any Event of Loss); provided that the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Issuer and its Restricted Subsidiaries taken as a whole will be governed by the provisions of the Indenture described above under the caption “—Repurchase at the Option of Holders—Change of Control” and/or the provisions described above under the caption “—Certain Covenants—Merger, Consolidation or Sale of Assets” and not by the provisions of the Asset Sale covenant; and

(2) the issuance of Equity Interests in any of the Issuer’s Restricted Subsidiaries or the sale of Equity Interests in any of its Restricted Subsidiaries (other than directors’ qualifying Equity Interests or Equity Interests required by applicable law to be held by a Person other than the Issuer or a Restricted Subsidiary).

Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale:

(1) any single transaction or series of related transactions that involves assets having a Fair Market Value of less than $5.0 million;

(2) a transfer of assets between or among the Issuer and its Restricted Subsidiaries;

(3) an issuance or sale of Equity Interests of a Restricted Subsidiary of the Issuer to the Issuer or to a Restricted Subsidiary of the Issuer or of a Qualified Restricted Subsidiary to Strategic Investors in connection with the start-up of such Qualified Restricted Subsidiary;

(4) the sale or lease of products, services or accounts receivable (including at a discount) in the ordinary course of business and any sale or other disposition of damaged, worn-out, negligible, surplus or obsolete assets in the ordinary course of business;

(5) the sale or other disposition of Cash Equivalents;

(6) a Restricted Payment that does not violate the covenant described above under the caption “—Certain Covenants—Restricted Payments” or a Permitted Investment;

(7) the sale or disposition of any assets or property received as a result of a foreclosure by the Issuer or any of its Restricted Subsidiaries on any secured Investment or any other transfer of title with respect to any secured Investment in default;

(8) the licensing of intellectual property in the ordinary course of business or in accordance with industry practice;

(9) surrender or waiver of contract rights or the settlement, release or surrender of contract, tort or other claims of any kind;

(10) leases or subleases to third persons in the ordinary course of business that do not interfere in any material respect with the business of the Issuer or any of its Restricted Subsidiaries;

(11) transfers of accounts receivable and related assets of the type specified in the definition of Qualified Receivables Transaction (or a fractional undivided interest therein) by a Receivables Subsidiary in a Qualified Receivables Transaction;

(12) any sale or disposition deemed to occur in connection with creating or granting any Permitted Liens (but not the sale or other disposition of the property subject to such Permitted Lien);

(13) any disposition of an account receivable in connection with the collection or compromise thereof; and

(14) any Intercompany Loan Refinancing if and to the extent the proceeds thereof are utilized as described in “—Repurchase at the Option of Holders—Intercompany Loan Refinancing.”

“Asset Sale Offer” has the meaning assigned to that term in the Indenture governing the Notes.

176

“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” will be deemed to have beneficial ownership of all securities that such “person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only after the passage of time.

“Board of Directors” means:

(1) with respect to a corporation, the board of directors of the corporation or, other than for purposes of the definition of Change of Control, any committee thereof duly authorized to act on behalf of such board;

(2) with respect to a partnership, the board of directors or board of managers of the general partner of the partnership;

(3) with respect to a limited liability company, the managing member or members or any controlling committee of managing members thereof; and

(4) with respect to any other Person, the board or committee of such Person serving a similar function.

“Capital Lease Obligation” means, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet prepared in accordance with GAAP, and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty.

“Capital Stock” means:

(1) in the case of a corporation, corporate stock;

(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

(3) in the case of a partnership or limited liability company, partnership interests (whether general or limited) or membership interests; and

(4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, but excluding from all of the foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock.

“Cash Equivalents” means:

(1) United States dollars or, in the case of any Restricted Subsidiary which is not a Domestic Subsidiary, any other currencies held from time to time in the ordinary course of business;

(2) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality of the United States government (provided that the full faith and credit of the United States is pledged in support of those securities) having maturities of not more than 12 months from the date of acquisition;

(3) direct obligations issued by any state of the United States of America or any political subdivision of any such state, or any public instrumentality thereof, in each case having maturities of not more than 12 months from the date of acquisition;

(4) certificates of deposit and eurodollar time deposits with maturities of 12 months or less from the date of acquisition, bankers’ acceptances with maturities not exceeding 12 months and overnight bank deposits, in each case, with any lender party to the Credit Agreement or with any domestic commercial bank that has capital and surplus of not less than $500.0 million;

177

(5) repurchase obligations with a term of not more than one year for underlying securities of the types described in clauses (2) and (4) above entered into with any financial institution meeting the qualifications specified in clause (4) above;

(6) commercial paper having one of the two highest ratings obtainable from Moody’s Investors Service, Inc. or Standard & Poor’s Rating Services and, in each case, maturing within 12 months after the date of acquisition; and

(7) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (6) of this definition or money market funds that comply with the criteria set forth in SEC Rule 2a-7 under the Investment Company Act of 1940, as amended.

“CFC” means a Restricted Subsidiary that is a controlled foreign corporation (as such term is defined in Section 957(a) of the United States Internal Revenue Code of 1986, as amended).

“Change of Control” means the occurrence of any of the following:

(1) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Issuer and its Subsidiaries taken as a whole to any “person” (as that term is used in Section 13(d) of the Exchange Act) other than Permitted Holders; or

(2) the consummation of any transaction (including, without limitation, any merger or consolidation), the result of which is that any “person” (as defined above), other than Permitted Holders, becomes the Beneficial Owner, directly or indirectly, of 50% or more of the Voting Stock of the Issuer, measured by voting power rather than number of shares; provided, however, for purposes of this clause (2), each Person will be deemed to beneficially own any Voting Stock of another Person held by one or more of its Subsidiaries.

“Change of Control Offer” has the meaning assigned to that term in the Indenture governing the Notes.

“Collateral Agent” means Wilmington Trust FSB, acting in its capacity as collateral agent under the Security Documents, or any successor thereto.

“Consolidated Adjusted Secured Debt Ratio” means, as of any date of determination, the ratio of

(1) Consolidated Adjusted Secured Net Debt as of such date after giving effect to all incurrences and repayments or discharges of Indebtedness and Liens to occur on such date to (2) the Issuer’s Consolidated EBITDA for the Measurement Period calculated on a Pro Forma Basis.

“Consolidated Adjusted Secured Net Debt” means, as of any date, (a) the aggregate principal amount of Indebtedness of the type specified in clauses (a), (b) and (g) of the definition thereof of the Issuer and its Restricted Subsidiaries outstanding as of such date determined on a consolidated basis, if such Indebtedness is (x) secured by a Lien or (y) owing by a Non-Guarantor Subsidiary, minus (b) the amount of unrestricted cash and Cash Equivalents held, on such date, by the Issuer and the Subsidiary Guarantors, minus (c) the amount of unrestricted cash and Cash Equivalents held, on such date, by any Non-Guarantor Subsidiary, up to the greater of (x) the aggregate principal amount of Indebtedness of such Non-Guarantor Subsidiary included in clause (a) of this definition and (y) the amount of such unrestricted cash and Cash Equivalents of such Non-Guarantor Subsidiary times the percentage of such Non-Guarantor Subsidiary owned directly or indirectly by the Issuer or a Subsidiary Guarantor.

178

“Consolidated EBITDA” means, with respect to any specified Person for any period, Consolidated Net Income for such Person for such period plus

(a) without duplication and to the extent deducted in determining such Consolidated Net Income for such period, the sum of:

(i) consolidated interest expense (and solely for purposes of calculating the Fixed Charge Coverage Ratio, other Fixed Charges) of the Issuer and its Restricted Subsidiaries for such period and, to the extent not reflected in such total interest expense, increased by payments made in respect of Hedging Obligations or other derivative instruments entered into for the purpose of hedging interest rate risk, minus any payments received in respect of such Hedging Obligations or other derivative instruments,

(ii) consolidated tax expense of the Issuer and its Restricted Subsidiaries based on income, profits or capital, including state, franchise, capital and similar taxes and withholding taxes paid or accrued during such period,

(iii) all amounts attributable to depreciation and amortization expense of the Issuer and its Restricted Subsidiaries for such period,

(iv) any Non-Cash Charges for such period,

(v) costs associated with the Transactions made or incurred by the Issuer and its Restricted Subsidiaries in connection with the Transactions for such period that are paid, accrued or reserved for within 365 days of the consummation of the Transactions,

(vi) any restructuring charges (including restructuring costs related to acquisitions after the Issue Date and to closure or consolidation of facilities) for such period and any “Specified Payments” as defined in Schedule 11.2(a)(vi) to the Merger Agreement made during such period,

(vii) any unusual or nonrecurring fees, cash charges and other cash expenses for such period (A) made or incurred by the Issuer and its Restricted Subsidiaries in connection with any acquisition or investment not prohibited by the Indenture, including severance, relocation and facilities closing costs, including any earnout payments, whether or not accounted for as such, that are paid, accrued or reserved for within 365 days of such transaction, or (B) incurred in connection with the issuance of Equity Interests or Indebtedness,

(viii) cash expenses incurred during such period in connection with an acquisition not prohibited by the Indenture to the extent that such expenses are reimbursed in cash during such period pursuant to indemnification provisions of any agreement relating to such transaction,

(ix) periodic management fees that are permitted by clause (13)(ii) under the covenant described under “—Certain Covenants—Transactions with Affiliates,”

(x) cash expenses incurred during such period in connection with extraordinary casualty events to the extent such expenses are reimbursed in cash by insurance during such period, and

(xi) the amount of any minority interest expense consisting of Restricted Subsidiary income attributable to minority equity interests of third parties in any non-Wholly Owned Restricted Subsidiary to the extent the Indebtedness owed by such Restricted Subsidiary is included in the Indebtedness of the Issuer; minus

(b) without duplication and, in the case of clause (ii) below, to the extent included in determining such Consolidated Net Income,

(i) any cash payments made during such period in respect of Non-Cash Charges described in clause (a)(iv) taken in a prior period or taken in such period,

(ii) any non-cash items of income for such period (other than the accrual of revenue or recording of receivables in the ordinary course of business);

179

provided that (I) in no event shall any charge, expense or loss relating to write-downs, write-offs or reserves with respect to current assets be added back and (II) the aggregate amount added back pursuant to clauses (vi) and (vii) shall not exceed 10% of Consolidated EBITDA (calculated before giving effect to such clauses) for any period.

“Consolidated Leverage Ratio” means, as of any date of determination, the ratio of (1) Consolidated Net Debt as of such date after giving effect to all incurrences and repayments of Indebtedness to occur on such date to (2) the Issuer’s Consolidated EBITDA for the Measurement Period calculated on a Pro Forma Basis.

“Consolidated Net Debt” means, as of any date, (a) the aggregate principal amount of Indebtedness of the type specified in clauses (a), (b) and (g) of the definition thereof of the Issuer and its Restricted Subsidiaries outstanding as of such date determined on a consolidated basis or is owing by Non-Guarantor Subsidiaries, minus (b) the amount of unrestricted cash and Cash Equivalents held, on such date, by the Issuer and the Subsidiary Guarantors, minus (c) the amount of unrestricted cash and Cash Equivalents held, on such date, by any Non-Guarantor Subsidiary, up to, the greater of (x) the aggregate principal amount of Indebtedness of such Non-Guarantor Subsidiary included in clause (a) of this definition and (y) the amount of such unrestricted cash and Cash Equivalents of such Non-Guarantor Subsidiary times the percentage of such Non-Guarantor Subsidiary owned directly or indirectly by the Issuer or a Subsidiary Guarantor.

“Consolidated Net Income” means, with respect to any specified Person for any period, the aggregate of the Net Income attributable to such specified Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that:

(1) the Net Income (and net loss) of any other Person (other than a Restricted Subsidiary of the Issuer) in which the Issuer or any of its Restricted Subsidiaries has an ownership interest will be excluded, except to the extent that any such Net Income is actually received in cash by the Issuer or a Qualified Restricted Subsidiary in the form of dividends or similar distributions in respect of such period;

(2) the cumulative effect of a change in accounting principles will be excluded;

(3) the amortization of any premiums, fees or expenses incurred in connection with the Transactions or any amounts required or permitted by Accounting Principles Board Opinions No. 16 (including non-cash write-ups and non-cash charges relating to inventory and fixed assets, in each case arising in connection with the Transactions) and No. 17 (including non-cash charges relating to intangibles and goodwill), in each case in connection with the Transactions, will be excluded;

(4) any gain or loss, together with any related provision for taxes on such gain or loss, realized in connection with: (a) any sales of assets out of the ordinary course of business (it being understood that a sale of assets comprising discontinued operations shall be deemed a sale of assets out of the ordinary course of business); or (b) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries will be excluded;

(5) any extraordinary gain or loss, together with any related provision for taxes on such extraordinary gain or loss, will be excluded;

(6) income or losses attributable to discontinued operations (including without limitation, operations disposed during such period whether or not such operations were classified as discontinued) will be excluded;

(7) any non-cash charges (i) attributable to applying the purchase method of accounting in accordance with GAAP, (ii) resulting from the application of FAS 142 or FAS 144, and (iii) relating to the amortization of intangibles resulting from the application of FAS 141, will be excluded;

(8) all non-cash charges relating to employee benefit or other management or stock compensation plans of the Issuer or a Restricted Subsidiary (excluding any such non-cash charge to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense

180

incurred in a prior period) will be excluded to the extent that such non-cash charges are deducted in computing such Consolidated Net Income; provided, further, that if the Issuer or any Restricted Subsidiary of the Issuer makes a cash payment in respect of such non-cash charge in any period, such cash payment will (without duplication) be deducted from the Consolidated Net Income of the Issuer for such period;

(9) all unrealized gains and losses relating to hedging transactions and mark-to-market of Indebtedness denominated in foreign currencies resulting from the application of FAS 52 shall be excluded;

(10) the Net Income for such period of any Restricted Subsidiary (other than a Guarantor) shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of its Net Income is not at the date of determination permitted without any prior governmental approval (which has not been obtained) or, directly or indirectly, by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule, or governmental regulation applicable to that Restricted Subsidiary or its stockholders, except to the extent such restriction with respect to the payment of dividends or similar distributions has been legally waived; and

(11) Consolidated Net Income shall be reduced by the amount of any payments described in clause (2) of the definition of “Permitted Payments to Parent.”

“Contribution Indebtedness” means Indebtedness of the Issuer in an aggregate principal amount not to exceed the aggregate net cash proceeds received by the Issuer after the date of the Indenture from the sale of its Equity Interests (other than Disqualified Stock) or as a contribution to its common equity capital (in each case, other than to or from a Subsidiary of the Issuer); provided that such Indebtedness (a) is incurred within 180 days after the sale of such Equity Interests or the making of such capital contribution and (b) is designated as “Contribution Indebtedness” pursuant to an Officers’ Certificate delivered to the Trustee within one business day of the date of its incurrence. Any sale of Equity Interests or capital contribution that forms the basis for an incurrence of Contribution Indebtedness will not be considered to be a sale of Capital Stock and will be disregarded for purposes of the “Restricted Payments” covenant and will not be considered to be an Equity Offering for purposes of the “Optional Redemption” provisions of the Indenture.

“Credit Agreement” means that certain Credit Agreement, dated on or about the Issue Date, by and among the Issuer, as borrower, Holdings, the Guarantors, Bank of America, N.A., as administrative agent and collateral agent, and various lenders from time to time party thereto, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, and, in each case, as amended, restated, modified, renewed, refunded, replaced (whether upon or after termination or otherwise) or refinanced from time to time.

“Credit Facilities” means one or more debt facilities (including, without limitation, the Credit Agreement) or commercial paper facilities or indentures, in each case, with banks or other institutional lenders providing for revolving credit loans, notes, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit or any other Indebtedness, in each case, as amended, restated, modified, renewed, refunded, replaced (whether upon or after termination or otherwise) or refinanced (including by means of sales of debt securities and including any amendment, restatement, modification, renewal, refunding, replacement or refinancing that increases the amount borrowed thereunder or extends the maturity thereof) in whole or in part from time to time.

“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.

“Designated Noncash Consideration” means any non-cash consideration received by the Issuer or a Restricted Subsidiary in connection with an Asset Sale that is designated as Designated Noncash Consideration pursuant to an Officers’ Certificate.

181

“Disqualified Stock” means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case, at the option of the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the date on which the Notes mature. Notwithstanding the preceding sentence, (x) any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require the Issuer or the Subsidiary that issued such Capital Stock to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale will not constitute Disqualified Stock if the terms of such Capital Stock provide that the Issuer may not repurchase such Capital Stock unless the Issuer would be permitted to do so in compliance with the covenant described under “—Certain Covenants—Restricted Payments,” (y) any Capital Stock that would constitute Disqualified Stock solely as a result of any redemption feature that is conditioned upon, and subject to, compliance with the covenant described above under “—Certain Covenants—Restricted Payments” will not constitute Disqualified Stock and (z) any Capital Stock issued to any plan for the benefit of employees will not constitute Disqualified Stock solely because it may be required to be repurchased by the Issuer or the Subsidiary that issued such Capital Stock in order to satisfy applicable statutory or regulatory obligations. The amount of Disqualified Stock deemed to be outstanding at any time for purposes of the Indenture will be the maximum amount that the Issuer and its Restricted Subsidiaries may become obligated to pay upon the maturity of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock, exclusive of accrued dividends.

“Domestic Subsidiary” means any Restricted Subsidiary of the Issuer that was formed under the laws of the United States or any state of the United States.

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

“Equity Offering” means a public or private offering of Qualified Capital Stock of the Issuer, Holdings or any other direct or indirect parent of the Issuer, other than:

(1) a public offering with respect to the Issuer’s or any direct or indirect parent company’s Qualified Capital Stock registered on Form S-4 or Form S-8;

(2) issuances to any Subsidiary of the Issuer; and

(3) any such public or private offering that constitutes an Excluded Contribution.

“Event of Loss” means, with respect to any property or asset (tangible or intangible, real or personal) constituting Collateral, any of the following:

(i) any loss, destruction or damage of such property or asset;

(ii) any institution of any proceeding for the condemnation or seizure of such property or asset or for the exercise of any right of eminent domain;

(iii) any actual condemnation, seizure or taking by exercise of the power of eminent domain or otherwise of such property or asset, or confiscation of such property or asset or the requisition of the use of such property or asset; or

(iv) any settlement in lieu of clauses (ii) or (iii) above.

“Exchange Act” means the Securities Exchange Act of 1934, as amended and the rules and regulations of the SEC promulgated thereunder.

“Exchange Notes” means the notes issued in the Exchange Offer pursuant to the Registration Rights Agreement.

182

“Exchange Offer” has the meaning set forth for such term in the Registration Rights Agreement.

“Excluded Contributions” means net cash proceeds, marketable securities or Qualified Proceeds received by the Issuer from (i) contributions to its equity capital (other than Disqualified Stock) or (ii) the sale (other than to a Subsidiary of the Issuer or to any management equity plan or stock option plan or any other management or employee benefit plan or agreement of the Issuer) of Equity Interests (other than Disqualified Stock) of the Issuer, in each case designated as Excluded Contributions pursuant to an Officers’ Certificate on the date such capital contributions are made or the date such Equity Interests are sold, as the case may be, that are excluded from the calculation set forth in clause (3) of the first paragraph under “—Certain Covenants—Restricted Payments.”

“Excluded Deposit Accounts” means (1) any deposit accounts specially and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of the Issuer’s or any Guarantor’s employees, (2) any deposit account of the Issuer or any Guarantor into which proceeds from any receivables in respect of participation in federal and state healthcare programs, including the Medicare or Medicaid programs, are paid into, so long as the balance of such deposit account is swept at the end of each business day into a deposit account subject to a control agreement and (3) any deposit account specially and exclusively used to hold cash deposits required to be held in escrow, (which escrow is not prohibited by the Indenture) and which by terms of the agreement creating the escrow obligations shall not be subject to any other Liens.

“Excluded Subsidiary” means any Subsidiary of the Issuer that is (a) an Immaterial Subsidiary so long as such Subsidiary remains an Immaterial Subsidiary, (b) not a Wholly Owned Subsidiary so long as such Subsidiary is not a Wholly Owned Subsidiary, (c) an Unrestricted Subsidiary so long as such Subsidiary remains an Unrestricted Subsidiary, (d) a Receivables Subsidiary so long as such Subsidiary remains a Receivables Subsidiary or (e) a CFC so long as such Subsidiary remains a CFC.

“Existing Indebtedness” means Indebtedness (other than the Indebtedness under the Credit Agreement and Indebtedness owed to Holdings or any of its Subsidiaries), existing on the Issue Date.

“Fair Market Value” means the value that would be paid by a willing buyer to an unaffiliated willing seller in a transaction not involving distress or necessity of either party, determined in good faith by the Board of Directors, chief executive officer or chief financial officer of the Issuer (unless otherwise provided in the Indenture).

“First Lien Obligations” means Priority Payment Lien Obligations, the Notes Obligations and Pari Passu Lien Indebtedness.

“Fixed Charge Coverage Ratio” means, with respect to any specified Person at any date of determination, the ratio of the Consolidated EBITDA of such Person for the Measurement Period to the Fixed Charges of such Person for the Measurement Period, in each case, calculated on a Pro Forma Basis. In the event that the specified Person or any of its Restricted Subsidiaries incurs, assumes, guarantees, repays, repurchases, redeems, defeases or otherwise discharges any Indebtedness (other than ordinary working capital borrowings) or issues, repurchases or redeems preferred stock or Disqualified Stock subsequent to the commencement of the Measurement Period, then the Fixed Charge Coverage Ratio will be calculated giving pro forma effect to such incurrence, assumption, Guarantee, repayment, repurchase, redemption, defeasance or other discharge of Indebtedness, or such issuance, repurchase or redemption of preferred stock or Disqualified Stock, and the use of the proceeds therefrom, as if the same had occurred at the beginning of the Measurement Period.

“Fixed Charges” means, with respect to any specified Person for any period, the sum, without duplication, of:

(1) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, net of interest income, whether paid or accrued, including, without limitation, original issue discount, non-cash

183

interest payments, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings, and net of the effect of all cash payments made or received pursuant to Hedging Obligations in respect of interest rates, and excluding (v) amortization of deferred financing costs, (w) accretion or accrual of discounted liabilities not constituting Indebtedness, (x) any expense resulting from the discounting of any Indebtedness in connection with the application of purchase accounting in connection with any acquisition, (y) any expensing of bridge, commitment and other financing fees and (z) to the extent included in Fixed Charges, the portion of consolidated interest expense of such Person and its Restricted Subsidiaries attributable to Fixed Charges incurred in connection with the acquisition of discontinued operations; plus

(2) any interest on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, but only to the extent such Guarantee or Lien is called upon; plus

(3) the product of (A) all cash dividends paid on any series of preferred stock of such Person or any of its Restricted Subsidiaries (other than to the Issuer or any Qualified Restricted Subsidiary), in each case, determined on a consolidated basis in accordance with GAAP, multiplied by (B) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of the Issuer and its Restricted Subsidiaries expressed as a decimal.

“GAAP” means 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 have been approved by a significant segment of the accounting profession, which are in effect on the Issue Date. For the purposes of the Indenture, the term “consolidated” with respect to any Person shall mean such Person consolidated with its Restricted Subsidiaries, and shall not include any Unrestricted Subsidiary, but the interest of such Person in an Unrestricted Subsidiary will be accounted for as an Investment.

“Government Securities” means direct obligations of, or obligations guaranteed by, the United States of America (including any agency or instrumentality thereof) and the payment for which the United States pledges its full faith and credit.

“guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party or applicant in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation, provided that the term “guarantee” shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any guarantee of any guarantor shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which the guarantee is made and (b) the maximum amount for which such guarantor may be liable pursuant to the terms of the instrument embodying such guarantee.

“Guarantee” means the guarantee by each Guarantor of the Issuer’s obligations under the Indenture and the Notes, executed pursuant to the provisions of the Indenture.

184

“Guarantee Agreement” means a supplemental indenture or a notation of guarantee, in a form satisfactory to the Trustee, pursuant to which a Guarantor guarantees the Issuer’s obligations with respect to the Notes on the terms provided for in the Indenture.

“Guarantors” means Holdings and the Subsidiary Guarantors.

“Hedging Obligations” means, with respect to any specified Person, the obligations of such Person

under:

(1) interest rate swap agreements (whether from fixed to floating or from floating to fixed), interest rate cap agreements and interest rate collar agreements;

(2) other agreements or arrangements designed to manage interest rates or interest rate risk; and

(3) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange rates or commodity prices.

“Holder” means any registered holder, from time to time, of the Notes.

“Holdings” means C.P. Atlas Intermediate Holdings, LLC, a Delaware limited liability company.

“Immaterial Subsidiary” means, at any date of determination, any Subsidiary of the Issuer that accounts for less than 1.0% of the Issuer’s consolidated revenues and less than 1.0% of the Issuer’s Net Income for the Measurement Period and has less than $10,000 of assets; provided that at no time shall Immaterial Subsidiaries in the aggregate account for more than 3.0% of the Issuer’s consolidated revenues or more than 3.0% of the Issuer’s Net Income for any Measurement Period.

“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (d) all obligations of such Person in respect of the deferred purchase price of property or services (excluding trade accounts payable and accrued obligations incurred in the ordinary course of business), (e) all obligations of others secured by any Lien on property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, but limited, in the event such secured obligations are nonrecourse to such Person, to the fair value of such property, (f) all Guarantees by such Person of the Indebtedness of any other Person, (g) all Capital Lease Obligations of such Person, (h) all reimbursement obligations of such Person as an account party or applicant in respect of letters of credit and letters of guaranty, (i) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances and (j) all obligations of such Person in respect of Disqualified Stock. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. For the avoidance of doubt, any right of Strategic Investors in an Qualified Restricted Subsidiary to require the Issuer or any Qualified Restricted Subsidiary to repurchase the Equity Interests in such Qualified Restricted Subsidiary held by such Strategic Investors does not constitute Indebtedness.

“Intercompany Loan Refinancing” has the meaning given to such term in clause (16) of the second paragraph of the covenant under “—Certain Covenants—Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock.”

“Investments” means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans (including Guarantees or other obligations), advances or

185

capital contributions (excluding accounts receivable, trade credit, advances to customers and commission, travel, relocation and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet (excluding the footnotes) prepared in accordance with GAAP. If the Issuer or any Restricted Subsidiary of the Issuer sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of the Issuer such that, after giving effect to any such sale or disposition, such Person is no longer a Subsidiary of the Issuer, the Issuer will be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of the Issuer’s Investments in such Subsidiary that were not sold or disposed of in an amount determined as provided in the penultimate paragraph of the covenant described above under the caption “—Certain Covenants—Restricted Payments.” The acquisition by the Issuer or any Restricted Subsidiary of the Issuer of a Person that holds an Investment in a third Person will not be deemed to be an Investment by the Issuer or such Restricted Subsidiary in such third Person, unless such third Person’s Investment was made in contemplation of the acquisition by the Issuer or a Restricted Subsidiary, in which case it shall be an Investment in an amount equal to the Fair Market Value of the Investments held by the acquired Person in such third Person in an amount determined as provided in the penultimate paragraph of the covenant described above under the caption “—Certain Covenants—Restricted Payments.” The outstanding amount of any Investment shall be the original cost thereof, reduced by all returns on such Investment (including dividends, interest, distributions, returns of principal and profits on sale).

“Issue Date” means the date the Notes are first issued under the Indenture. “Issuer” means American Renal Holdings Inc., a Delaware corporation.

“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset and (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset.

“Make-Whole Redemption Date” has the meaning set forth under “—Optional Redemption.”

“Management Agreements” means the management, service or similar agreements pursuant to which the Issuer or any of its Qualified Restricted Subsidiaries manages the assets and businesses of any of its Restricted Subsidiaries.

“Measurement Period” means, at any date of determination, the period of four full fiscal quarters for which internal financial statements are available immediately preceding such date.

“Merger Agreement” means the Agreement and Plan of Merger by and among, inter alia, Holdings, the Issuer, Pamlico Capital I, L.P. (formerly known as Wachovia Capital Partners GP I, LLC) and selling shareholders named therein, dated as of March 22, 2010, as amended or modified from time to time prior to the Issue Date.

“Net Income” means, with respect to any specified Person, the net income (loss) attributable to such Person (which shall exclude, for the avoidance of doubt, the income (loss) attributable to minority interests), determined in accordance with GAAP and before any reduction in respect of preferred stock dividends.

“Net Proceeds” means the aggregate cash proceeds received by the Issuer or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale and, in the case of an Event of Loss, insurance proceeds, condemnation awards or damages awarded by any judgment), net of the direct costs relating to such Asset Sale, including, without limitation, legal, accounting and investment banking fees, payments made in order to obtain a necessary consent or required by applicable law, and sales commissions, and any relocation

186

expenses incurred as a result of the Asset Sale, taxes paid or payable as a result of the Asset Sale, including taxes resulting from the transfer of the proceeds of such Asset Sale to the Issuer, in each case, after taking into account:

(1) any available tax credits or deductions and any tax sharing arrangements;

(2) any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP;

(3) any reserve for adjustment in respect of any liabilities associated with the asset disposed of in such transaction and retained by the Issuer or any Restricted Subsidiary after such sale or other disposition thereof;

(4) any distributions and other payments required to be made to minority interest holders in Subsidiaries or joint ventures as a result of such Asset Sale; and

(5) in the event that a Restricted Subsidiary consummates an Asset Sale and makes a pro rata payment of dividends to all of its stockholders from any cash proceeds of such Asset Sale, the amount of dividends paid to any stockholder other than the Issuer or any other Restricted Subsidiary, provided that any net proceeds of an Asset Sale by a Non-Guarantor Subsidiary that are subject to legal or contractual restrictions on repatriation to the Issuer will not be considered Net Proceeds for so long as such proceeds are subject to such restrictions, provided, however, that any such contractual restrictions on repatriation were not entered into in contemplation of such Asset Sale.

“Non-Cash Charges” means (a) losses on asset sales, disposals or abandonments, (b) any impairment charge or asset write-off or write-down related to intangible assets, goodwill, long-lived assets, and investments in debt and equity securities pursuant to GAAP, (c) all losses from investments recorded using the equity method, (d) stock-based awards compensation expense, and (e) other non-cash charges (provided that if any non-cash charges, expenses and write-downs referred to in this clause (e) represent an accrual or reserve for potential cash items in any future period, the cash payment in respect thereof in such future period shall be subtracted from Consolidated EBITDA to such extent, and excluding amortization of a prepaid cash item that was paid in a prior period).

“Non-Guarantor Subsidiary” means any Subsidiary of the Issuer that is not a Subsidiary Guarantor.

“Non-Recourse Debt” means Indebtedness:

(1) as to which neither the Issuer nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly or indirectly liable as a guarantor or (c) otherwise constitutes the lender;

(2) no default with respect to which (including any rights that the holders of the Indebtedness 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 Issuer or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment of such other Indebtedness to be accelerated or payable prior to its Stated Maturity; and

(3) as to which the lenders have been notified in writing or have agreed in writing (in the agreement relating thereto or otherwise) that they will not have any recourse to the stock or assets of the Issuer or any of its Restricted Subsidiaries.

“Notes Obligations” means Obligations in respect of the Notes, the Guarantees and the Indenture.

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

“Officer” means any of the following of the Issuer: the Chairman of the Board of Directors, the Chief Executive Officer, the Chief Financial Officer, the President, any Vice President, the Treasurer or the Secretary.

187

“Officers’ Certificate” means a certificate signed by two Officers.

“Opinion of Counsel” means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to the Issuer or the Trustee.

“Pari Passu Lien Indebtedness” means Obligations with respect to Indebtedness permitted to be incurred under the covenant described under “—Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock” and “—Liens” and under the Credit Agreement which is by its terms intended to be secured on a pari passu basis with the Liens securing the Notes; provided such Lien is permitted to be incurred under the Indenture and the Credit Agreement and such Indebtedness has a stated maturity that is no earlier than the stated maturity of the Notes.

“Permitted Debt” has the meaning given to such term in the second paragraph of the covenant under “—Certain Covenants—Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock.”

“Permitted Business” means (i) any business engaged in by the Issuer or any of its Restricted Subsidiaries on the Issue Date, and (ii) any business or other activities that are reasonably similar, ancillary, complementary or related to, or a reasonable extension, development or expansion of, the businesses in which the Issuer and its Restricted Subsidiaries are engaged on the Issue Date.

“Permitted Collateral Liens” means (a) in the case of Collateral other than mortgaged real property and any pledged securities, Permitted Liens, (b) in the case of mortgaged real property, “Permitted Collateral Liens” means the Liens described in clauses (1), (7), (8), (9), (10), (16), (17), (25) and (28) of the definition of “Permitted Liens” and (c) in the case of Collateral consisting of pledged securities, means the Liens described in clauses (10), (25) and (28) of the definition of “Permitted Liens.”

“Permitted Holder” means the Sponsor and its Affiliates (other than portfolio companies or holding companies of other portfolio companies).

“Permitted Investments” means:

(1)(a) any Investment in the Issuer, in a Subsidiary Guarantor or in a Qualified Restricted Subsidiary of the Issuer and (b) any loans or advances to any Restricted Subsidiary that meets the requirements of clauses (1), (2) and (3) of the definition of Qualified Restricted Subsidiary;

(2) any Investment in Cash Equivalents;

(3) any Investment by the Issuer or any Restricted Subsidiary of the Issuer in a Person (other than the Issuer, a Subsidiary Guarantor or a Qualified Restricted Subsidiary of the Issuer) that is engaged as its primary business in a Permitted Business, if as a result of such Investment:

(a) such Person becomes a Qualified Restricted Subsidiary of the Issuer; or

(b) such Person, in one transaction or a series of transactions, is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Issuer, or a Qualified Restricted Subsidiary of the Issuer;

(4) any Investment received in connection with a disposition of assets not constituting an Asset

Sale;

(5) any Investment solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Issuer or any parent of the Issuer;

(6) any Investments received in compromise, settlement or resolution of (A) obligations of trade debtors or customers that were incurred in the ordinary course of business of the Issuer or any of its

188

Restricted Subsidiaries, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade debtor or customer, (B) litigation, arbitration or other disputes with Persons who are not Affiliates or (C) as a result of a foreclosure by the Issuer or any Restricted Subsidiary with respect to any secured Investment or other transfer of title with respect to any secured Investment in default;

(7) Investments represented by Hedging Obligations entered into to protect against fluctuations in interest rates, exchange rates and commodity prices;

(8) any Investment in payroll, travel and similar advances to cover business-related travel expenses, moving expenses or other similar expenses, in each case incurred in the ordinary course of business;

(9) Investments in receivables owing to the Issuer or any Restricted Subsidiary 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 Issuer or any such Restricted Subsidiary deems reasonable under the circumstances;

(10) Investments in prepaid expenses, negotiable instruments held for collection and lease, utility and workers compensation, performance and similar deposits entered into as a result of the operations of the business in the ordinary course of business;

(11) obligations of one or more officers or other employees of the Issuer or any of its Restricted Subsidiaries in connection with such officer’s or employee’s acquisition of shares of Capital Stock of the Issuer or Capital Stock of Holdings (or any other direct or indirect parent company of the Issuer) so long as no cash or other assets are paid by the Issuer or any of its Restricted Subsidiaries to such officers or employees in connection with the acquisition of any such obligations;

(12) loans or advances to and guarantees provided for the benefit of employees made in the ordinary course of business of the Issuer or the Restricted Subsidiary of the Issuer in an aggregate principal amount not to exceed $2.0 million at any one time outstanding;

(13) Investments existing as of the Issue Date or an Investment consisting of any extension, modification or renewal of any Investment existing as of the Issue Date (excluding any such extension, modification or renewal involving additional advances, contributions or other investments of cash or property or other increases thereof unless it is a result of the accrual or accretion of interest or original issue discount or payment-in-kind pursuant to the terms, as of the Issue Date, of the original Investment so extended, modified or renewed) and pursuant to any binding commitment outstanding as of the Issue Date;

(14) repurchases of the Notes;

(15) the acquisition by a Receivables Subsidiary in connection with a Qualified Receivables Transaction of Equity Interests of a trust or other Person established by such Receivables Subsidiary to effect such Qualified Receivables Transaction; and any other Investment by the Issuer or a Subsidiary of the Issuer in a Receivables Subsidiary or any Investment by a Receivables Subsidiary in any other Person in connection with a Qualified Receivables Transaction customary for such transactions;

(16) Investments not otherwise permitted by the foregoing clauses in an amount, taken together with all other Investments made pursuant to this clause, not to exceed, in the aggregate at any time outstanding, the greater of (i) $20.0 million and (ii) 3.75% of Total Assets at the time of any Investment pursuant to this clause;

(17) Investments consisting of amounts potentially due from a seller of property in an acquisition that (i) relate to customary post-closing adjustments with respect to accounts receivable, accounts payable and similar items typically subject to post-closing adjustments in similar transactions and (ii) are outstanding for a period of one hundred twenty (120) days or less following the closing of such acquisition;

(18) good faith deposits in connection with any acquisition, joint venture or acquisition of assets and escrowed money in connection with Asset Sales, acquisitions or joint ventures;

189

(19) Investments of a Restricted Subsidiary of the Issuer acquired after the Issue Date or of a Person merged into, amalgamated with or consolidated with a Restricted Subsidiary of the Issuer in a transaction that is not prohibited by the covenant described under “—Certain Covenants—Merger, Consolidation or Sale of Assets” after the Issue Date to the extent that such Investments were not made in contemplation of such acquisition, merger, amalgamation or consolidation and were in existence on the date of such merger, acquisition, amalgamation or consolidation;

(20) any investment in a Receivables Subsidiary or any Investment by a Receivables Subsidiary in any other Person in connection with a Qualified Receivables Transaction, including, without limitation, Investments of funds held in accounts permitted or required by the arrangements governing such Qualified Receivables Transaction or any related indebtedness; and

(21) guarantees of obligations (other than Indebtedness) incurred by Qualified Restricted Subsidiaries in the ordinary course of business and not otherwise prohibited by the Indenture;

provided that any Investment in a Restricted Subsidiary that is not a Subsidiary Guarantor which is made in the form of loans or advances shall be secured by substantially all assets of such Restricted Subsidiary and evidenced by an intercompany note that is pledged as part of the Collateral.

“Permitted Liens” means:

(1) Liens in favor of the Issuer or any Subsidiary Guarantor;

(2) Liens on property or assets of a Person, existing at the time such Person is merged with or into, consolidated with or acquired by the Issuer or any Restricted Subsidiary of the Issuer; provided that

such Liens were in existence prior to, and were not incurred in contemplation of, such merger, consolidation or acquisition and do not extend to any assets other than those of the Person merged into, consolidated with or acquired by the Issuer or such Subsidiary, plus renewals and extensions of such Liens on the same assets;

(3) Liens on property (including Capital Stock) existing at the time of acquisition of the property by the Issuer or any Restricted Subsidiary of the Issuer; provided that such Liens were in existence prior to such acquisition, and were not incurred in contemplation of, such acquisition, plus renewals and extensions of such Liens on the same assets;

(4) Liens (including deposits and pledges) to secure the performance of public or statutory obligations, progress payments, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business;

(5) Liens to secure Purchase Money Indebtedness permitted by clause (18) of the definition of “Permitted Debt” covering only the assets acquired, constructed or improved with or financed by such Indebtedness;

(6) Liens existing on the Issue Date (other than Liens in favor of the lenders under the Credit Agreement), plus renewals and extensions of such Liens on the same assets;

(7) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded; provided that any reserve or other appropriate provision as is required in conformity with GAAP has been made therefor;

(8) Liens imposed by law, such as carriers’, warehousemen’s, landlord’s, materialmen’s, laborers’, employees’, suppliers’ and mechanics’ Liens, in each case, incurred in the ordinary course of business;

(9) survey exceptions, title defects, encumbrances, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real property that do not materially interfere with the ordinary conduct of the business of the Issuer and its Subsidiaries, taken as a whole;

190

(10) Liens securing the Notes Obligations relating to Notes (and the Guarantees) issued on the Issue Date and the Exchange Notes (and the Guarantees) issued pursuant to an Exchange Offer;

(11) Liens to secure any Permitted Refinancing Indebtedness permitted to be incurred under the Indenture; provided, however, that the new Lien shall be limited to all or part of the same property and assets that secured or, under the written agreements pursuant to which the original Lien arose, could secure the original Indebtedness (plus improvements and accessions to, such property or proceeds or distributions thereof);

(12) Liens securing Indebtedness that does not exceed $2.5 million at any one time outstanding, and Obligations in respect thereof;

(13) Liens on assets of any Qualified Restricted Subsidiary securing Indebtedness of such Qualified Restricted Subsidiary incurred under clause (15) or (16) of the definition of “Permitted Debt,” and Obligations in respect thereof;

(14) security for the payment of workers’ compensation, unemployment insurance, other social security benefits or other insurance-related obligations (including, but not limited to, in respect of deductibles, self-insured retention amounts and premiums and adjustments thereto) entered into in the ordinary course of business;

(15) deposits or pledges in connection with bids, tenders, leases and contracts (other than contracts for the payment of money) entered into in the ordinary course of business;

(16) zoning restrictions, easements, licenses, reservations, provisions, encroachments, encumbrances, protrusion permits, servitudes, covenants, conditions, waivers, restrictions on the use of property or minor irregularities of title (and with respect to leasehold interests, mortgages, obligations, liens and other encumbrances incurred, created, assumed or permitted to exist and arising by, through or under a landlord or owner of the leased property, with or without consent of the lessee), in each case, not materially interfering with the ordinary conduct of the business of the Issuer and its Subsidiaries, taken as a whole;

(17) leases, subleases, licenses or sublicenses to third parties entered into in the ordinary course of business;

(18) Liens securing Hedging Obligations entered into to protect against fluctuations in interest rates, exchange rates and commodity prices permitted under the Indenture; provided that the holders of such Obligations (or their representative) are party to, such Liens are subject to, the Intercreditor Agreement;

(19) Liens arising out of judgments, decrees, orders or awards (to the extent not constituting an Event of Default) in respect of which the Issuer shall in good faith be prosecuting an appeal or proceedings for review which appeal or proceedings shall not have been finally terminated, or if the period within which such appeal or proceedings may be initiated shall not have expired;

(20) Liens on Capital Stock of an Unrestricted Subsidiary that secure Indebtedness or other obligation of such Unrestricted Subsidiary;

(21) Liens securing Treasury Management Obligations; provided that the holders of such Obligations (or their representative) are party to, and such Liens are subject to, the Intercreditor Agreement;

(22) any Liens arising from the precautionary filing of Uniform Commercial Code financing statements regarding leases;

(23) Liens (i) of a collection bank arising under Section 4-210 of the Uniform Commercial Code on items in the course of collection and (ii) in favor of banking institution encumbering deposits (including the right of set-off) and which are within the general parameters customary in the banking industry;

(24) Liens encumbering reasonable customary initial deposits and margin deposits and similar Liens attaching to brokerage accounts incurred in the ordinary course of business and not for speculative purposes;

191

(25) Liens on the Collateral securing Indebtedness (including Liens securing any Obligations in respect thereof) permitted to be incurred pursuant to clause (1) of the definition of “Permitted Debt”; provided that the holders of such Indebtedness (or their representative) are party to, and such Liens are subject to, the Intercreditor Agreement;

(26) Liens created or deemed to exist by the establishment of trusts for the purpose of satisfying government reimbursement program costs and other actions or claims pertaining to the same or related matters or other medical reimbursement programs;

(27) Liens solely on any cash earned money deposits made by the Issuer or any Restricted Subsidiary with any letter of intent or purchase agreement permitted hereunder;

(28) Liens securing Indebtedness (including Liens securing any Obligations in respect thereof) permitted to be incurred pursuant to the “Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock” covenant if the Consolidated Adjusted Secured Debt Ratio of the Issuer and its Restricted Subsidiaries would not be greater than 4.50 to 1.00; provided that (a) an authorized representative of the holders of such Indebtedness shall have executed (i) a joinder to the Intercreditor Agreement (in the form attached thereto) as a holder of Pari Passu Lien Indebtedness or (ii) another intercreditor agreement pursuant to which such representative shall agree with the Trustee and other representatives of First Lien Obligations that the Liens securing such Indebtedness are subordinated to the Liens securing the First Lien Obligations and (b) the Issuer may elect, pursuant to an Officers’ Certificate delivered to the Trustee, to treat all or any portion of the commitment under any Indebtedness which is to be secured by a Lien permitted by this clause (28) as being Incurred at the time the Lien is Incurred and any subsequent Incurrence of Indebtedness under such commitment shall not be deemed to be an Incurrence at such subsequent time; and

(29) Liens incurred in connection with a Qualified Receivables Transaction (which, in the case of the Issuer and its Restricted Subsidiaries (other than Receivables Subsidiaries), shall be limited to receivables and related assets referred to in the definition of “Qualified Receivables Transaction”).

“Permitted Payment Restriction” means, with respect to any Subsidiary, any restriction that (i) becomes effective only upon the occurrence of (x) specified events under its charter or (y) a default by such Subsidiary in the payment of principal of or interest, a bankruptcy default, a default on any financial covenant or any other material event of default, in each case on Indebtedness that was incurred by such Subsidiary in compliance with the covenant under “—Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock” and (ii) does not materially impair the Issuer’s ability to make scheduled payments of cash interest and fees and to make required principal payments on the Notes, as determined in good faith by the Board of Directors.

“Permitted Payments to Parent” means

(1) payments, directly or indirectly, to Holdings or any other direct or indirect parent company of the Issuer (including C.P. Atlas Holdings, Inc.) to be used by Holdings (or any other direct or indirect parent company of the Issuer) to pay (x) consolidated, combined or similar Federal, state and local taxes payable by Holdings (or such parent company) and directly attributable to (or arising as a result of) the operations of the Issuer and its Subsidiaries and (y) franchise or similar taxes and fees of Holdings (or such parent company) required to maintain Holdings’ (or such parent company’s) corporate or other existence; provided that:

(a) the amount of such dividends, distributions or advances paid shall not exceed the amount (x) that would be due with respect to a consolidated, combined or similar federal, state or local tax return for the Issuer and its Subsidiaries if the Issuer were the parent of such group for federal, state and local tax purposes plus (y) the actual amount of such franchise or similar taxes and fees of Holdings (or such parent company) required to maintain Holdings’ (or such parent company’s) corporate or other existence, each as applicable; and

(b) such payments are used by Holdings (or such parent company) for such purposes within 90 days of the receipt of such payments;

192

(2) payments, directly or indirectly, to Holdings or any other direct or indirect parent company of the Issuer if the proceeds thereof are used to pay general corporate and overhead expenses (including salaries and other compensation of employees) incurred in the ordinary course of its business or of the business of Holdings or such other parent company of the Issuer as a direct or indirect holding company for the Issuer or used to pay fees and expenses (other than to Affiliates) relating to any unsuccessful debt or equity financing, in each case, only to the extent directly attributable to the operations of Holdings, the Issuer and its Restricted Subsidiaries; and

(3) so long as no Default exists at the time of such payment or would result therefrom, payments, directly or indirectly, to Holdings or any other direct or indirect parent company of the Issuer if the proceeds thereof are used to pay amounts payable to the Permitted Holders to the extent permitted by clause (13) of “—Transactions with Affiliates,” solely to the extent such amounts are not paid directly by the Issuer or any of its Subsidiaries; provided that any accelerated payment of periodic management fees under the Sponsor Management Agreement (other than upon termination thereof upon an initial public offering of common stock, or change of control, of the Issuer or any direct or indirect parent company of the Issuer) shall constitute a Restricted Payment (whether or not such payment is made by the Issuer directly or through a dividend or distribution to Holdings) not permitted by this clause (3) and shall be permitted only if the Issuer would be permitted to make a Restricted Payment under another exception under the “Restricted Payments” covenant.

“Permitted Refinancing Indebtedness” means any Indebtedness of the Issuer or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, renew, refund, refinance, replace, defease or discharge other Indebtedness of the Issuer or any of its Restricted Subsidiaries; provided that:

(1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness extended, renewed, refunded, refinanced, replaced, defeased or discharged (plus all accrued interest on the Indebtedness and the amount of all fees, commissions, discounts and expenses, including premiums, incurred in connection therewith);

(2) either (a) such Permitted Refinancing Indebtedness has a final maturity date equal to or later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, renewed, refunded, refinanced, replaced, defeased or discharged or (b) all scheduled payments on or in respect of such Permitted Refinancing Indebtedness (other than interest payments) shall be at least 91 days following the final scheduled maturity of the Notes;

(3) if the Indebtedness being extended, renewed, refunded, refinanced, replaced, defeased or discharged is subordinated in right of payment to the Notes, such Permitted Refinancing Indebtedness is subordinated in right of payment to the Notes on terms at least as favorable to the holders of Notes as those contained in the documentation governing the Indebtedness being extended, renewed, refunded, refinanced, replaced, defeased or discharged;

(4) such Indebtedness is incurred

(a) by the Issuer or by the Restricted Subsidiary who is the obligor on the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged;

(b) by the Issuer or any Subsidiary Guarantor if the obligor on the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged is the Issuer or a Subsidiary Guarantor; or

(c) by any Non-Guarantor Subsidiary if the obligor on the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged is a Non-Guarantor Subsidiary; and

(5) such Indebtedness is only secured if and to the extent and with the priority the Indebtedness being extended, renewed, refunded, refinanced, replaced, defeased or discharged is secured.

193

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, governmental authority or other entity.

“Priority Payment Lien Obligations” means (i) Obligations secured by Liens permitted by clause (25) of the definition of “Permitted Liens” and (ii) to the extent secured equally and ratably with the Obligations referred to in the foregoing clause (i), Obligations secured by Liens permitted by clause (18) or clause (21) of the definition of “Permitted Liens.”

“Pro Forma Basis” means, with respect to any calculation for any Measurement Period:

(1) Investments, acquisitions, mergers, consolidations and dispositions that have been made by the specified Person or any of its Restricted Subsidiaries, or any Person or any of its Restricted Subsidiaries acquired by, merged or consolidated with the specified Person or any of its Restricted Subsidiaries, and including any related financing transactions and including increases in ownership of Restricted Subsidiaries, during such Measurement Period or subsequent to the Measurement Period and on or prior to the date for which the calculation is being made (the “Calculation Date”) will be given pro forma effect, including giving effect to Pro Forma Cost Savings, as if they had occurred on the first day of the Measurement Period;

(2) for purposes of the Fixed Charge Coverage Ratio, the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date, will be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the specified Person or any of its Restricted Subsidiaries following the Calculation Date;

(3) any Person that is a Restricted Subsidiary on the Calculation Date will be deemed to have been a Restricted Subsidiary at all times during such Measurement Period;

(4) any Person that is not a Restricted Subsidiary on the Calculation Date will be deemed not to have been a Restricted Subsidiary at any time during such Measurement Period; and

(5) if any Indebtedness bears a floating rate of interest, the interest expense on such Indebtedness will be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire Measurement Period (taking into account any Hedging Obligation applicable to such Indebtedness).

The calculations above shall be made in good faith by a responsible financial or accounting officer of the Issuer and shall take into account any Hedging Obligations of the Issuer and its Restricted Subsidiaries. Interest on a Capital Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by a responsible financial or accounting officer of the Issuer to be the rate of interest implicit in such Capital Lease Obligation in accordance with GAAP. For purposes of making the computation referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be deemed to have been based upon the rate actually chosen, or, if none, then based upon such optional rate chosen as the Issuer may designate.

“Pro Forma Cost Savings” means, with respect to any period, the reduction in net costs and related adjustments that were directly attributable to an acquisition, merger, consolidation or disposition that (i) occurred during the four-quarter reference period or subsequent to the four-quarter reference period and on or prior to the date of determination and calculated on a basis that is consistent with Regulation S-X under the Securities Act as in effect and applied as of the date of the Indenture, (ii) were actually implemented within 12 months after the date of the acquisition, merger, consolidation or disposition and prior to the date of determination that are supportable and quantifiable by the underlying accounting records of such business or (iii) the Issuer reasonably determines are probable based upon specifically identifiable actions to be taken within 12 months of the date of the acquisition, merger, consolidation or disposition and, in the case of each of (i), (ii) and (iii), are described, as

194

provided below, in an Officers’ Certificate, as if all such reductions in costs had been effected as of the beginning of such period. Pro Forma Cost Savings described above shall be accompanied by an Officers’ Certificate delivered to the Trustee from the chief financial officer of the Issuer that outlines the actions taken or to be taken, the net cost savings achieved or to be achieved from such actions and that, in the case of clause (iii) above, such savings have been determined to be probable.

“Purchase Money Indebtedness” means Indebtedness, including Capital Lease Obligations, Disqualified Stock or preferred stock of the Issuer or any Restricted Subsidiary incurred for the purpose of financing all or any part of the purchase price of assets used in the business of the Issuer or any Restricted Subsidiary or the cost of installation, construction or improvement thereof; provided, however, that (1) the amount of such Indebtedness shall not exceed such purchase price or cost and (2) such Indebtedness shall be incurred within 90 days after such acquisition of such asset by the Issuer or such Restricted Subsidiary or such installation, construction or improvement.

“Qualified Capital Stock” means any Capital Stock that is not Disqualified Stock. “Qualified Proceeds” means any of the following or any combination of the following:

(1) cash or Cash Equivalents;

(2) the Fair Market Value of assets that are used or useful in the Permitted Business; and

(3) the Fair Market Value of the Capital Stock of any Person engaged primarily in a Permitted Business if, in connection with the receipt by the Issuer or any of its Restricted Subsidiaries of such Capital Stock, such Person becomes a Subsidiary Guarantor or a Qualified Restricted Subsidiary or such Person is merged or consolidated into the Issuer or a Subsidiary Guarantor or a Qualified Restricted Subsidiary;

provided that (i) for purposes of clause (3) of the first paragraph under “—Certain Covenants—Restricted Payments,” Qualified Proceeds shall not include Excluded Contributions and (ii) the amount of Qualified Proceeds shall be reduced by the amount of payments made in respect of the applicable transaction which are permitted under clause (13)(i) of the covenant described under “—Certain Covenants—Transactions with Affiliates.”

“Qualified Receivables Transaction” means any transaction or series of transactions entered into by the Issuer or any of its Subsidiaries pursuant to which the Issuer or any of its Subsidiaries sells, conveys or otherwise transfers, or grants a security interest, to:

(1) a Receivables Subsidiary (in the case of a transfer by the Issuer or any of its Subsidiaries, which transfer may be effected through the Issuer or one or more of its Subsidiaries); and

(2) if applicable, any other Person (in the case of a transfer by a Receivables Subsidiary),

in each case, in any accounts receivable (including health care insurance receivables), instruments, chattel paper, general intangibles and similar assets (whether now existing or arising in the future, the “Receivables”) of the Issuer or any of its Subsidiaries, and any assets related thereto, including, without limitation, all collateral securing such Receivables, all contracts, contract rights and all guarantees or other obligations in respect of such Receivables, proceeds of such Receivables and any other assets, which are customarily transferred or in respect of which security interests are customarily granted in connection with receivables financings and asset securitization transactions of such type, together with any related transactions customarily entered into in receivables financings and asset securitizations, including servicing arrangements. All determinations under the Indenture as to whether a particular provision in respect of a receivables transaction is customary shall be made by the Issuer in good faith (which determination shall be conclusive).

“Qualified Restricted Subsidiary” means a majority-owned Restricted Subsidiary or a Wholly Owned Restricted Subsidiary that satisfies each of the following requirements: (1) except for Permitted Payment

195

Restrictions, there are no consensual encumbrances or restrictions, directly or indirectly, on the ability of such Restricted Subsidiary to (a) pay dividends or make any other distributions on its equity interest to the Issuer or a Restricted Subsidiary or pay any Indebtedness owed to the Issuer or a Restricted Subsidiary or (b) make any loans or advances to the Issuer or a Restricted Subsidiary; (2) the Equity Interests of such Restricted Subsidiary are owned by the Issuer and/or one or more of its Qualified Restricted Subsidiaries (without giving effect to the proviso in this definition) and, if it is not a Wholly Owned Restricted Subsidiary, one or more of (A) Strategic Investors, (B) directors of such Restricted Subsidiary (only to the extent holding directors’ qualifying shares) and (C) any other Person to the extent ownership by such other Person is required as a result of changes in law occurring after the Issue Date; and (3) the primary business of such Restricted Subsidiary is a Permitted Business; provided that, so long as the laws or regulations of the State of New York require that membership interests in limited liability companies that own dialysis clinics in the State of New York be owned by individuals, a Restricted Subsidiary that operates one or more clinics located only in the State of New York shall be deemed a Qualified Restricted Subsidiary if (i) the requirements of clause (1) and (3) of this definition are satisfied, (ii) a majority of its Equity Interests are owned by an officer of the Issuer who is party to a written contract with the Issuer or a Subsidiary Guarantor pursuant to which the Issuer or such Subsidiary Guarantor shall have the right to repurchase all of such Equity Interests owned by such officer for a nominal amount, (iii) the Issuer or a Subsidiary Guarantor receives dividends and distributions from such Restricted Subsidiary as if it owned all of the Equity Interests owned by such officer and (iv) such officer pledges such Equity Interests as part of the Collateral to the extent such Equity Interests would have been pledged if they were owned by the Issuer or a Guarantor.

“Receivables Fees” means distributions or payments made directly or by means of discounts with respect to any participation interest issued or sold in connection with, and other fees paid to a Person that is not a Restricted Subsidiary in connection with, any Qualified Receivables Transaction.

“Receivables Repurchase Obligation” means any obligation of a seller of receivables in a Qualified Receivables Transaction to repurchase receivables arising as a result of a breach of a representation, warranty or covenant or otherwise, including as a result of a receivable or portion thereof becoming subject to any asserted defense, dispute, off-set or counterclaim of any kind as a result of any action taken by, any failure to take action by or any other event relating to the seller.

“Receivables Subsidiary” means a Subsidiary of the Issuer which engages in no activities other than in connection with the financing of accounts receivable and in businesses related or ancillary thereto and that is designated by the Board of Directors of the Issuer (as provided below) as a Receivables Subsidiary (A) no portion of the Indebtedness or any other Obligations (contingent or otherwise) of which:

(1) is guaranteed by the Issuer or any Subsidiary of the Issuer (excluding guarantees of Obligations (other than the principal of, and interest on, Indebtedness) pursuant to Standard Securitization Undertakings);

(2) is recourse to or obligates the Issuer or any Subsidiary of the Issuer in any way other than pursuant to Standard Securitization Undertakings; or

(3) subjects any property or asset of the Issuer or any Subsidiary of the Issuer (other than accounts receivable and related assets as provided in the definition of Qualified Receivables Transaction), directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings; and

(B) with which neither the Issuer nor any Subsidiary of the Issuer has any material contract, agreement, arrangement or understanding other than on terms no less favorable to the Issuer or such Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Issuer, other than as may be customary in a Qualified Receivables Transaction including for fees payable in the ordinary course of business in connection with servicing accounts receivable; and (C) with which neither the Issuer nor any Subsidiary of the Issuer has any obligation to maintain or preserve such Subsidiary’s financial condition or cause such Subsidiary

196

to achieve certain levels of operating results other than pursuant to representations, warranties, covenants and indemnities entered into in connection with a Qualified Receivables Transaction. Any such designation by the Board of Directors of the Issuer will be evidenced to the Trustee by filing with the Trustee a certified copy of the resolution of the Board of Directors of the Issuer giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the foregoing conditions.

“Registration Rights Agreement” means (i) the Registration Rights Agreement dated the Issue Date by and among the Issuer, the Guarantors, Banc of America Securities LLC, Barclays Capital and Wells Fargo Securities, LLC, as amended, supplemented or otherwise modified from time to time and (ii) any other registration rights agreement entered into in connection with an issuance of Additional Notes in a private offering after the Issue Date.

“Replacement Preferred Stock” means any Disqualified Stock of the Issuer or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to redeem, refund, refinance, replace or discharge any Disqualified Stock of the Issuer or any of its Restricted Subsidiaries (other than intercompany Disqualified Stock); provided that such Replacement Preferred Stock (i) is issued by the Issuer or by the Restricted Subsidiary who is the Issuer of the Disqualified Stock being redeemed, refunded, refinanced, replaced or discharged, (ii) does not have an initial liquidation preference in excess of the liquidation preference plus accrued and unpaid dividends on the Disqualified Stock being redeemed, refunded, refinanced, replaced or discharged and (iii) does not require redemption, repurchase or discharge at any time prior to the date on which the Disqualified Stock being redeemed, refunded, refinanced, replaced or discharged is required to be redeemed, repurchased or discharged.

“Restricted Investment” means an Investment other than a Permitted Investment.

“Restricted Subsidiary” of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. Unless otherwise specified, references to Restricted Subsidiaries shall refer to Restricted Subsidiaries of the Issuer.

“Secured Party” means (i) the Holders, (ii) the Trustee, (iii) the Collateral Agent and (iv) any successors, indorsees, transferees and assigns of each of the foregoing.

“Security Agreement” means the security agreement by and between the Issuer and the Collateral Agent, dated as of the Issue Date, as amended, supplemented or otherwise modified from time to time.

“Security Documents” means the Security Agreement, each mortgage and any other instruments and documents executed and delivered pursuant to the Indenture or any of the foregoing, as the same may be amended, supplemented or otherwise modified from time to time and pursuant to which Collateral is pledged, assigned or granted to or on behalf of the Collateral Agent for the benefit of the Secured Parties.

“Significant Subsidiary” means any Subsidiary that would be a “significant subsidiary” as defined in Article 1, Rule 1-02(w)(1) or (2) of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the Issue Date. For purposes of determining whether an Event of Default has occurred, if any group of Restricted Subsidiaries as to which a particular event has occurred and is continuing at any time would be, taken as a whole, a “Significant Subsidiary” then such event shall be deemed to have occurred with respect to a Significant Subsidiary.

“Sponsor” means Centerbridge Capital Partners, L.P. and certain affiliated entities.

“Sponsor Management Agreement” means the Management Agreement between the Issuer and the Sponsor dated as of the Issue Date.

“Standard Securitization Undertakings” means representations, warranties, covenants and indemnities entered into by the Issuer or any Subsidiary of the Issuer which the Issuer has determined in good faith to be

197

customary in a Qualified Receivables Transaction including, without limitation, those relating to the servicing of the assets of a Receivables Subsidiary, it being understood that any Receivables Repurchase Obligation shall be deemed to be a Standard Securitization Undertaking.

“Stated Maturity” means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which the payment of interest or principal was scheduled to be paid in the documentation governing such Indebtedness, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.

“Strategic Investors” means physicians, hospitals, health systems, other healthcare providers, other healthcare companies and other similar strategic joint venture partners which joint venture partners are, directly or indirectly, actively involved in the day-to-day operations of providing dialysis-related services, or, in the case of physicians, that have retired therefrom, individuals who are former owners or employees of dialysis clinics purchased by the Issuer, any of its Restricted Subsidiaries, and consulting firms that receive common stock solely as consideration for consulting services performed.

“subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date.

“Subsidiary” means any subsidiary of the Issuer, which, for the avoidance of doubt, includes Non-Guarantor Subsidiaries.

“Subsidiary Guarantors” means the Restricted Subsidiaries of the Issuer that have executed and delivered a Guarantee of the Notes and their respective successors and assigns, in each case, until the Guarantee of such Person has been released in accordance with the provisions of the Indenture.

“Total Assets” means the total consolidated assets of the Issuer and its Restricted Subsidiaries as set forth on the most recent consolidated balance sheet of the Issuer and its Restricted Subsidiaries prepared in accordance with GAAP.

“Transactions” means the transactions contemplated by the Merger Agreement and the other related transactions described in this prospectus.

“Treasury Management Obligations” means obligations under any agreement governing the provision of treasury or cash management services, including deposit accounts, funds transfer, automated clearinghouse, zero balance accounts, returned check concentration, controlled disbursement, lockbox, account reconciliation and reporting and trade finance services.

“Treasury Rate” has the meaning set forth under “—Optional Redemption.”

“Unrestricted Subsidiary” means any Subsidiary of the Issuer that is designated by the Board of Directors of the Issuer as an Unrestricted Subsidiary pursuant to a resolution of the Board of Directors and any Subsidiary of an Unrestricted Subsidiary.

The Issuer may designate any Subsidiary of the Issuer (including any existing Subsidiary and any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Equity Interests or Indebtedness of, or owns or holds any Lien on, any property of, the Issuer or any Subsidiary of the Issuer (other than solely any Subsidiary of the Subsidiary to be so designated); provided that

(1) such designation complies with the covenants described under “Certain Covenants— Restricted Payments”;

198

(2) each of (a) the Subsidiary to be so designated and (b) its Subsidiaries has not at the time of designation, and does not thereafter, incur any Indebtedness other than Non-Recourse Debt;

(3) is not party to any agreement, contract, arrangement or understanding with the Issuer or any Restricted Subsidiary of the Issuer unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Issuer or such Restricted Subsidiary than those permitted under the covenant described above under the caption “—Certain Covenants—Transactions with Affiliates”;

(4) is a Person with respect to which neither the Issuer nor any of its Restricted Subsidiaries has any direct or indirect obligation to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; and

(5) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Issuer or any of its Restricted Subsidiaries.

“Voting Stock” of any specified Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person.

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing:

(1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by

(2) the then outstanding principal amount of such Indebtedness.

“Wholly Owned Restricted Subsidiary” of any specified Person means a Restricted Subsidiary of such Person all of the outstanding Capital Stock or other ownership interest of which (other than directors’ qualifying shares) will at that time be owned by such Person or by one or more Wholly Owned Restricted Subsidiaries of such Person.

“Wholly Owned Subsidiary” of any specified Person means a Subsidiary of such Person all of the outstanding Capital Stock or other ownership interest of which (other than directors’ qualifying shares) will at that time be owned by such Person or by one or more Wholly Owned Subsidiaries of such Person.

199

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER

The following is a summary of the material U.S. federal income tax consequences of the exchange of the outstanding notes for the exchange notes in the exchange offer. The exchange of outstanding notes for exchange notes in the exchange offer will not constitute a taxable event to holders for U.S. federal income tax purposes. Consequently, you will not recognize gain or loss upon receipt of an exchange note, the holding period of the exchange note will include the holding period of the outstanding note for which it was exchanged and the basis of the exchange note will be the same as the basis of the outstanding note immediately before the exchange.

In any event, persons considering the exchange of outstanding notes for exchange notes should consult their own tax advisors concerning the U.S. federal income tax consequences in light of their particular situations as well as any consequences arising under the laws of any other taxing jurisdiction.

200

CERTAIN ERISA CONSIDERATIONS

The following is a summary of certain considerations associated with the purchase of the notes and exchange notes by employee benefit plans that are subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), plans, individual retirement accounts and other arrangements that are subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”) or provisions under any other federal, state, local, non-U.S. or other laws or regulations that are similar to such provisions of ERISA or the Code (collectively, “Similar Laws”), and entities whose underlying assets are considered to include “plan assets” of any such plan, account or arrangement (each, a “Plan”).

General fiduciary matters

ERISA and the Code impose certain duties on persons who are fiduciaries of a Plan subject to Title I of ERISA or Section 4975 of the Code (an “ERISA Plan”) and prohibit certain transactions involving the assets of an ERISA Plan and its fiduciaries or other interested parties. Under ERISA and the Code, any person who exercises any discretionary authority or control over the administration of an ERISA Plan or the management or disposition of the assets of an ERISA Plan, or who renders investment advice for a fee or other compensation to an ERISA Plan, is generally considered to be a fiduciary of the ERISA Plan.

In considering an investment in the notes and exchange notes using a portion of the assets of any Plan, a fiduciary should determine whether the investment is in accordance with the documents and instruments governing the Plan and the applicable provisions of ERISA, the Code or any Similar Law relating to a fiduciary’s duties to the Plan including, without limitation, the prudence, diversification, delegation of control and prohibited transaction provisions of ERISA, the Code and any other applicable Similar Laws.

Prohibited transaction issues

Section 406 of ERISA and Section 4975 of the Code prohibit ERISA Plans from engaging in specified transactions involving plan assets with persons or entities who are “parties in interest,” within the meaning of ERISA, or “disqualified persons,” within the meaning of Section 4975 of the Code, unless an exemption is available. A party in interest or disqualified person who engages in a non-exempt prohibited transaction may be subject to excise taxes and other penalties and liabilities under ERISA and the Code. In addition, the fiduciary of an ERISA Plan that engages in such a non-exempt prohibited transaction may be subject to penalties and liabilities under ERISA and the Code. The acquisition and/or holding of notes or exchange notes by an ERISA Plan with respect to which the issuer, an initial purchaser, or a guarantor is considered a party in interest or a disqualified person may constitute or result in a direct or indirect prohibited transaction under Section 406 of ERISA and/or Section 4975 of the Code, unless the investment is acquired and is held in accordance with an applicable statutory, class or individual prohibited transaction exemption. In this regard, the U.S. Department of Labor has issued prohibited transaction class exemptions, or “PTCEs,” that may apply to the acquisition and holding of the notes or exchange notes. These class exemptions include, without limitation, PTCE 84-14 respecting transactions determined by independent qualified professional asset managers, PTCE 90-1 respecting insurance company pooled separate accounts, PTCE 91-38 respecting bank collective investment funds, PTCE 95-60 respecting life insurance company general accounts and PTCE 96-23 respecting transactions determined by in-house asset managers. In addition, Section 408(b)(17) of ERISA and Section 4975(d)(20) of the Code provide relief from the prohibited transaction provisions of ERISA and Section 4975 of the Code for certain transactions between an ERISA Plan and a person that is a party in interest and/or a disqualified person (other than a fiduciary or an affiliate that, directly or indirectly, has or exercises) any discretionary authority or control or renders any investment advice with respect to the assets of any ERISA Plan involved in the transaction solely by reason of providing services to the Plan or by relationship to a service provider, provided that the ERISA Plan pays no more than adequate consideration in connection with the transaction. There can be no assurance that all of the conditions of any such exemptions will be satisfied.

201

Because of the foregoing, the notes and the exchange notes should not be purchased or held by any person investing “plan assets” of any Plan, unless such purchase and holding (and the exchange of notes for exchange notes) will not constitute a non-exempt prohibited transaction under ERISA and the Code or a similar violation of any applicable Similar Laws.

Representation

Accordingly, by acceptance of a note or an exchange note, each purchaser and subsequent transferee will be deemed to have represented and warranted that either (i) no portion of the assets used by such purchaser or transferee to acquire or hold the notes or the exchange notes constitutes assets of any Plan or (ii) the acquisition and holding of the notes and the exchange notes (and the exchange of notes for exchange notes) by such purchaser or transferee will not constitute a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or a similar violation under any applicable Similar Laws.

The foregoing discussion is general in nature and is not intended to be all-inclusive. Due to the complexity of these rules and the penalties that may be imposed upon persons involved in non-exempt prohibited transactions, it is particularly important that fiduciaries, or other persons considering acquiring the notes or exchange notes (and holding the notes or exchange notes) on behalf of, or with the assets of, any Plan, consult with their counsel regarding the potential applicability of ERISA, Section 4975 of the Code and any Similar Laws to such investment and whether an exemption would be applicable to the purchase and holding of the notes or exchange notes.

202

PLAN OF DISTRIBUTION

Each broker–dealer that receives exchange notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of the exchange notes. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker–dealer in connection with resales of exchange notes received in exchange for outstanding notes where the outstanding notes were acquired as a result of market–making activities or other trading activities. In addition, all dealers effecting transactions in the exchange notes may be required to deliver a prospectus.

We will not receive any proceeds from any exchange of outstanding notes for exchange notes or from any sale of exchange notes by broker–dealers. Exchange notes received by broker–dealers for their own accounts pursuant to the exchange offer may be sold 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 exchange notes or a combination of these methods of resale, at market prices prevailing at the time of resale, at prices related to the prevailing market prices or at negotiated prices. Any such resale may be made directly to purchasers or through brokers or dealers who may receive compensation in the form of commissions or concessions from any broker–dealer and/or the purchasers of any exchange notes. Any broker–dealer that resells exchange notes that were received by it for its own account pursuant to the exchange offer and any broker or dealer that participates in a distribution of the exchange notes may be deemed to be an “underwriter” within the meaning of the Securities Act and any profit of any resale of exchange notes and any commissions or concessions received by these persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker–dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

We have agreed to pay all expenses incident to the exchange offer other than commissions or concessions of any brokers or dealers and, except in certain circumstances, the expenses of counsel and other advisors of the holders and will indemnify the holders of outstanding notes, including any broker–dealers, against certain liabilities, including liabilities under the Securities Act.

203

LEGAL MATTERS

Simpson Thacher & Bartlett LLP will pass upon the legality of the exchange notes and the related guarantees to be offered hereby.

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The financial statements and schedule as of December 31, 2009 and 2008 and for each of the three years in the period ended December 31, 2009, included in this prospectus and elsewhere in the registration statement have been audited by Grant Thornton LLP, independent registered public accountants, as stated in its report appearing herein.

AVAILABLE INFORMATION

After the consummation of the exchange offer, we will file certain reports with the Securities Exchange Commission (“the SEC”), including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. You may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C., 20549. Please call 1-800-SEC-0330 for further information on the operation of the Public Reference Room. Our SEC filings are also available to the public from the SEC’s web site at www.sec.gov.

204

AMERICAN RENAL HOLDINGS INC.

INDEX TO FINANCIAL STATEMENTS

Audited Financial Statements for the years ended December 31, 2009, 2008 and 2007

Report of Independent Registered Public Accountants	F-2
Consolidated Balance Sheets as of December 31, 2009 and 2008	F-3
Consolidated Statements of Income for the years ended December 31, 2009, 2008 and 2007	F-4
Consolidated Statements of Changes in Deficit for the years ended December 31, 2009, 2008 and 2007	F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008 and 2007	F-8
Notes to Consolidated Financial Statements	F-9
Schedule II—Valuation and Qualifying Accounts	F-39
Unaudited Financial Statements for the periods ended September 30, 2010 and 2009
Consolidated Balance Sheets as of September 30, 2010 (unaudited) and December 31, 2009	F-40
Unaudited Consolidated Statements of Operations for the three month and nine month periods ended September 30, 2010 and 2009	F-41
Unaudited Consolidated Statements of Changes in Equity (Deficit) for the periods December  31, 2009 to May 7, 2010 and May 8, 2010 to September 30, 2010	F-42
Unaudited Consolidated Statements of Cash Flows for the nine months ended September  30, 2010 and 2009	F-44
Notes to Unaudited Consolidated Financial Statements	F-45

F-1

Report of Independent Registered Public Accountants

Board of Directors

American Renal Holdings Inc.

We have audited the accompanying consolidated balance sheets of American Renal Holdings Inc. (a Delaware corporation) and subsidiaries (collectively the “Company”) as of December 31, 2009 and 2008, and the related consolidated statements of income, changes in deficit, and cash flows for each of the three years in the period ended December 31, 2009. Our audits of the basic financial statements included the financial statement schedule listed in the index on page F-1. These consolidated financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of American Renal Holdings Inc. and subsidiaries as of December 31, 2009 and 2008, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2009 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

As discussed in Note B, the Company adopted new accounting guidance on January 1, 2009 related to the accounting for non-controlling interests on a prospective basis except for the presentation and disclosure requirements which were applied retrospectively for all periods presented.

As discussed in Note C, the Company adopted new accounting guidance on January 1, 2009 related to the accounting for business combinations.

/S/    GRANT THORNTON LLP

Boston, Massachusetts

November 4, 2010

F-2

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2009 and 2008

(in thousands, except share and per share data)

	2009			2008
Assets
Current assets:
Cash and cash equivalents	$	29,179		$	29,182
Accounts receivable, less allowance for doubtful accounts of $8,165 and $7,833 at December 31, 2009 and 2008, respectively		45,654			38,979
Inventories		2,294			1,978
Prepaid expenses and other current assets		2,366			6,030
Deferred tax assets		4,845			3,803
Total current assets		84,338			79,972
Property and equipment, net		59,405			54,819
Deferred financing costs, net		1,044			1,878
Amortizable intangible assets, net		1,418			1,056
Other long-term assets		3,319			2,883
Goodwill		24,198			15,762
Total assets	$	173,722		$	156,370
Liabilities and Deficit
Current liabilities:
Accounts payable	$	18,158		$	17,644
Accrued compensation and benefits		7,170			7,262
Accrued expenses and other current liabilities		15,646			11,233
Current portion of long-term debt		14,309			11,556
Current portion of capital lease obligations		334			630
Total current liabilities		55,617			48,325
Long-term debt, less current portion		64,261			76,137
Capital lease obligations, less current portion		214			293
Other long-term liabilities		7,664			7,570
Deferred tax liabilities		4,548			3,613
Series X mandatorily redeemable preferred stock, 43,000 shares authorized; 40,500 shares issued and outstanding at December 31, 2009 and 2008		62,799			54,730
Commitments and contingencies (notes K and P)
Noncontrolling interests subject to put provisions		38,431			34,881
Deficit:
Series A convertible preferred stock, which accrue dividends at 10%, $.001 par value, 7,300,000 shares authorized, issued and outstanding (liquidation value of $74,322 at December 31, 2009)		7			7
Series B convertible preferred stock, $.001 par value, 10,700,000 shares authorized; 2,675,000 shares issued and outstanding (liquidation value of $18,524 at December 31, 2009)		3			3
Common stock, $.0005 par value, 39,982,000 shares authorized; 1,330,250 and 1,062,500 shares issued and 1,083,350 and 873,600 shares outstanding at December 31, 2009 and 2008, respectively		1			1
Additional paid-in capital		23,704			27,395
Notes receivable from stockholders		(735	)		(713	)
Accumulated deficit		(97,784	)		(102,922	)
Treasury stock, at cost, 246,900 and 188,900 common shares held at December 31, 2009 and 2008, respectively		(1,065	)		(791	)
Total American Renal Holdings Inc. deficit		(75,869	)		(77,020	)
Noncontrolling interests not subject to put provisions		16,057			7,841
Total deficit		(59,812	)		(69,179	)
Total liabilities and deficit	$	173,722		$	156,370

See the accompanying notes to the consolidated financial statements.

F-3

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Consolidated Statements of Income

For the years ended December 31, 2009, 2008 and 2007

(in thousands)

	2009			2008			2007
Net operating revenues	$	262,989		$	217,777		$	178,391
Operating expenses:
Patient care costs		170,826			141,810			115,058
General and administrative		24,819			19,944			18,595
Depreciation and amortization		12,127			9,777			7,919
Provision for uncollectible accounts		3,216			4,834			3,258
Total operating expenses		210,988			176,365			144,830
Operating income		52,001			41,412			33,561
Interest expense, net		(14,948	)		(13,729	)		(13,695	)
Income before income taxes		37,053			27,683			19,866
Income tax expense		9,524			6,860			4,409
Net income		27,529			20,823			15,457
Less: Net income attributable to noncontrolling interests		(22,391	)		(17,179	)		(14,706	)
Net income attributable to American Renal Holdings Inc.	$	5,138		$	3,644		$	751

See the accompanying notes to the consolidated financial statements.

F-4

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Deficit

For the years ended December 31, 2009, 2008 and 2007

(in thousands, except share and per share data)

	Non- controlling interests subject to put provisions			Total American Renal Holdings Inc. Deficit																															Non- controlling interests not subject to put provisions			Compre- hensive Income
				Series A Convertible Preferred Stock				Series B Convertible Preferred Stock				Common Stock				Treasury Stock					Additional Paid-in Capital			Notes Receivable from Stock- holders		Accumu- lated Deficit			Accumu- lated Other Compre- hensive Loss			Total
				Shares		Amount		Shares		Amount		Shares		Amount		Shares		Cost
Balance at December 31, 2006	$	29,819			7,300,000	$	7		2,675,000	$	3		285,000	$	1		5,000	$	(8	)	$	28,643		$	—	$	(106,317	)	$	(57	)	$	(77,728	)	$	6,567
Comprehensive income:
Interest rate swap, net of tax					—		—		—		—		—		—		—		—			—			—		—			(143	)		(143	)				$	(143	)
Net income		4,424			—		—		—		—		—		—		—		—			—			—		751			—			751			10,282			15,457
Total comprehensive income																																						$	15,314
Redemption of Series B preferred stock					—		—		—		—		—		—		—		—			—			—		(1,000	)		—			(1,000	)
Stock-based compensation expense					—		—		—		—		—		—		—		—			2,180			—		—			—			2,180
Distributions to noncontrolling interests		(5,253	)		—		—		—		—		—		—		—		—			—			—		—			—			—			(10,775	)
Contributions from noncontrolling interests		348			—		—		—		—		—		—		—		—			—			—		—			—			—			1,228
Acquisitions of noncontrolling interests		—			—		—		—		—		—		—		—		—			—			—		—			—			—			287
Changes in fair value of noncontrolling interests		2,216			—		—		—		—		—		—		—		—			(2,216	)		—		—			—			(2,216	)
Balance at December 31, 2007	$	31,554			7,300,000	$	7		2,675,000	$	3		285,000	$	1		5,000	$	(8	)	$	28,607		$	—	$	(106,566	)	$	(200	)	$	(78,156	)	$	7,589

See the accompanying notes to the consolidated financial statements.

F-5

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Deficit—(Continued)

For the years ended December 31, 2009, 2008 and 2007

(in thousands, except share and per share data)

	Non- controlling interests subject to put provisions			Total American Renal Holdings Inc. Deficit																																Non- controlling interests not subject to put provisions			Compre- hensive Income
				Series A Convertible Preferred Stock				Series B Convertible Preferred Stock				Common Stock				Treasury Stock					Additional Paid-in Capital			Notes Receivable from Stock- holders			Accumu- lated Deficit			Accumu- lated Other Compre- hensive Loss			Total
				Shares		Amount		Shares		Amount		Shares		Amount		Shares		Cost
Balance at December 31, 2007	$	31,554			7,300,000	$	7		2,675,000	$	3		285,000	$	1		5,000	$	(8	)	$	28,607		$	—		$	(106,566	)	$	(200	)	$	(78,156	)	$	7,589
Comprehensive income:
Interest rate swap, net of tax					—		—		—		—		—		—		—		—			—			—			—			200			200					$	200
Net income		4,908			—		—		—		—		—		—		—		—			—			—			3,644			—			3,644			12,271			20,823
Total comprehensive income																																							$	21,023
Issuance of common stock					—		—		—		—		185,000		—		—		—			697			(697	)		—			—			—
Purchase of common stock for treasury					—		—		—		—		—		—		183,900		(783	)		—			—			—			—			(783	)
Stock options exercised					—		—		—		—		592,500		—		—		—			170			—			—			—			170
Excess tax benefits from stock awards exercised					—		—		—		—		—		—		—		—			351			—			—			—			351
Interest due from note receivable					—		—		—		—		—		—		—		—			—			(16	)		—			—			(16	)
Stock-based compensation expense					—		—		—		—		—		—		—		—			1,482			—			—			—			1,482
Distributions to noncontrolling interests		(5,602	)		—		—		—		—		—		—		—		—			—			—			—			—			—			(12,806	)
Contributions from noncontrolling interests		109			—		—		—		—		—		—		—		—			—			—			—			—			—			861
Sales and assumptions of additional noncontrolling interests		—			—		—		—		—		—		—		—		—			—			—			—			—			—			(74	)
Changes in fair value of noncontrolling interests		3,912			—		—		—		—		—		—		—		—			(3,912	)		—			—			—			(3,912	)
Balance at December 31, 2008	$	34,881			7,300,000	$	7		2,675,000	$	3		1,062,500	$	1		188,900	$	(791	)	$	27,395		$	(713	)	$	(102,922	)	$	—		$	(77,020	)	$	7,841

See the accompanying notes to the consolidated financial statements.

F-6

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Deficit—(Continued)

For the years ended December 31, 2009, 2008 and 2007

(in thousands, except share and per share data)

	Non- controlling interests subject to put provisions			Total American Renal Holdings Inc. Deficit																															Non- controlling interests not subject to put provisions			Compre- hensive Income
				Series A Convertible Preferred Stock				Series B Convertible Preferred Stock				Common Stock				Treasury Stock					Additional Paid-in Capital			Notes Receivable from Stock- holders			Accumu- lated Deficit			Accumu- lated Other Compre- hensive Loss		Total
				Shares		Amount		Shares		Amount		Shares		Amount		Shares		Cost
Balance at December 31, 2008	$	34,881			7,300,000	$	7		2,675,000	$	3		1,062,500	$	1		188,900	$	(791	)	$	27,395		$	(713	)	$	(102,922	)	$	—	$	(77,020	)	$	7,841
Comprehensive income:
Net income		5,100			—		—		—		—		—		—		—		—			—			—			5,138			—		5,138			17,291		$	27,529
Total comprehensive income
Issuance of common stock					—		—		—		—		267,750		—		—		—			96			—			—			—		96
Purchase of common stock for treasury					—		—		—		—		—		—		58,000		(274	)		—			—			—			—		(274	)
Adjustment for tax benefits from stock awards exercised					—		—		—		—		—		—		—		—			(204	)		—			—			—		(204	)
Interest due from note receivable					—		—		—		—		—		—		—		—			—			(22	)		—			—		(22	)
Stock-based compensation expense					—		—		—		—		—		—		—		—			1,135			—			—			—		1,135
Distributions to noncontrolling interests		(5,618	)		—		—		—		—		—		—		—		—			—			—			—			—		—			(15,476	)
Contributions from noncontrolling interests		292			—		—		—		—		—		—		—		—			—			—			—			—		—			1,303
Acquisitions of noncontrolling interests		—			—		—		—		—		—		—		—		—			—			—			—			—		—			5,098
Purchases of noncontrolling interests		(942	)		—		—		—		—		—		—		—		—			—			—			—			—		—			—
Changes in fair value of noncontrolling interests		4,718			—		—		—		—		—		—		—		—			(4,718	)		—			—			—		(4,718	)		—
Balance at December 31, 2009	$	38,431			7,300,000	$	7		2,675,000	$	3		1,330,250	$	1		246,900	$	(1,065	)	$	23,704		$	(735	)	$	(97,784	)	$	—	$	(75,869	)	$	16,057

See the accompanying notes to the consolidated financial statements.

F-7

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2009, 2008 and 2007

(in thousands)

	2009			2008			2007
Operating activities
Net income	$	27,529		$	20,823		$	15,457
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		12,127			9,777			7,919
Amortization of deferred financing costs		1,212			611			795
Stock-based compensation expense		1,135			1,482			2,180
Excess tax benefit for stock options exercised, net		204			(351	)		—
Change in deferred taxes		(108	)		1,117			876
Accrued interest on obligations under financing agreements		377			300			438
Non cash change related to interest rate swap		—			200			—
Accrued interest on obligations under Series X preferred stock agreement		8,069			7,268			6,536
Gain on nonmonetary exchange		(611	)		(542	)		(483	)
Non-cash rent charges		822			1,161			400
Loss (gain) on disposal of assets		18			(66	)		217
Change in operating assets and liabilities, net of acquisitions:
Increase in accounts receivable		(5,439	)		(7,661	)		(7,446	)
(Increase) decrease in inventories		(316	)		4,274			(4,057	)
Decrease (increase) in prepaid expenses and other current assets		4,040			(2,573	)		(1,458	)
Increase in other assets		(424	)		(2,023	)		(219	)
Increase (decrease) in accounts payable		67			(216	)		5,329
(Decrease) increase in accrued compensation and benefits		(236	)		1,049			1,457
Increase (decrease) in accrued expenses and other current liabilities		4,389			1,435			(2,253	)
(Decrease) increase in other liabilities		(1,524	)		947			2,956
Net cash provided by operating activities		51,331			37,012			28,644
Investing activities
Purchases of property and equipment		(15,067	)		(21,254	)		(15,218	)
Cash paid for acquisitions		(3,964	)		—			(1,995	)
Proceeds from divestiture of dialysis center		—			507			—
Net cash used in investing activities		(19,031	)		(20,747	)		(17,213	)
Financing activities
Borrowings, net	$	1,184		$	17,363		$	14,239
Payments on long-term debt		(12,001	)		(7,952	)		(7,026	)
Payments on capital lease obligations		(663	)		(675	)		(1,537	)
Proceeds from issuance of common stock		96			170			—
Purchase of treasury stock		(274	)		(783	)		—
Excess tax benefits for stock options exercised, net		(204	)		351			—
Payments made for Series B stock redemption		—			—			(1,000	)
Decrease in cash held in escrow		—			—			1,000
Distributions to noncontrolling interests		(21,094	)		(18,408	)		(16,028	)
Purchases of noncontrolling interests		(942	)		(678	)		—
Contributions from noncontrolling interests		1,595			970			1,576
Net cash used in financing activities		(32,303	)		(9,642	)		(8,776	)
Net (decrease) increase in cash and cash equivalents		(3	)		6,623			2,655
Cash and cash equivalents at beginning of year		29,182			22,559			19,904
Cash and cash equivalents at end of year	$	29,179		$	29,182		$	22,559
Supplemental disclosure of cash flow information
Cash paid during the year for income taxes	$	7,125		$	7,361		$	4,369
Cash paid during the year for interest		5,572			5,651			6,166
Supplemental disclosure of non-cash financing activities
Issuance of common stock in exchange for long-term notes		—			697			—
Issuance of notes to sellers in connection with acquisitions		1,342			—			—
Noncontrolling interest in net assets of acquisitions		5,098			—			1,413

See the accompanying notes to the consolidated financial statements.

F-8

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2009 and 2008

(dollars in thousands, except per share amounts)

NOTE A—DESCRIPTION OF BUSINESS

On December 16, 2005, American Renal Holding LLC (ARH) was merged with American Renal Associates, Inc., which was renamed American Renal Holdings Inc. (the Company). Immediately thereafter, the Company contributed all of its assets, subject to all of its liabilities, to ARA Subsidiary Corp., which was renamed American Renal Associates Inc. (ARA). On December 31, 2007, ARA converted to a limited liability company (American Renal Associates LLC). All financial statements presented reflect the merger of ARH into the Company and the contribution of all of the assets, subject to all of the liabilities, from the Company to ARA. Prior to the merger, ARH owned 99.8% of the common stock of the Company and the balance of the common stock was owned by employees of the Company who exercised stock options. The Company was incorporated as a Delaware corporation in July 1999, and was formed to open, staff, and operate outpatient kidney dialysis centers and to provide related medical services in selected markets. The Company’s first dialysis center opened on December 8, 2000. On December 31, 2009, the Company operated 83 dialysis centers, which are located in 16 states and Washington, D.C.

The Company owns and operates dialysis centers in partnership with nephrologists. The ownership and management of each center is established through operating and management services agreements. Medical director services are provided separately through a medical director agreement. The Company maintains a majority ownership interest in each of its centers. The Company and the partners contribute capital to the centers in proportion to their ownership interest. Financing for the centers is obtained through third-party lenders, collateralized by the assets of the centers. If additional financing is required and is not reasonably available, additional capital contributions may be required from the Company and its partners to meet operating needs.

NOTE B—SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Consolidation

These consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States. The financial statements include the Company’s subsidiaries and partnerships that are wholly owned or majority owned. All significant intercompany transactions have been eliminated in consolidation. The Company has evaluated subsequent events through November 4, 2010, which is the date these consolidated financial statements were issued.

As of January 1, 2009, the Company adopted the new accounting standard for noncontrolling interests and changed the reporting for minority interests, which are now characterized as noncontrolling interests. Noncontrolling interests are classified in the accompanying balance sheet either as a component of equity whenever such interests are not subject to a put provision or as temporary equity whenever such interests are subject to a put provision. The amounts of consolidated net income attributable to both parent and the noncontrolling interest are now separately presented in the accompanying statement of income. The presentation and disclosure requirements were retroactively applied to minority interest amounts existing as of December 31, 2006, 2007 and 2008, and for the years ended December 31, 2007 and 2008 in the consolidated financial statements. See “Noncontrolling Interests” disclosure in Note B and Note H for additional information.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires the use of estimates and assumptions that affect the reported amounts of revenues,

F-9

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

(dollars in thousands, except per share amounts)

NOTE B—SIGNIFICANT ACCOUNTING POLICIES—(Continued)

expenses, assets, liabilities, and contingencies. Although actual results in subsequent periods will differ from these estimates, such estimates are developed based on the best information available to management and management’s best judgments at the time made. All significant assumptions and estimates underlying the reported amounts in the consolidated financial statements and accompanying notes are regularly reviewed and updated. Changes in estimates are reflected in the financial statements based upon ongoing actual experience, trends, or subsequent settlements and realizations, depending on the nature and predictability of the estimates and contingencies.

The most significant assumptions and estimates underlying these financial statements and accompanying notes involve revenue recognition and provisions for uncollectible accounts, impairments and valuation adjustments, the useful lives of property and equipment, fair value measurements, accounting for income taxes, acquisition accounting valuation estimates and stock-based compensation. Specific risks and contingencies related to these estimates are further addressed within the notes to the consolidated financial statements.

Net Operating Revenues and Allowance for Doubtful Accounts

Net operating revenues are recognized as services are provided to patients and consist primarily of reimbursement for dialysis and ancillary services provided to patients. A usual and customary fee schedule is maintained for dialysis treatment and other patient services; however, actual collectible revenue is normally at a discount to the fee schedule. Medicare and Medicaid programs are billed at predetermined net realizable rates per treatment that are established by statute or regulation. Revenue for contracted payors is recorded at contracted rates and other payors are billed at usual and customary rates, and a contractual allowance is recorded to reflect the expected net realizable revenue for services provided. Contractual allowances, along with provisions for uncollectible amounts, are estimated based upon contractual terms, regulatory compliance, and historical collection experience. Net revenue recognition and allowances for uncollectible billings require the use of estimates of the amounts that will actually be realized considering among other items, retroactive adjustments that may be associated with regulatory reviews, audits, billing reviews, and other matters.

Net operating service revenues associated with patients whose primary coverage is under governmental programs, including Medicare and Medicaid, Veterans Administration, and Medicare or Medicaid Managed Care programs, accounted for approximately 57%, 56% and 59% of total net operating service revenues for the years ended December 31, 2009, 2008 and 2007, respectively.

Laws and regulations governing the Medicare and Medicaid programs are extremely complex and subject to interpretation. As a result, there is at least a reasonable possibility that recorded estimates will change by a material amount in the near term. Patient accounts receivable from these programs were $30,389 and $25,053 at December 31, 2009 and 2008, respectively. No other single payor accounted for more than 5% of total patient accounts receivable.

Management services are provided to dialysis centers not owned by the Company. The management fees are typically determined as a percentage of the centers’ patient revenues and are included in net revenues as earned. Any costs incurred in performing these management services are recognized in general and administrative expenses. Management fees that are charged to noncontrolling shareholders are eliminated in consolidation. The noncontrolling share of expenses is included in net income attributable to noncontrolling interests.

F-10

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

(dollars in thousands, except per share amounts)

NOTE B—SIGNIFICANT ACCOUNTING POLICIES—(Continued)

A significant physician-prescribed pharmaceutical administered during dialysis, EPO (Erythropoietin), is provided by a sole supplier and accounted for approximately 22%, 24% and 25% of gross operating revenues for the years ended December 31, 2009, 2008 and 2007, respectively. Although the Company currently receives discounted prices for EPO, the supplier has unilateral pricing discretion, and in the future, the Company may not be able to achieve the same cost levels historically obtained.

Segment Information

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions how to allocate resources and assess performance. The Company’s chief decision-maker is a combination of the Chief Executive Officer and the Chief Financial Officer. The Company views its operations and manages its business as one reportable business segment, the ownership and operation of dialysis clinics, all of which are located in the United States.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less at time of purchase to be cash equivalents.

Fair Value Measurements

The Company measures the fair value of certain assets, liabilities and noncontrolling interests subject to put provisions based upon certain valuation techniques that include observable or unobservable inputs and assumptions that market participants would use in pricing these assets, liabilities and commitments. The Company also has classified certain assets, liabilities and noncontrolling interests subject to put provisions that are measured at fair value into the appropriate fair value hierarchy levels. The Company’s financial instruments consist of cash equivalents, accounts receivable, accounts payable, accrued liabilities and long-term debt. The Company’s estimate of fair value for these financial instruments approximates their carrying values at December 31, 2009 and 2008.

Inventories

Inventories are stated at the lower of cost (first in, first out) or market, and consist principally of pharmaceuticals and dialysis-related supplies.

Property and Equipment

Property and equipment are recorded at cost. Depreciation expense is calculated using the straight-line method over the following useful lives:

Buildings	39 years
Leasehold improvements	Shorter of lease term or useful lives
Equipment and information systems	3 to 7 years

Upon retirement or sale, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is credited or charged to income. Maintenance and repairs are charged to expense as incurred. The Company capitalizes interest on funds borrowed to finance facility construction.

F-11

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

(dollars in thousands, except per share amounts)

NOTE B—SIGNIFICANT ACCOUNTING POLICIES—(Continued)

Interest capitalized was $49, $328 and $231 during 2009, 2008 and 2007, respectively.

Deferred Financing Costs

Costs incurred in connection with a stock exchange and recapitalization, debt issuances, and capital lease arrangements have been deferred, and are being amortized over the term of the related instrument as interest expense.

Amortizable Intangible Assets

Amortizable intangible assets include a right of first refusal waiver, noncompete agreements and certificates of need. Each of these assets is amortized on a straight-line basis over the term of the agreement, which is generally five to ten years.

Goodwill

The excess of aggregate purchase price over the fair value of the net tangible and specifically identifiable intangible assets acquired in business combinations is recorded as goodwill. Goodwill is not amortized, but required to be assessed for possible impairment as circumstances warrant, but at least annually. The Company assesses goodwill for impairment as of October 1st.

The Company evaluates goodwill for impairment at least on an annual basis and more frequently if certain indicators are encountered. Goodwill is to be tested at the reporting unit level, defined as an operating segment or one level below an operating segment (referred to as a component), with the fair value of the reporting unit being compared to its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered to be impaired. The Company has determined that it has one operating, as well as one reportable, segment. For impairment testing purposes, the Company’s individual clinics qualify as components of that operating segment. Because they have similar economic characteristics, the components are aggregated and deemed a single reporting unit. No impairment was identified during the years ended December 31, 2009 and 2008.

Impairment of Long-Lived Assets

Long-lived assets include property and equipment and intangibles, except for goodwill. In the event that facts and circumstances indicate that these assets may be impaired, an evaluation of recoverability would be performed. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset would be compared to the asset’s carrying amount to determine if a write-down to market value or discounted cash flow value is required. No long-lived assets were identified as impaired in 2009 and 2008.

Income Taxes

The Company accounts for income taxes under a liability approach. Under this approach, deferred tax assets and liabilities are recognized based upon temporary differences between the financial statement and tax bases of assets and liabilities, as measured by the enacted tax rates, which will be in effect when these differences reverse. Deferred tax expense or benefit is the result of changes between deferred tax assets and liabilities. A valuation allowance is established when, based on an evaluation of objective verifiable evidence, there is a likelihood that some portion or all of the deferred tax assets will not be realized.

F-12

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

(dollars in thousands, except per share amounts)

NOTE B—SIGNIFICANT ACCOUNTING POLICIES—(Continued)

On January 1, 2007, the Company adopted the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 740-10, Accounting for Income Tax Uncertainties which Interpretation prescribes a recognition threshold of more-likely-than-not and a measurement attribute on all tax positions taken or expected to be taken in a tax return in order to be recognized in the financial statements. In making this assessment, a company must determine whether it is more-likely-than-not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based solely on the technical merits of the position and must assume that the tax position will be examined by the appropriate taxing authority that would have full knowledge of all relevant information. Once the recognition threshold is met, the tax position is then measured to determine the actual amount of benefit to recognize in the financial statements. In addition, the recognition threshold of more-likely-than-not must continue to be met in each reporting period to support continued recognition of the tax benefit. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold should be derecognized in the financial reporting period in which that threshold is no longer met. The Company recognizes interest and penalties related to unrecorded tax positions in its income tax expense. See Note L for a discussion of the impact of this new accounting standard on the accompanying financial statements.

Noncontrolling Interests

Noncontrolling interests represent the proportionate equity interests of other partners in the Company’s consolidated entities, which are not wholly owned. Effective January 1, 2009, the Company is required to treat noncontrolling interests not subject to put provisions as a separate component of equity, but apart from the Company’s equity, and not as a liability or other item outside of equity. The Company is also required to identify and present consolidated net income attributable to the Company and to noncontrolling interests on the face of the consolidated statement of income. In addition, changes in the Company’s ownership interest while the Company retains a controlling financial interest should be accounted for as equity transactions. The Company was also required to expand disclosures in the financial statements to include a reconciliation of the beginning and ending balances of the equity attributable to the Company and the noncontrolling owners and a schedule showing the effects of changes in the Company’s ownership interest in a subsidiary on the equity attributable to the Company. This change did not have a material impact on the Company’s consolidated financial statements; however, it did change the presentation of minority interests (noncontrolling interests) in the Company’s consolidated financial statements. In conjunction with adopting these requirements, the Company was required to classify member interests with redemption features that are not solely within the Company’s control, such as the Company’s noncontrolling interests that are subject to put provisions, outside of permanent equity and to measure these noncontrolling interests at fair value. Changes in the fair value of noncontrolling interests subject to put provisions are accounted for as equity transactions. See Note H for further details. These consolidated financial statements have been recast for all prior periods presented for the retrospective application of these presentation and disclosure requirements.

F-13

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

(dollars in thousands, except per share amounts)

NOTE B—SIGNIFICANT ACCOUNTING POLICIES—(Continued)

The effects of the change upon the retrospective application of these presentation and disclosure requirements were as follows:

Consolidated Balance Sheet:

	December 31, 2008
	Minority Interest			Noncontrolling Interests subject to put provisions		Noncontrolling Interests not subject to put provisions		Additional paid-in capital
Balance	$	8,911		$	—	$	—	$	61,208
Net change		(8,911	)		34,881		7,843		(33,813	)
Balance as adjusted	$	—		$	34,881	$	7,843	$	27,395

Consolidated Statements of Cash Flows:

For the year ended December 31, 2008

	Operating Activities		Financing Activities
Net cash provided by operating/financing activities	$	18,604	$	9,444
Reclassification of distributions to noncontrolling interests		18,407		(18,407	)
Reclassification of purchase of noncontrolling interest from investing activities		—		(678	)
Net cash provided by (used in) operating/financing activities as adjusted	$	37,011	$	(9,641	)

In addition to the reclassifications noted above, the retrospective application in the accounting for noncontrolling interests resulted in an increase of $678 in cash flows from investing activities in 2008 as compared to the amount previously presented.

For the year ended December 31, 2007

	Operating Activities		Financing Activities
Net cash provided by operating/financing activities	$	12,616	$	7,252
Reclassification of distributions to noncontrolling interests		16,028		(16,028	)
Net cash provided by (used in) operating/financing activities as adjusted	$	28,644	$	(8,776	)

Stock-Based Compensation

The Company measures and recognizes the cost for all share-based awards made to employees and directors, including stock options, stock appreciation rights, stock units, and discounted employee stock purchases. The Company’s stock-based compensation awards are measured at their estimated grant-date fair

F-14

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

(dollars in thousands, except per share amounts)

NOTE B—SIGNIFICANT ACCOUNTING POLICIES—(Continued)

value and recognized as compensation expense on the straight-line method over their requisite service periods. The amount of compensation cost recognized in the consolidated statements of income is based on the awards that vest, and therefore, is reduced for forfeitures.

Recent Accounting Pronouncements

In January 2010, the FASB issued ASC Topic 820, Fair Value Measurements and Disclosures—Improving Disclosures About Fair Value Measurements. The ASU requires new disclosures about transfers into and out of Levels 1 and 2 and separate disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurements. It also clarifies existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair value. The new disclosures and clarifications of existing disclosures are effective January 1, 2010, except for the disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurements, which are effective January 1, 2011. Other than requiring additional disclosures, the adoption of this new guidance is not expected to have a material impact on the Company’s consolidated results of operations and financial position.

In August 2010, the FASB issued guidance that requires health care entities to use cost as the measurement basis for charity care disclosures and defines cost as the direct and indirect costs of providing charity care. The amended disclosure requirements are effective for fiscal years beginning after December 15, 2010 and must be applied retrospectively. The Company will adopt the amended disclosure requirements for their fiscal year beginning January 1, 2011. Since the new guidance amends disclosure requirements only, its adoption will not impact the Company’s statement of financial position, statement of operations, or cash flow statement.

NOTE C—ACQUISITIONS

The Company periodically acquires assets and liabilities of dialysis centers. The results of operations for these acquisitions are included in the Company’s consolidated statements of income from the respective acquisition dates.

All acquisitions occurring after January 1, 2009 are required to be accounted for under the acquisition method (previously referred to as the purchase method). Under this method, the acquirer recognizes the assets acquired, the liabilities assumed, contractual contingencies, as well as any noncontrolling interest in the acquiree at their fair values at the acquisition date. Transaction costs are excluded from the acquisition cost and are expensed as incurred. Under accounting standards in effect prior to January 1, 2009, noncontrolling interests in the acquiree were recorded at historical cost and transaction costs were included in the acquisition cost.

Fiscal Year 2009

On May 1, 2009, the Company entered into three joint ventures with nephrologists to acquire the assets and assume certain liabilities of three dialysis centers in Georgia for cash and notes payable. The Company has a 51% interest in each of the three joint ventures.

On July 29, 2009, the Company entered into a joint venture with a nephrologist to acquire the assets and assume certain liabilities of a dialysis center in Michigan for cash. The Company has a 51% interest in the joint venture.

F-15

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

(dollars in thousands, except per share amounts)

NOTE C—ACQUISITIONS—(Continued)

The purchase price, on a combined basis for both acquisitions consummated in 2009, was allocated preliminarily as follows:

Accounts receivable	$	1,182
Other receivables and supplies		462
Property and equipment		1,433
Noncompete agreements		593
Goodwill		8,436
Less liabilities assumed		(1,703	)
Less noncontrolling interest in net assets acquired		(5,098	)
Purchase price (including notes to sellers of $1,341)	$	5,305

The goodwill above is deductible for income tax purposes. The weighted average amortization period for the acquired noncompete agreements is ten years.

Fiscal Year 2008

On January 1, 2008, the Company purchased an additional 8% membership interest from a noncontrolling interest partner. After the purchase of this interest, the Company has a 59% interest in this subsidiary. The consideration paid in excess of the seller’s book value in the amount of $604 was recorded as goodwill.

Fiscal Year 2007

On January 1, 2007, the Company entered into a joint venture with a nephrologist to acquire the assets and assume certain liabilities of a dialysis center in Missouri for cash. The Company has a 51% interest in the partnership.

On May 1, 2007, the Company entered into a joint venture with three nephrologists to acquire the assets of a dialysis center in Maryland. The Company has a 51% interest in the partnership.

On September 1, 2007, the Company acquired the assets of a chronic kidney disease business in Rhode Island for cash. The Company has a 100% interest in the entity.

The purchase price, on a combined basis for all acquisitions consummated in 2007, was allocated as follows:

Property and equipment	$	944
Other receivables and supplies		91
Noncompete agreements		670
Goodwill		1,171
Less liabilities assumed		(594	)
Less noncontrolling interest in assets acquired		(287	)
Cash purchase price	$	1,995

The goodwill above is deductible for income tax purposes. The weighted average amortization period for the acquired noncompete agreements is 8 years.

F-16

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

(dollars in thousands, except per share amounts)

NOTE D—FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company’s financial instruments are classified and disclosed in one of the following three categories:

Level 1: Financial instruments with unadjusted, quoted prices listed on active market exchanges. The Company’s Level 1 assets include cash equivalent investments held in money market funds.

Level 2: Financial instruments determined using prices for recently traded financial instruments with similar underlying terms, as well as directly or indirectly observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3: Financial instruments not actively traded on a market exchange. This category includes situations where there is little, if any, market activity for the financial instrument. The prices are determined using significant unobservable inputs or valuation techniques.

The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The following is a description for the valuation methodologies used for assets and liability’s measured at fair value. There were no changes in the methodologies used at December 31, 2009 and 2008.

Cash equivalent—The cash equivalent represents investments in a money market fund and U.S. government obligations which are recorded at fair value based on their quoted market prices.

Noncontrolling interest subject to put provision—See Note H to the consolidated financial statements for a discussion of the Company’s methodology for estimating fair value of noncontrolling interest subject to put obligations.

Interest rate swap—The fair value of the interest rate swap was determined using a pricing model with inputs that are observable in the market.

	December 31, 2009
	Total		Level 1		Level 2		Level 3
Assets
Cash equivalent	$	9,506	$	9,506	$	—	$	—
Temporary Equity
Noncontrolling interests subject to put provisions	$	38,431	$	—	$	—	$	38,431
	December 31, 2008
	Total		Level 1		Level 2		Level 3
Assets
Cash equivalent	$	10,004	$	10,004	$	—	$	—
Liabilities
Interest rate swap	$	190	$	—	$	190	$	—
Temporary Equity
Noncontrolling interests subject to put provisions	$	34,881	$	—	$	—	$	34,881

F-17

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

(dollars in thousands, except per share amounts)

NOTE E—PROPERTY AND EQUIPMENT

Property and equipment consist of the following at December 31:

	2009			2008
Land	$	380		$	380
Buildings		1,312			1,312
Leasehold improvements		54,045			45,712
Equipment and information systems		43,669			37,101
Construction in progress, new centers		2,250			1,519
		101,656			86,024
Less accumulated depreciation		(42,251	)		(31,205	)
	$	59,405		$	54,819

Depreciation of property and equipment was $11,897, $9,548 and $7,757 for the years ended December 31, 2009, 2008 and 2007, respectively. Included in construction in progress for the Company’s new centers are items related to property and equipment during the development stage of new dialysis clinics. At December 31, 2009, the Company had commitments of $1,102 to complete projects relating to capital construction.

During 2006, the Company exchanged old dialysis machines for new dialysis machines, which qualified as a nonmonetary asset exchange. The assets received in the exchange were accounted for using fair value and resulted in a deferred gain of $2,391. A purchase agreement with this vendor for dialysis supplies was revised in contemplation of this nonmonetary exchange of assets. As of December 31, 2009 and 2008, $324 and $934, respectively, of the unrecognized gain was deferred related to additional dialysis supplies purchases on this contract. During 2009, 2008 and 2007, $611, $542 and $483, respectively, of the gain was recognized as a reduction to patient care costs.

NOTE F—DEFERRED FINANCING COSTS AND AMORTIZABLE INTANGIBLE ASSETS

Deferred financing costs and amortizable intangible assets consist of the following at December 31:

	2009			2008
Deferred financing costs	$	2,347		$	4,166
Less accumulated amortization		(1,303	)		(2,288	)
	$	1,044		$	1,878
	2009			2008
Noncompete agreements	$	1,794		$	1,201
Other intangible assets		426			426
		2,220			1,627
Less accumulated amortization		(802	)		(571	)
	$	1,418		$	1,056

F-18

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

(dollars in thousands, except per share amounts)

NOTE F—DEFERRED FINANCING COSTS AND AMORTIZABLE INTANGIBLE ASSETS—(Continued)

Amortization of amortizable intangible assets was $231, $230 and $162 for the years ended December 31, 2009, 2008 and 2007, respectively. Amortization expense for deferred financing costs was $585, $611 and $795 for the years ended December 31, 2009, 2008 and 2007, respectively, and is included as part of interest expense. In connection with the amendment of certain loans during 2009, the Company expensed the remaining unamortized deferred financing costs of $627 associated with these loans.

The estimated annual amortization expense related to amortizable intangible assets is as follows for the years ending December 31:

2010	$	261
2011		250
2012		196
2013		170
2014		149
Thereafter		392
	$	1,418

NOTE G—ACCRUED EXPENSES

Accrued compensation and benefits consist of the following at December 31:

	2009		2008
Accrued payroll	$	4,038	$	4,266
Other		3,132		2,996
	$	7,170	$	7,262

Accrued expenses and other current liabilities consist of the following at December 31:

	2009		2008
Payor refunds and retractions	$	9,928	$	6,802
Other		5,718		4,432
	$	15,646	$	11,234

NOTE H—NONCONTROLLING INTERESTS SUBJECT TO PUT PROVISIONS

The Company has potential obligations to purchase the noncontrolling interests held by third parties in several of its consolidated subsidiaries. These obligations are in the form of put provisions and are exercisable at the third-party owners’ discretion within specified periods as outlined in each specific put provision. If these put provisions were exercised, the Company would be required to purchase the third-party owners’ noncontrolling interests at the appraised fair value. The methodology the Company used to estimate the fair value of the noncontrolling interests subject to these put provisions assumes an average multiple of earnings, based on historical earnings, development stage of the underlying business and other factors. The estimated fair values of the noncontrolling interests subject to these put provisions can also fluctuate and the implicit multiple of earnings

F-19

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

(dollars in thousands, except per share amounts)

NOTE H—NONCONTROLLING INTERESTS SUBJECT TO PUT PROVISIONS—(Continued)

at which these noncontrolling interest obligations may ultimately be settled could vary significantly from our current estimates depending upon market conditions including potential purchasers’ access to the credit and capital markets, which can impact the level of competition for dialysis and non-dialysis related businesses, the economic performance of these businesses and the restricted marketability of the third-party owners’ noncontrolling interests.

As of December 31, 2009 and 2008, the Company’s potential obligations under these put provisions totaled approximately $29,295 and $25,770, respectively. Additionally, the Company has certain put agreements which are exercisable upon the occurrence of specific events, including third-party members’ death, disability, bankruptcy, retirement, or if third-party members are dissolved. As of December 31, 2009 and 2008, the Company’s potential additional obligations under these put provisions were approximately $9,136 and $9,111, respectively. The Company’s potential obligations for all of these put provisions are included in noncontrolling interests subject to put provisions in the accompanying consolidated balance sheets.

During 2009, the Company purchased an additional 7.5% membership interest from a noncontrolling interest partner for $942. This purchase has been accounted for as an equity transaction.

NOTE I—LONG-TERM DEBT

Long-term debt consists of the following at December 31:

	2009			2008
Term loan A, principal payments of $550 and interest at variable rates (8.50% as of December 31, 2009) payable quarterly through December 2010.	$	2,750		$	4,950
Term loan B (converted into Term loan D in 2009)		—			17,505
Term loan C (converted into Term loan D in 2009)		—			22,000
Term loan D, principal payments of $45 and interest at variable rates (8.50% as of December 31, 2009) payable quarterly through September 2011, with a $39,010 balloon payment due December 2011.		39,325			—
Term loans, principal payments of $33 and interest at variable monthly rates (3.60% as of December 31, 2009) payable monthly through November 2011, with a balloon payment of $1,983 due December 2011.		2,065			3,120
Term loans, principal payments of $9 and interest at variable rates (3.01% as of December 31, 2009) through May 2014, with a $536 balloon payment due May 2014		1,001			—
Term loans, principal and interest payable monthly at rates between 5.9% and 8.67% over varying periods through December 2013.		29,802			25,914
Term loans, interest payable monthly at variable rates (between 4.51% and 7.90% as of December 31, 2008) during the progress periods, which converted in 2009 to term loans		—			8,401
Mortgage payable, principal and interest due monthly through February 2012 at a rate of 7%		509			528
Mortgage payable, principal and interest due monthly through March 2014 at a rate of 4.79%		268			321
Lines of credit, variable interest (4.25% as of December 31, 2009), due monthly through September 2010, convertible to term loans payable over an additional term of 36 months through September 2013.		2,850			4,954
		78,570			87,693
Less current maturities		(14,309	)		(11,556	)
	$	64,261		$	76,137

F-20

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

(dollars in thousands, except per share amounts)

NOTE I—LONG-TERM DEBT—(Continued)

Scheduled maturities of long-term debt are as follows for the years ending December 31:

2010	$	14,309
2011		52,024
2012		7,826
2013		3,617
2014		794
	$	78,570

In December 2005, the Company’s wholly owned subsidiary, ARA, entered into a credit agreement with a financial institution. The financial institution extended three term loans (term loans A, B, and C), totaling $51,000, and a revolving line of credit of $10,000, to fund the repayment of certain indebtedness, provide for working capital and acquisition funding, and for the stock recapitalization (see Note M). During 2007, the Company and the financial institution amended the credit agreement reducing the applicable variable interest rate margins by three quarters of a percent on term loan A, one and one quarter of a percent on term loan B, three and three quarters percent on term loan C and three quarters of a percent on the revolving line of credit. In 2009, the Company amended its revolving line of credit with the financial institution which decreased borrowing availability under the line of credit from $10,000 to $6,000 and combined term loan B and term loan C into one new term loan (term loan D) with a variable interest rate based on the 30—day LIBOR (with a LIBOR floor of 2.5%) plus 6.00%. This amendment also permitted the Company to increase its intercompany loans from $12,000 to $15,000. The unused portion of the line of credit was $6,000 at December 31, 2009 and $10,000 at December 31, 2008.

The loans are guaranteed by the Company, and by each wholly owned subsidiary of ARA. Additionally, the loans are secured by (i) all of the assets of ARA and each wholly owned subsidiary of ARA (other than their membership interests in the dialysis clinic subsidiaries that are owned in partnership with nephrologists,) and; (ii) all of the capital stock of ARA and the membership interests of each wholly owned subsidiary of ARA. The loans from the financial institution were subject to certain debt covenants beginning March 31, 2006, which were primarily based on ARA’s financial results. The Company was in compliance with the covenants of these loans as of and for the year ended December 31, 2009.

During 2006, the Company entered into an interest rate swap agreement with an amortizing notional amount of $20,000. The agreement has the economic effect of converting the LIBOR-based variable interest rate to a fixed rate of 12.27% for $20,000 of term loan C. The swap agreement expired on March 31, 2009, and required quarterly settlement payments which were recorded as an increase or decrease to interest expense. During 2008, management determined the interest rate swap could no longer be considered an effective cash flow hedge. As a result, the change in the fair value of the interest rate swap of $144 was reflected in the accompanying consolidated statement of income in 2008 as a component of interest expense. In addition, the accumulated other comprehensive loss balance on the interest rate swap has also been recognized as a component of interest expense in 2008. The interest rate swap is recorded at its fair value of $190 as of December 31, 2008 (see Note J).

F-21

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

(dollars in thousands, except per share amounts)

NOTE J—OTHER LIABILITIES

Other liabilities consist of the following at December 31:

	2009			2008
Deferred gain from nonmonetary asset exchange	$	324		$	934
Deferred straight-line rent		3,234			2,411
Liability from tenant allowances		4,483			4,914
Accrued professional liability		527			487
Interest rate swap liability		—			190
Other		110			—
		8,678			8,936
Less current portion of other liabilities		(1,013	)		(1,366	)
	$	7,665		$	7,570

NOTE K—LEASES

Operating Leases

The majority of the Company’s facilities are leased under noncancelable operating leases expiring in various years through 2023. Most lease agreements cover periods from five to fifteen years, and contain renewal options of five to ten years at the fair rental value at the time of renewal. Certain leases are subject to rent holidays and/or escalation clauses. The Company expenses rent using the straight-line method over the lease term. Tenant allowances received from lessors are amortized over the term of the leases. Rental expense under all operating leases for the years ended December 31, 2009, 2008 and 2007 was $9,152, $8,242 and $5,760, respectively. The Company also subleases space to related party tenants at fair values under noncancelable operating leases expiring in various years through 2023. Rental income under all subleases for the years ended December 31, 2009, 2008 and 2007 was $1,091, $643 and $244, respectively.

Future minimum lease payments under non-cancelable operating leases, net of sublease receipts, are as follows as of December 31, 2009:

	Operating Leases		Less: Sublease Receipts		Net Lease Obligation
2010	$	9,603	$	1,038	$	8,565
2011		9,240		1,034		8,206
2012		8,430		1,027		7,403
2013		7,710		1,040		6,670
2014		7,103		1,017		6,086
Thereafter		31,580		7,626		23,954
	$	73,666	$	12,782	$	60,884

Capital Leases

Capital leases are recorded as an asset and an obligation at an amount equal to the lesser of the present value of the minimum lease payments during the lease term or the fair market value of the leased asset. Assets recorded

F-22

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

(dollars in thousands, except per share amounts)

NOTE K—LEASES—(Continued)

under capital leases totaled $2,804 and $2,822, with accumulated amortization of $1,811 and $1,679 at December 31, 2009 and 2008, respectively. The cost and accumulated amortization of the equipment are included in property and equipment. Amortization expense for these assets is included in depreciation and amortization expense in the consolidated statements of operations.

The future minimum commitments due under capital leases, as of December 31, 2009 are as follows for the years ending December 31:

2010	$	358
2011		59
2012		59
2013		59
2014		59
Thereafter		5
Total minimum lease payments		599
Less portion representing interest		(51	)
Present value of minimum lease payments		548
Less amount due in one year		(334	)
Long-term capital lease obligations	$	214

NOTE L—INCOME TAXES

The provision for income taxes consisted of the following:

	2009			2008		2007
Current:
Federal	$	7,705		$	4,372	$	2,299
State		1,926			1,371		1,234
		9,631			5,743		3,533
Deferred:
Federal		(22	)		1,019		1,108
State		(85	)		98		(232	)
		(107	)		1,117		876
Total provision for income taxes	$	9,524		$	6,860	$	4,409

F-23

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

(dollars in thousands, except per share amounts)

NOTE L—INCOME TAXES—(Continued)

The significant components of the Company’s deferred tax assets and liabilities are as follows at December 31:

	2009			2008
Deferred tax assets:
Bad debt reserve	$	1,582		$	1,075
Stock-based compensation		1,883			1,437
Accrued expenses		168			251
Lease		657			429
Net operating loss carryforwards		—			19
Other		555			592
Total deferred tax assets		4,845			3,803
Deferred tax liabilities:
Goodwill amortization		(2,716	)		(2,090	)
Depreciation		(1,748	)		(1,523	)
Other		(84	)		—
Total deferred tax liabilities		(4,548	)		(3,613	)
Net deferred tax asset	$	297		$	190

The income tax expense included in the accompanying consolidated statements of income principally relates to the Company’s proportionate share of the pre-tax income of its majority-owned subsidiaries. A reconciliation of the federal statutory rate to the Company’s effective tax rate is as follows for the years ended December 31:

	2009			2008			2007
Income tax provision at federal statutory rate		35.0	%		35.0	%		35.0	%
Increase (decrease) in tax resulting from:
State taxes, net of federal benefit		4.2			3.5			4.1
Noncontrolling interests		(21.3	)		(21.9	)		(25.1	)
Nondeductible Series X interest expense		7.6			9.2			11.1
Other		0.2			(1.0	)		(2.9	)
Effective income tax rate		25.7	%		24.8	%		22.2	%

The Company and its subsidiaries file U.S. federal income tax returns and various state returns. The Company is no longer subject to U.S. federal, state and local examinations by tax authorities for years before 2006.

As of January 1, 2007 (date of adoption) the Company did not have any uncertain tax positions. In 2009, the Company recognized a liability for uncertain tax positions totaling $470 attributable to a bad debt deduction taken. This liability is expected to be paid in the next year. The resolution of this uncertain tax position will have no impact on the provision for income taxes.

F-24

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

(dollars in thousands, except per share amounts)

NOTE M—SERIES X REDEEMABLE PREFERRED STOCK

As part of the December 16, 2005 recapitalization transaction, certain investors, including holders of Series A and Series B convertible preferred stock, purchased 40,500 shares of Series X redeemable preferred stock at $1,000 per share. Series X redeemable preferred stock accrues dividends at a rate of 12% per annum, compounding quarterly. Accrued dividends on Series X redeemable preferred stock were $24,726 and $17,478 at December 31, 2009 and 2008, respectively. Dividends recorded during 2009, 2008 and 2007 were $7,248, $6,447 and $5,715, respectively, and are included in interest expense. Series X redeemable preferred stock is redeemable for cash at the earlier occurrence of the Company’s initial public offering, liquidation event, as defined, or December 16, 2012, equal to the face value of the stock plus accrued and unpaid dividends. The Series X redeemable preferred stock is classified as long-term debt in the accompanying consolidated balance sheets. In connection with the recapitalization, the purchasers of the Series X redeemable preferred stock received 3,844,000 detachable common stock warrants which have an exercise price of $.005 per share. These warrants are valued at $1.50 per share ($5,747 in the aggregate), and included in additional paid-in capital in the accompanying consolidated balance sheets. Through December 31, 2009, none of these warrants have been exercised.

The allocation of proceeds to the warrants resulted in an original issue discount on the Series X redeemable preferred stock, which is being amortized through December 2012. Amortization of $821 was recorded in interest expense for each of the years ended December 31, 2009, 2008 and 2007.

The carrying value of the Series X redeemable preferred stock consisted of the following at December 31, 2009 and 2008:

	2009			2008
Series X preferred stock, $.001 par value, 43,000 shares authorized; 40,500 shares issued and outstanding at December 31, 2009 and 2008	$	40,500		$	40,500
Accrued dividends		24,726			17,478
		65,226			57,978
Original issue discount, net of amortization		(2,427	)		(3,248	)
	$	62,799		$	54,730

NOTE N—PREFERRED AND COMMON STOCK

Series A Convertible Preferred Stock

The Series A convertible preferred stock is initially convertible on a 2:1 basis into shares of the Company’s common stock. The Series A convertible preferred stock has a liquidation preference equal to $3.4625 per share plus any accrued and unpaid dividends (the Series A Liquidation Value), and ranks junior in priority to the Series X redeemable preferred stock and senior in priority to all other equity securities of the Company. Each share of Series A convertible preferred stock is convertible into the Company’s common stock at any time at the option of the holder thereof, and is automatically converted into the Company’s common stock upon a qualified initial public offering. The Series A convertible preferred stock accrues cumulative dividends at a rate of 10% per year compounded annually on the then-effective Series A Liquidation Value. Dividends will be payable quarterly in arrears, when, as, and if declared by the Board. The amount of undeclared dividends for the years ended December 31, 2009 and 2008 was $6,757 and $6,142, respectively, and as of December 31, 2009 cumulative undeclared dividends were $23,770.

F-25

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

(dollars in thousands, except per share amounts)

NOTE N—PREFERRED AND COMMON STOCK—(Continued)

Series B Convertible Preferred Stock

The Series B convertible preferred stock is initially convertible on a 2:1 basis into shares of the Company’s common stock. The Series B convertible preferred stock has a liquidation preference equal to $3.4625 per share (the Series B Liquidation Value) and ranks junior in priority to the Series X redeemable preferred stock and the Series A convertible preferred stock and senior in priority to all other equity securities of the Company. Each share of Series B convertible preferred stock is convertible into the Company’s common stock at any time at the option of the holder thereof, and shall be automatically converted into the Company’s common stock upon a qualified initial public offering. The Series B convertible preferred stock does not accumulate dividends.

Common Stock

Determining the fair value of the Company’s common stock requires making complex and subjective judgments. The Company hired a third-party valuation firm to assist with the valuation of the common stock. The Company’s approach to valuation is based on discounted future cash flow that uses estimates of revenue, driven by assumed market quote rates and estimated costs, as well as appropriate discount rates. The Company also considers market multiples of Earnings Before Income Tax, Depreciation and Amortization (EBITDA) and third-party transactions in determining fair value.

The estimated enterprise fair value is allocated to preferred and common shares using the option-pricing method. The option-pricing method involves making estimates of the anticipated timing of a potential liquidity event, such as a sale of the Company or an initial public offering, and estimates of the volatility of the equity securities. The Company estimates volatility based on available information on volatility of stocks of publicly traded companies in its industry.

Stock Option Plans

The Company adopted the American Renal Associates, Inc. 2000 Stock Option Plan (the 2000 Plan), under which 4,000,000 shares of the Company’s common stock were reserved for issuance to employees, directors, and consultants. Options granted under the 2000 Plan may be incentive stock options or nonstatutory stock options. Stock purchase rights may also be granted under the 2000 Plan. The Board of Directors determines the period over which options become exercisable; however, except in the case of options granted to officers, directors, and consultants, options generally become exercisable at a rate of not less than 25% per year over four years from the date the options are granted. The exercise price of incentive stock options and nonstatutory stock options shall be no less than 100% and 85%, respectively, of the fair market value per share of the Company’s common stock on the grant date. The term of the options is ten years.

On December 16, 2005, the Company established the American Renal Holdings Inc. 2005 Equity Incentive Plan (the 2005 Plan), under which 3,659,800 shares of the Company’s common stock were reserved for issuance to employees, directors, and consultants. Options granted under the 2005 Plan may be incentive stock options or nonstatutory stock options. The Board of Directors determines the period over which options become exercisable; however, except in the case of options granted to officers, directors, and consultants, options generally become exercisable at a rate of not less than 25% per year over four years from the date the options are granted. The exercise price of incentive stock options and nonstatutory stock options shall be no less than 100% and 85%, respectively, of the fair market value per share of the Company’s common stock on the grant date. The term of the options is 10 years.

F-26

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

(dollars in thousands, except per share amounts)

NOTE N—PREFERRED AND COMMON STOCK—(Continued)

The following tables summarize the activity of the Company’s stock option plans:

	Number of Options			Weighted- Average Exercise Price per Share
2000 Stock Option Plan
Outstanding at December 31, 2007		3,530,000		$	0.49
Exercised		(592,500	)		0.29
Canceled		(65,000	)		0.77
Outstanding at December 31, 2008		2,872,500			0.52
Exercised		(265,000	)		0.32
Canceled		(40,000	)		0.48
Outstanding at December 31, 2009		2,567,500		$	0.54
Vested and exercisable at December 31, 2009		2,532,500		$	0.54
Vested and exercisable at December 31, 2008		2,621,875		$	0.45

In 2009, the aggregate intrinsic value of 2000 Plan stock awards exercised was $1,304. In 2008, the aggregate intrinsic value of 2000 Plan stock awards exercised was $2,904. At December 31, 2009, the aggregate intrinsic value of 2000 Plan stock awards outstanding was $12,067, and the aggregate intrinsic value of exercisable 2000 Plan stock awards was $11,903.

	Number of Options			Weighted- Average Exercise Price per Share
2005 Stock Option Plan
Outstanding at December 31, 2007		2,734,550		$	3.52
Granted		192,500			3.99
Canceled		(48,750	)		3.87
Outstanding at December 31, 2008		2,878,300			3.55
Granted		707,500			5.04
Exercised		(2,500	)		4.19
Canceled		(140,000	)		4.07
Outstanding at December 31, 2009		3,443,300		$	3.83
Vested and exercisable at December 31, 2009		2,359,925		$	3.54
Vested and exercisable at December 31, 2008		1,515,325		$	3.51

In 2009, the aggregate intrinsic value of 2005 Plan stock awards exercised was $2,888. At December 31, 2009, the aggregate intrinsic value of 2005 Plan stock awards outstanding was $4,855 and the aggregate intrinsic value of exercisable 2005 Plan stock awards was $4,083.

F-27

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

(dollars in thousands, except per share amounts)

NOTE N—PREFERRED AND COMMON STOCK—(Continued)

The aggregate intrinsic values disclosed herein represent the total pretax intrinsic value (the difference between the estimated per share fair value of the Company’s common stock on December 31, 2009, and the stock option exercise price, multiplied by the number of in-the-money stock options) that would have been received by the stock option holders had all stock option holders exercised their stock options on December 31, 2009. The amount of aggregate intrinsic value will change based on the fair market value of the Company’s common stock.

The following table summarizes information relating to current outstanding and exercisable options under all plans as of December 31, 2009:

Exercise Price	Weighted- Average Remaining Contractual Life (in Years)		Number of Options Outstanding		Number of Options Vested and Exercisable
$0.14		3		1,530,000		1,530,000
$0.48		5		372,500		372,500
$1.50		6		665,000		630,000
$3.50		7		2,505,550		2,216,800
$3.77		8		197,500		81,250
$4.26		8		75,000		16,875
$4.72		9		215,000		35,625
$5.20		9		147,500		1,875
$5.24		9		302,500		7,500
				6,010,550		4,892,425

Stock-Based Compensation

In 2009, 2008 and 2007, the Company recorded an aggregate of $1,135, $1,482 and $2,180 in stock-based compensation expense ($738, $955 and $1,326 net of taxes).

Weighted-average assumptions used to estimate fair values of stock options on the dates of grant are as follows:

	2009			December 31 2008			2007
Risk-free interest rates		2.7	%		4.9	%		4.9	%
Expected dividend yield		0	%		0	%		0	%
Expected term of option		7 years			7 years			7 years
Expected volatility		39	%		38	%		38	%
Weighted-average grant date fair value per share of options granted	$	1.42		$	1.57		$	1.28

Expected volatility is based on comparable companies’ volatility over the expected term. Expected life of an option is based on the Company’s historical experience of stock options. The risk-free interest rate represents the

F-28

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

(dollars in thousands, except per share amounts)

NOTE N—PREFERRED AND COMMON STOCK—(Continued)

implied yields available from the U.S. Treasury zero-coupon yield curve. Expected dividend yield is 0% because the Company has not paid dividends in the past, and currently has no known intention to do so in the future. Compensation expense is recognized net of forfeitures.

Based on equity awards outstanding as of December 31, 2009, there was $743 of unrecognized compensation costs, net of forfeitures, related to unvested share-based compensation arrangements that are expected to vest. Such costs are expected to be recognized over a weighted-average period of three years. The following table summarizes the estimated future annual stock-based compensation expense related to share-based arrangements, existing as of December 31, 2009, that are expected to vest:

2010	$	480
2011		190
2012		61
2014		12
Total	$	743

NOTE O—RELATED PARTY TRANSACTIONS

The Company has lease agreements for dialysis clinics with noncontrolling interest members or entities under the control of noncontrolling interest members. The amount of rent expense under these lease arrangements was approximately $2,468, $1,500 and $1,114 in 2009, 2008 and 2007, respectively. In addition, in 2008, the Company sub-leased space at one of its dialysis clinics to the noncontrolling interest member. Rent income under this sub-lease arrangement, which extends to 2023, amounted to $510 and $510 in 2009 and 2008, respectively. Future rental receipts of $7,258 due from this related party are included in sub-lease receipts as presented in Note K.

During 2008, 185,000 shares of restricted common stock were sold to the Company’s executives at a per share price equal to the fair value of the Company’s common stock on the date of issuance. All shares were unvested as of December 31, 2008. The purchases were financed through secured promissory notes with the Company in the amount of $697, which accrue interest at a rate of 3% per annum. The notes are full recourse and become due and payable March 4, 2011.

NOTE P—COMMITMENTS AND CONTINGENCIES

Healthcare provider revenues may be subject to adjustment as a result of (i) examination by government agencies or contractors, for which the resolution of any matters raised may take extended periods of time to finalize; (ii) differing interpretations of government regulations by different fiscal intermediaries or regulatory authorities; (iii) differing opinions regarding a patient’s medical diagnosis or the medical necessity of service provided; (iv) retroactive applications or interpretations of governmental requirements; and (v) claims for refund from private payors, including as the result of government actions. Management believes it has recorded adequate provisions to consider potential revenue adjustments.

The Company had obligations under contracts related to the construction of its clinics totaling approximately $1,102 as of December 31, 2009 which are expected to be paid in 2010.

F-29

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

(dollars in thousands, except per share amounts)

NOTE P—COMMITMENTS AND CONTINGENCIES—(Continued)

Professional Liability Coverage

The Company maintains professional liability insurance coverage on a claims-made basis. Under this type of policy, claims based on occurrences during its term, but reported subsequently, will be uninsured should the policy not be renewed or replaced with other coverage. Management expects to be able to obtain renewal or other coverage in future periods, and has accrued the estimated cost associated with coverage of past occurrences reported in subsequent periods.

Litigation

The Company is a defendant in various legal actions in the normal course of business. In the opinion of the Company’s management, based in part on the advice of outside counsel, the resolution of these matters will not have a material effect on the Company’s financial position, results of operations or cash flow.

Regulatory

The healthcare industry is subject to numerous laws and regulations of federal, state, and local governments. Recently, government activity has increased with respect to investigations and allegations concerning possible violations by healthcare providers of fraud and abuse statutes and regulations, which could result in the imposition of significant fines and penalties, as well as significant repayments for patient services previously billed. Compliance with such laws and regulations are subject to government review and interpretations, as well as regulatory actions unknown or unasserted at this time.

NOTE Q—SUPPLEMENTAL INFORMATION

The following information is presented in accordance with Rule 3-10 of Regulation S-X. The operating and investing activities of the separate legal entities included in the Company’s consolidated financial statements are fully interdependent and integrated. Revenues and operating expenses of the separate legal entities include the Company and were guaranteed by substantially all of its wholly-owned subsidiaries. Non-wholly-owned subsidiaries were not guarantors of these obligations.

F-30

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

(amounts in thousands, except per share amounts)

NOTE Q—SUPPLEMENTAL INFORMATION—(Continued)

Condensed Consolidating Balance Sheet—December 31, 2009

	ARH			Subsidiary Guarantors			Non- Guarantors			Eliminations			Predecessor Consolidated
Assets
Cash and cash equivalents	$	—		$	11,423		$	17,756		$	—		$	29,179
Accounts receivable		—			215			45,439			—			45,654
Inventories		—			22			2,272			—			2,294
Prepaid expenses and other current assets		—			2,313			3,107			(3,054	)		2,366
Deferred tax assets		4,845			—			—			—			4,845
Total current assets		4,845			13,973			68,574			(3,054	)		84,338
Property and equipment, net		—			2,054			57,351			—			59,405
Deferred financing costs, net		—			1,000			44			—			1,044
Intangible assets, net		—			363			1,055			—			1,418
Other long-term assets		—			5,161			3,251			(5,093	)		3,319
Receivables from subsidiaries		—			12,267			—			(12,267	)		—
Investment in subsidiaries		38,021			—			—			(38,021	)		—
Goodwill, net		(13,349	)		—			32,973			4,574			24,198
Total assets	$	29,517		$	34,818		$	163,248		$	(53,861	)	$	173,722
Liabilities and Deficit
Current liabilities	$	—		$	7,095		$	63,814		$	(15,292	)	$	55,617
Long-term debt, less current portion		—			40,185			29,169			(5,093	)		64,261
Capital lease obligations, less current portion		—			—			214			—			214
Other long-term liabilities		—			137			7,527			—			7,664
Deferred tax liability		4,548			—			—			—			4,548
Series X preferred stock		62,799			—			—			—			62,799
Noncontrolling interests subject to put provisions		—			750			(99,184	)		136,865			38,431
Total American Renal Holdings Inc. equity (deficit)		(37,830	)		(13,349	)		145,651			(170,341	)		(75,869	)
Noncontrolling interests not subject to put provisions		—			—			16,057			—			16,057
Total equity (deficit)		(37,830	)		(13,349	)		161,708			(170,341	)		(59,812	)
Total liabilities and equity (deficit)	$	29,517		$	34,818		$	163,248		$	(53,861	)	$	173,722

F-31

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

(amounts in thousands, except per share amounts)

NOTE Q—SUPPLEMENTAL INFORMATION—(Continued)

Condensed Consolidating Balance Sheet—December 31, 2008

	ARH			Subsidiary Guarantors			Non- Guarantors			Eliminations			Consolidated
Assets
Cash and cash equivalents	$	—		$	11,869		$	17,313		$	—		$	29,182
Accounts receivable, net		—			226			38,753			—			38,979
Inventories		—			19			1,959			—			1,978
Prepaid expenses and other current assets		—			3,413			3,735			(1,118	)		6,030
Deferred tax asset		3,803			—			—			—			3,803
Total current assets		3,803			15,527			61,760			(1,118	)		79,972
Property and equipment, net		—			2,338			52,481			—			54,819
Deferred financing costs, net		—			1,825			53			—			1,878
Amortizable intangible assets, net		—			435			621			—			1,056
Other long-term assets		—			89			2,794			—			2,883
Receivables from subsidiaries		—			11,060			—			(11,060	)		—
Investment in subsidiaries		29,152			—						(29,152	)		—
Goodwill, net		(17,822	)		—			24,537			9,047			15,762
Total assets	$	15,133		$	31,274		$	142,246		$	(32,283	)	$	156,370
Liabilities and Deficit
Current liabilities:	$	—		$	5,757		$	54,715		$	(12,147	)	$	48,325
Long-term debt, less current portion		—			42,584			33,553			—			76,137
Capital lease obligations, less current portion		—			—			293			—			293
Other long-term liabilities		—			4			7,566			—			7,570
Deferred tax liability		3,613			—			—			—			3,613
Series X preferred stock		54,730			—			—			—			54,730
Noncontrolling interests subject to put provisions		—			750			(60,030	)		94,161			34,881
Total ARH deficit		(43,210	)		(17,822	)		98,308			(114,296	)		(77,020	)
Noncontrolling interests not subject to put provisions		—			—			7,841			—			7,841
Total deficit		(43,210	)		(17,822	)		106,149			(114,296	)		(69,179	)
Total liabilities & deficit	$	15,133		$	31,273		$	142,246		$	(32,282	)	$	156,370

F-32

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

(amounts in thousands, except per share amounts)

NOTE Q—SUPPLEMENTAL INFORMATION—(Continued)

Condensed Consolidating Statement of Operations—Year Ended December 31, 2009

	ARH			Subsidiary Guarantors			Non- Guarantors			Eliminations			Consolidated
Net operating revenues	$	—		$	1,489		$	261,500		$	—		$	262,989
Total operating expenses		—			5,760			205,228						210,988
Operating income					(4,271	)		56,272			—			52,001
Interest expense, net		(11,218	)		(36	)		(3,694	)		—			(14,948	)
Income before taxes		(11,218	)		(4,307	)		52,578			—			37,053
Income tax expense		8,521			—			1,003			—			9,524
Net income (loss) before earnings in subsidiaries		(19,739	)		(4,307	)		51,575			—			27,529
Equity earnings in subsidiaries		24,875			29,184			—			(54,059	)		—
Net income		5,136			24,877			51,575			(54,059	)		27,529
Less: Net income attributable to noncontrolling interests		—			—			—			(22,391	)		(22,391	)
Net income attributable to American Renal Holdings Inc.	$	5,136		$	24,877		$	51,575		$	(76,450	)	$	5,138

Condensed Consolidating Statement of Operations—Year Ended December 31, 2008

	ARH			Subsidiary Guarantors			Non- Guarantors			Eliminations			Consolidated
Net operating revenues	$	—		$	1,486		$	216,291		$	—		$	217,777
Total operating expenses		—			16,120			160,245			—			176,365
Operating income		—			(14,634	)		56,046			—			41,412
Interest expense, net		(10,607	)		(38	)		(3,084	)		—			(13,729	)
Income before taxes		(10,607	)		(14,672	)		52,962			—			27,683
Income tax expense		6,284			—			576			—			6,860
Net income (loss) before earnings in subsidiaries		(16,891	)		(14,672	)		52,386			—			20,823
Equity earnings in subsidiaries		20,535			35,207			—			(55,742	)		—
Net income .		3,644			20,535			52,386			(55,742	)		20,823
Less: Net income attributable to noncontrolling interests		—			—			—			(17,179	)		(17,179	)
Net income attributable to American Renal Holdings Inc.	$	3,644		$	20,535		$	52,386		$	(72,921	)	$	3,644

F-33

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

(amounts in thousands, except per share amounts)

NOTE Q—SUPPLEMENTAL INFORMATION—(Continued)

Condensed Consolidating Statement of Operations—Year Ended December 31, 2007

	ARH			Subsidiary Guarantors			Non- Guarantors			Eliminations			Consolidated
Net operating revenues	$	—		$	249		$	178,142		$	—		$	178,391
Total operating expenses		—			13,528			131,302			—			144,830
Operating income		—			(13,279	)		46,840			—			33,561
Interest expense, net		(11,012	)		(42	)		(2,641	)		—			(13,695	)
Income before taxes		(11,012	)		(13,321	)		44,199			—			19,866
Income tax expense		3,922			—			487			—			4,409
Net income (loss) before earnings in subsidiaries		(14,934	)		(13,321	)		43,712			—			15,457
Equity earnings in subsidiaries		15,684			29,006			—			(44,690	)		—
Net income		750			15,685			43,712			(44,690	)		15,457
Less: Net income attributable to noncontrolling interests		—			—			—			(14,706	)		(14,706	)
Net income attributable to American Renal Holdings Inc.	$	750		$	15,685		$	43,712		$	(59,396	)	$	751

F-34

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

(amounts in thousands, except per share amounts)

NOTE Q—SUPPLEMENTAL INFORMATION—(Continued)

Condensed Consolidated Statement of Cash Flows—Year Ended December 31, 2009

	ARH			Subsidiary Guarantors			Non- Guarantors			Eliminations			Consolidated
Operating activities
Net income	$	5,137		$	24,875		$	51,576		$	(54,059	)	$	27,529
Change in operating assets and liabilities and noncash items included in net income		(15,800	)		(924	)		9,383			31,143			23,802
Net cash provided by (used in) operating activities		(10,663	)		23,951			60,959			(22,916	)		51,331
Investing Activities
Other		—			—			—			—			—
Purchases of property and equipment		—			(68	)		(14,999	)		—			(15,067	)
Cash paid for acquisitions		—			—			(3,964	)		—			(3,964	)
Net cash provided by (used in) investing activities		—			(68	)		(18,963	)		—			(19,031	)
Financing Activities
Proceeds from borrowings		—			(323	)		1,507			—			1,184
Payments on long-term debt obligations		—			(2,398	)		(9,603	)		—			(12,001	)
Other		10,663			(21,610	)		(33,455	)		22,916			(21,486	)
Net cash provided by (used in) financing activities		10,663			(24,331	)		(41,551	)		22,916			(32,303	)
Net increase (decrease) in cash		—			(448	)		445			—			(3	)
Cash, at beginning of year		—			11,869			17,313			—			29,182
Cash, at ending of year	$	—		$	11,421		$	17,758		$	—		$	29,179

F-35

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

(amounts in thousands, except per share amounts)

NOTE Q—SUPPLEMENTAL INFORMATION—(Continued)

Condensed Consolidated Statement of Cash Flows—Year Ended December 31, 2008

	ARH			Subsidiary Guarantors			Non- Guarantors			Eliminations			Consolidated
Operating activities
Net income	$	3,643		$	20,535		$	52,387		$	(55,742	)	$	20,823
Change in operating assets and liabilities and noncash items included in net income		(25,593	)		2,109			(3,694	)		43,367			16,189
Net cash provided by (used in) operating activities		(21,950	)		22,644			48,693			(12,375	)		37,012
Investing Activities
Other		—			(12,375	)		507			12,375			507
Purchases of property and equipment		—			(318	)		(20,936	)		—			(21,254	)
Cash paid for acquisitions		—			—			—			—			—
Net cash provided by (used in) investing activities		—			(12,693	)		(20,429	)		12,375			(20,747	)
Financing Activities
Proceeds from borrowings		—			14			17,349			—			17,363
Payments on long-term debt obligations		—			(1,802	)		(6,150	)		—			(7,952	)
Other		21,950			(3,927	)		(37,076	)		—			(19,053	)
Net cash provided by (used in) financing activities		21,950			(5,715	)		(25,877	)		—			(9,642	)
Net increase (decrease) in cash		—			4,236			2,387			—			6,623
Cash, at beginning of year		—			7,634			14,925			—			22,559
Cash, at ending of year	$	—		$	11,870		$	17,312		$	—		$	29,182

F-36

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

(amounts in thousands, except per share amounts)

NOTE Q—SUPPLEMENTAL INFORMATION—(Continued)

Condensed Consolidated Statement of Cash Flows—Year Ended December 31, 2007

	ARH			Subsidiary Guarantors			Non- Guarantors			Eliminations			Consolidated
Operating activities
Net income	$	750		$	15,684		$	43,712		$	(44,689	)	$	15,457
Change in operating assets and liabilities, and noncash items included in net income		(19,663	)		(8,636	)		(3,953	)		45,439			13,187
Net cash provided (used) by operating activities		(18,913	)		7,048			39,759			750			28,644
Investing activities
Other		—			—			—			—			—
Purchases of property and equipment		—			(1,740	)		(13,478	)		—			(15,218	)
Cash paid for acquisitions		—			—			(1,995	)		—			(1,995	)
Net cash provided (used) for investing activities		—			(1,740	)		(15,473	)		—			(17,213	)
Financing activities
Proceeds from borrowings		—			—			14,239			—			14,239
Payments on long-term debt obligations		—			(2,396	)		(4,630	)		—			(7,026	)
Other		18,913			147			(34,299	)		(750	)		(15,989	)
Net Cash provided (used) in financing activities		18,913			(2,249	)		(24,690	)		(750	)		(8,776	)
Net increase (decrease) in cash		—			3,059			(404	)		—			2,655
Cash, at beginning of period		—			4,576			15,328			—			19,904
Cash, at ending of period	$	—		$	7,635		$	14,924		$	—		$	22,559

NOTE R—SUBSEQUENT EVENTS

On March 22, 2010, the Company entered into a Contribution and Merger Agreement (the “Merger Agreement”) with C.P. Atlas Holdings, Inc. (the “Parent”), C.P. Atlas Intermediate Holdings LLC, C.P. Atlas Acquisition Corp., certain of the Company’s stockholders and Pamlico Capital I, LLC (formerly known as Wachovia Capital Partners GP I, LLC), pursuant to which C.P. Atlas Acquisition Corp. merged with and into the Company (the “Merger”) and, after which, American Renal Holdings Inc. (“ARH”) is the surviving entity and a wholly owned subsidiary of C.P. Atlas Intermediate Holdings, LLC, which is in turn a wholly owned subsidiary of the Parent.

C.P. Atlas Intermediate Holdings, LLC is an entity formed in the Merger and prior to the Merger had no assets or liabilities other than the shares of CP Atlas Acquisition Corp. and its rights and obligations under and in connection with the Merger Agreement. As a result of the Merger, all of the Company’s issued and outstanding capital stock is owned by CP Atlas Intermediate Holdings, LLC which is CP Atlas Intermediate Holdings, LLC’s only asset. As such, the consolidated financial statements of CP Atlas Intermediate Holdings, LLC are identical to the Company’s consolidated financial statements.

F-37

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

(dollars in thousands, except per share amounts)

NOTE R—SUBSEQUENT EVENTS—(Continued)

The parties agreed to consummate the Merger, subject to the terms and conditions set forth in the Merger Agreement, for an aggregate purchase price of $415 million, subject to adjustments for working capital, indebtedness, certain specified liabilities and certain tax savings. The aggregate purchase price of approximately $415 million for the Merger, plus related fees and expenses, was funded by the equity investment by Centerbridge Capital Partners, L.P. and certain affiliated entities (“Centerbridge”) as well as from certain members of management and the net proceeds from the offering of $250 million of Senior Secured Notes (the “Senior Secured Notes) due 2018 which bear interest at 8.375%. The Merger and the financing transaction described above were consummated on May 7, 2010.

F-38

American Renal Holdings Inc.

Schedule II—Valuation and Qualifying Accounts

(in thousands)	Balance at Beginning of Year		Charged to Expense		Deductions			Balance at End of Year
Allowance for Doubtful Accounts
Year Ended December 31, 2009	$	7,833	$	3,216	$	(2,884	)	$	8,165
Year Ended December 31, 2008	$	7,356	$	4,834	$	(4,357	)	$	7,833
Year Ended December 31, 2007	$	5,037	$	3,258	$	(939	)	$	7,356

F-39

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands, except share and per share data)

	Successor			Predecessor
	September 30, 2010			December 31, 2009
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	27,579		$	29,179
Accounts receivable, less allowance for doubtful accounts of $10,398 and $8,165 at September 30, 2010 and December 31, 2009, respectively		45,987			45,654
Inventories		1,977			2,294
Prepaid expenses and other current assets		3,830			2,366
Income tax receivable		10,303			—
Deferred tax assets		4,043			4,845
Total current assets		93,719			84,338
Property and equipment, net		56,631			59,405
Deferred financing costs, net		4,993			1,044
Intangible assets, net		39,112			1,418
Deferred tax asset		3,625			—
Other long-term assets		2,043			3,319
Goodwill		503,360			24,198
Total assets	$	703,483		$	173,722
Liabilities and Equity (Deficit)
Current liabilities:
Accounts payable	$	18,150		$	18,158
Accrued compensation and benefits		10,116			7,170
Accrued expenses and other current liabilities		19,371			15,646
Amount due to sellers		13,928			—
Current portion of long-term debt		2,863			14,309
Current portion of capital lease obligations		47			334
Total current liabilities		64,475			55,617
Long-term debt, less current portion		247,484			64,261
Capital lease obligations, less current portion		175			214
Other long-term liabilities		2,468			7,664
Deferred tax liabilities		16,968			4,548
Series X mandatorily redeemable preferred stock, 43,000 shares authorized at December 31, 2009; 40,500 shares issued and outstanding at December 31, 2009		—			62,799
Commitments and contingencies (note J)
Noncontrolling interests subject to put provisions		42,739			38,431
Equity (Deficit)
Series A convertible preferred stock, which accrue dividends at 10%, $.001 par value, 7,300,000 shares authorized, issued and outstanding at December 31, 2009 and no shares issued or outstanding at September 30, 2010 (liquidation value of $74,322 at December 31, 2009)		—			7
Series B convertible preferred stock, $.001 par value, 10,700,000 shares authorized; 2,675,000 shares issued and outstanding at December 31, 2009 and no shares issued or outstanding at September 30, 2010 (liquidation value of $18,524 at December 31, 2009)		—			3
Common stock, $.0005 par value, 39,982,000 shares authorized at December 31, 2009; 1,330,250 shares issued and 1,083,350 shares outstanding at December 31, 2009 and 1,000 shares authorized, issued and outstanding at September 30, 2010		—			1
Notes receivable from stockholders		—			(735	)
Additional paid-in capital		188,833			23,704
Accumulated deficit		(14,292	)		(97,784	)
Treasury stock, at cost, 246,900 common shares held at December 31, 2009 and no shares held at September 30, 2010		—			(1,065	)
Total American Renal Holdings Inc. equity (deficit)		174,541			(75,869	)
Noncontrolling interests not subject to put provisions		154,633			16,057
Total equity (deficit)		329,174			(59,812	)
Total liabilities and equity (deficit)	$	703,483		$	173,722

See accompanying notes to the unaudited consolidated financial statements.

F-40

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Operations

(in thousands)

	Successor						Predecessor
	Three months Ended September 30, 2010			May 8 through September  30, 2010			January 1 through May  7, 2010			Nine months Ended September 30, 2009			Three months Ended September 30, 2009
Net operating revenues	$	77,231		$	120,833		$	102,094		$	193,109		$	68,084
Operating expenses:
Patient care costs		49,321			78,335			66,042			125,098			44,061
General and administrative		8,001			14,991			10,016			17,423			6,393
Merger and transaction-related costs		152			14,839			7,378			—			—
Depreciation and amortization		4,085			6,434			4,429			8,816			2,814
Provision for (recoveries of) uncollectible accounts		371			1,021			(334	)		3,184			1,016
Total operating expenses		61,930			115,620			87,531			154,521			54,284
Operating income		15,301			5,213			14,563			38,588			13,800
Interest expense, net		(5,885	)		(9,205	)		(5,717	)		(11,212	)		(3,755	)
Income (loss) before income taxes		9,416			(3,992	)		8,846			27,376			10,045
Income tax expense (benefit)		977			(649	)		2,264			7,036			2,582
Net income (loss)		8,439			(3,343	)		6,582			20,340			7,463
Less: Net income attributable to noncontrolling interests		(6,907	)		(10,949	)		(9,266	)		(15,823	)		(5,756	)
Net income (loss) attributable to American Renal Holdings Inc.	$	1,532		$	(14,292	)	$	(2,684	)	$	4,517		$	1,707

See accompanying notes to the unaudited consolidated financial statements.

F-41

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Changes in Equity (Deficit)

For the predecessor period from December 31, 2009 to May 7, 2010 and

for the successor period from May 8, 2010 to September 30, 2010

(in thousands, except share data)

	Non- controlling interests subject to put provisions			Total American Renal Holdings Inc. Equity (Deficit)																													Non- controlling interests not subject to put provisions
				Series A Convertible Preferred Stock				Series B Convertible Preferred Stock				Common Stock				Note Receivable from Stock- holders			Treasury Stock					Additional Paid-in Capital			Accumu- lated Deficit			Total
				Shares		Amount		Shares		Amount		Shares		Par Value					Shares		Cost
Balance at December 31, 2009	$	38,431			7,300,000	$	7		2,675,000	$	3		1,330,250	$	1	$	(735	)		246,900	$	(1,065	)	$	23,704		$	(97,784	)	$	(75,869	)	$	16,057
Net income (loss)		1,942			—		—		—		—		—		—		—			—		—			—			(2,684	)		(2,684	)		7,324
Issuance of common stock					—		—		—		—		328,490		—		—			—		—			7			—			7
Purchase of common stock for treasury					—		—		—		—		—		—		—			—		—			—			—			—
Tax benefits from stock awards exercised					—		—		—		—		—		—		—			—		—			9,140			—			9,140
Stock-based compensation expense					—		—		—		—		—		—		—			—		—			219			—			219
Distributions to noncontrolling interests		(2,487	)		—		—		—		—		—		—		—			—		—			—			—			—			(8,907	)
Contributions from noncontrolling interests		128			—		—		—		—		—		—		—			—		—			—			—			—			520
Sales of noncontrolling interests		—			—		—		—		—		—		—		—			—		—			(250	)		—			(250	)		626
Purchases of noncontrolling interests		(1,183	)		—		—		—		—		—		—		—			—		—			—			—			—			—
Changes in fair value of noncontrolling interests		5,386			—		—		—		—		—		—		—			—		—			(5,386	)		—			(5,386	)		—
Balance at May 7, 2010	$	42,217			7,300,000	$	7		2,675,000	$	3		1,658,740	$	1		(735	)		246,900	$	(1,065	)	$	27,434		$	(100,468	)	$	(74,823	)	$	15,620

See accompanying notes to the unaudited consolidated financial statements.

F-42

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Changes in Equity (Deficit)—(Continued)

For the predecessor period from December 31, 2009 to May 7, 2010 and

for the successor period from May 8, 2010 to September 30, 2010

(in thousands, except share data)

	Non- controlling interests subject to put provisions			Total American Renal Holdings Inc. Equity (Deficit)																																		Non- controlling interests not subject to put provisions
				Series A Convertible Preferred Stock						Series B Convertible Preferred Stock						Common Stock						Note Receivable from Stock- holders		Treasury Stock					Additional Paid-in Capital			Accumu- lated Deficit			Total
				Shares			Amount			Shares			Amount			Shares			Par Value					Shares			Cost
Successor Entity Acquisition transaction		—			(7,300,000	)		(7	)		(2,675,000	)		(3	)		(1,658,740	)		(1	)		735		(246,900	)		1,065		(27,434	)		100,468			74,823			141,182
Successor Entity Opening Equity	$	42,217			—		$	—			—		$	—			—		$	—			—	$	—		$	—	$	—		$	—		$	—			156,802
Capital contribution		—			—			—			—			—			1,000			—			—		—			—		186,433			—			186,433			—
Net income (loss)		2,768			—			—			—			—			—			—			—		—			—		—			(14,292	)		(14,292	)		8,181
Stock-based compensation		—			—			—			—			—			—			—			—		—			—		544			—			544
Parent capital costs		—			—			—			—			—			—			—			—		—			—		(137	)		—			(137	)
Distributions to noncontrolling interests		(2,407	)		—			—			—			—			—			—			—		—			—		—			—			—			(7,527	)
Contributions from noncontrolling interests		362			—			—			—			—			—			—			—		—			—		—			—			—			1,564
Sales of noncontrolling interests		28			—			—			—			—			—			—			—		—			—		93			—			93			—
Purchases of noncontrolling interests		(229	)		—			—			—			—			—			—			—		—			—		1,900			—			1,900			(4,387	)
Balance at September 30, 2010	$	42,739			—		$	—			—		$	—			1,000		$	—			—	$	—		$	—	$	188,833		$	(14,292	)	$	174,541		$	154,633

See accompanying notes to the unaudited consolidated financial statements.

F-43

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Cash Flows

(in thousands)

	Successor			Predecessor
	May 8 through September 30, 2010			January 1 through May 7, 2010			Nine months ended September 30, 2009
Operating activities
Net (loss) income	$	(3,343	)	$	6,582		$	20,340
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		6,434			4,429			8,816
Amortization of deferred financing costs		752			205			1,066
Stock-based compensation expense		4,487			219			876
Change in deferred taxes		—			1,130			—
Accrued interest on obligations under financing agreements		—			—			377
Accrued interest on obligations under Series X preferred stock agreement		—			3,137			5,955
Non-cash rent charges		423			186			306
Change in operating assets and liabilities, net of acquisitions:
Decrease (increase) in accounts receivable		2,132			(2,465	)		(4,827	)
Decrease (increase) in inventories		424			(6	)		192
Decrease (increase) in prepaid expenses and other current assets		730			(1,529	)		2,946
Decrease in other assets		2,938			23			39
Increase (decrease) in accounts payable		846			(855	)		(1,650	)
Increase in accrued compensation and benefits		2,161			754			853
(Decrease) increase in accrued expenses and other current liabilities		(2,762	)		(6,445	)		4,103
Increase (decrease) in other liabilities		1,615			(70	)		(1,254	)
Net cash provided by operating activities		16,837			5,295			37,222
Investing activities
Purchases of property and equipment		(6,141	)		(4,904	)		(9,757	)
Cash paid for acquisitions		(275	)		(200	)		(3,964	)
Merger with C.P. Atlas Holdings, Inc.		(249,716	)		56			—
Net cash used in investing activities		(256,132	)		(5,048	)		(13,721	)
Financing activities
Proceeds from borrowings		—			—			1,008
Payments on long-term debt		(65,104	)		(5,391	)		(8,687	)
Payments on capital lease obligations		(78	)		(249	)		(504	)
Proceeds from issuance of common stock		161,732			8			81
Purchase of treasury stock		—			—			(274	)
Issuance of debt		248,200			—			—
Debt issuance costs		(11,426	)
Payoff of Series X mandatorily redeemable preferred stock		(68,088	)		—			—
Distributions to noncontrolling interests		(9,934	)		(11,394	)		(15,016	)
Contributions from noncontrolling interests		1,926			648			1,197
Purchases of noncontrolling interests		(2,716	)		(1,183	)		(942	)
Proceeds from sales of additional noncontrolling interests		121			376			—
Net cash provided by (used in) financing activities		254,633			(17,185	)		(23,137	)
Net increase (decrease) in cash and cash equivalents		15,338			(16,938	)		364
Cash and cash equivalents at beginning of period		12,241			29,179			29,182
Cash and cash equivalents at end of period	$	27,579		$	12,241		$	29,546

See accompanying notes to the unaudited consolidated financial statements.

F-44

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

September 30, 2010

(dollars in thousands, except per share amounts)

NOTE A—MERGER AND PRESENTATION

On March 22, 2010, American Renal Holdings Inc. (“ARH” or “the Company”) entered into a Contribution and Merger Agreement (the “Merger Agreement”) with C.P. Atlas Holdings, Inc. (the “Parent”), C.P. Atlas Intermediate Holdings, LLC, C.P. Atlas Acquisition Corp., certain of ARH’s stockholders party thereto and Pamlico Capital I, LLC (formerly known as Wachovia Capital Partners GP I, LLC), pursuant to which C.P. Atlas Acquisition Corp. merged with and into ARH (the “Merger”) and, after which, ARH became the surviving entity and a wholly owned subsidiary of C.P. Atlas Intermediate Holdings, LLC, which is in turn a wholly owned subsidiary of the Parent.

C.P. Atlas Intermediate Holdings, LLC is an entity formed in the Merger and prior to the Merger had no assets or liabilities other than the shares of CP Atlas Acquisition Corp. and its rights and obligations under and in connection with the Merger Agreement. As a result of the Merger, all of ARH’s issued and outstanding capital stock became owned by CP Atlas Intermediate Holdings, LLC which is CP Atlas Intermediate Holdings, LLC’s only asset. As such, the consolidated financial statements of CP Atlas Intermediate Holdings, LLC are identical to the consolidated financial statements of ARH.

The parties agreed to consummate the Merger, subject to the terms and conditions set forth in the Merger Agreement, for an aggregate purchase price of $415 million, subject to adjustments for working capital, indebtedness, certain specified liabilities and certain tax savings. The aggregate purchase price of approximately $415 million for the Merger, plus related fees and expenses, was funded by the equity investment by Centerbridge Capital Partners, L.P. and its affiliates (“Centerbridge”) as well as from certain members of management and the net proceeds from the offering of $250.0 million of Senior Secured Notes (the “Senior Secured Notes”) due 2018 which bear interest at 8.375%. The Merger and the financing transaction described above are collectively referred to herein as the “Transactions.” See Note F for a summary of the terms of the Senior Secured Notes.

A reconciliation of the base price to the acquisition-date fair value of consideration is as follows:

Base Price	$	415,000
Adjustment for cash and working capital		11,233
Acquisition-related deferred consideration		17,015
Post-combination service compensation		(4,035	)
Acquisition-date fair value of consideration	$	439,213

The Transactions were consummated on May 7, 2010. Although ARH continued as the surviving corporation and same legal entity after the Merger, the accompanying unaudited consolidated financial statements are presented for two periods: predecessor and successor, which relate to the periods preceding the Merger and the period succeeding the Merger, respectively. The Merger resulted in a new basis of accounting beginning on May 8, 2010 and the financial reporting periods are presented as follows:

• The nine month period ended September 30, 2010 includes the predecessor period of the Company from January 1, 2010 to May 7, 2010 and the successor period, reflecting the Merger of ARH and Parent, from May 8, 2010 to September 30, 2010.

• The 2009 periods presented are predecessor. The consolidated financial statements for all predecessor periods have been prepared using the historical basis of accounting for the Company. As a result of the Merger and the associated acquisition accounting, the consolidated financial statements of the successor are not comparable to periods preceding the Merger.

F-45

Total fees and expenses related to the Transactions aggregated approximately $27.7 million consisting of $22.4 million of acquisition costs and $5.3 million of deferred financing costs. Of the $22.4 million, $7.4 million was recognized in the predecessor period and $15.0 million was recognized in the successor period.

The Merger has been accounted for under the acquisition method of accounting, whereby the purchase price was allocated to the assets, liabilities and noncontrolling interests based on the estimated fair values on the date of acquisition. The Company has evaluated and allocated the purchase price as the appraisal associated with the valuation of certain assets, liabilities and noncontrolling interests is complete.

The Company calculated the fair value of its noncontrolling interests not subject to put provisions at the acquisition date using a discounted cash flow approach for interest based on income forecasts for all clinics. The Company utilized a weighted average cost of capital of 13.25%. The discounted cash flow for each interest was then reduced by discounts for a lack of control and marketability. The lack of control discount applied was estimated at 10% as determined through an analysis of the premiums for control paid in transactions of similar companies. A discount for lack of marketability of 9% was estimated utilizing the Black-Scholes model. The application of this model was based on the following assumptions: a maturity period of 1 year, a volatility of 22.5% based on this maturity period for comparable companies, and a risk free rate of 0.38%, which also corresponds with the maturity period.

F-46

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements—(Continued)

September 30, 2010

(dollars in thousands, except per share amounts)

NOTE A—MERGER AND PRESENTATION—(Continued)

A reconciliation of the final closing balance sheet of the Predecessor entity (the “Predecessor”) prior to the effect of the Transactions, including other simultaneous transactions, such as the repayment of certain indebtedness of the Predecessor and the capital contribution made by the Parent, with the beginning consolidated balance sheet of the Successor entity (the “Successor”) (after the application of the acquisition method of accounting) is presented below:

	Predecessor						Successor
	May 7, 2010			Adjustments			May 8, 2010
Assets
Current assets:
Cash and cash equivalents	$	12,241		$	—		$	12,241
Accounts receivable, net		48,119			—			48,119
Inventories		2,300			—			2,300
Prepaid expenses and other current assets		3,606			—			3,606
Deferred transaction expense		—			18,982			18,982
Income tax receivable		11,706			1,595			13,301
Deferred tax assets		3,429			593			4,022
Total current assets		81,401			21,170			102,571
Property and equipment, net
Land and buildings		1,692			(250	)		1,442
Leasehold improvements		55,859			(27,948	)		27,911
Equipment and information systems		43,640			(20,647	)		22,993
Construction in progress		3,047			—			3,047
		104,238			(48,845	)		55,393
Less: accumulated depreciation and amortization		(44,338	)		44,338			—
		59,900			(4,507	)		55,393
Deferred financing costs, net		882			4,323			5,205
Intangible assets, net		1,408			39,081			40,489
Deferred tax asset		—			3,625			3,625
Other long-term assets		3,287			(2,012	)		1,275
Goodwill		33,157			470,181			503,338
Total assets	$	180,035		$	531,861		$	711,896
Liabilities and Deficit
Current liabilities:
Accounts payable	$	17,304		$	—		$	17,304
Accrued compensation and benefits		7,924			—			7,924
Accrued expenses and other current liabilities		20,523			(6,911	)		13,612
Amount due to sellers		—			17,016			17,016
Current portion of long-term debt		13,148			(9,678	)		3,470
Current portion of capital lease obligations		105						105
Total current liabilities		59,004			427			59,431
Long-term debt, less current portion		60,030			188,556			248,586
Capital lease obligations, less current portion		195			—			195
Other long-term liabilities		7,595			(6,331	)		1,264
Deferred tax liabilities		4,261			12,707			16,968
Series X mandatorily redeemable preferred stock		65,936			(65,936	)		—
Noncontrolling interests subject to put provisions		42,217			—			42,217
Equity (deficit):
Additional paid-in capital		27,434			158,999			186,433
Accumulated deficit		(100,468	)		100,468			—
Other stockholders’ deficit		(1,789	)		1,789			—
Total American Renal Holdings Inc. equity (deficit)		(74,823	)		261,256			186,433
Noncontrolling interests not subject to put provisions		15,620			141,182			156,802
Total equity (deficit)		(59,203	)		402,438			343,235
Total liabilities and equity (deficit)	$	180,035		$	531,861		$	711,896

F-47

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements—(Continued)

September 30, 2010

(dollars in thousands, except per share amounts)

NOTE B—SIGNIFICANT ACCOUNTING POLICIES

As a result of the Merger, we have recorded approximately $503.3 million of goodwill. The components of this goodwill are primarily patient relationships and our assembled work force. The goodwill is not deductible for income tax purposes.

Fair Value of Consideration Transferred

At the closing, C.P. Atlas made a cash payment to the former shareholders of the Company equal to the sum of the initial purchase price of $217.9 million plus $1.8 million based on an estimated working capital adjustment and other adjustments in accordance with the Merger Agreement. The final working capital adjustment was settled during the third quarter of fiscal 2010 for an additional payment of $379,000. In addition, at the close, C.P. Atlas made a cash payment to an escrow agent for $30.0 million. Based on the conditions of the escrow release, the Company has determined the release of the escrow amount is probable.

Of the $217.9 million, approximately $45.3 million was paid to the Company’s holders of stock-options. In connection with the Merger, vesting was accelerated for all outstanding stock options. As a result of this acceleration, the Company determined that approximately $4.1 million of the $45.3 million payment was attributable to post-combination services and, as such, recorded as an expense in the successor income statement.

The total acquisition date fair value of the consideration transferred was estimated at $439.2 million as follows:

Cash consideration to debtholders	$	63,600
Cash consideration to Series X redeemable preferred stockholders		68,088
Cash consideration to stockholders at close		249,716
Acquisition-related deferred consideration		17,015
Equity consideration to shareholders		24,089
Assumed liabilities		16,705
Acquisition-date fair value of consideration	$	439,213

The Company’s stockholders are additionally entitled to certain future tax benefits realized as a result of the Merger. The Company has estimated this amount as $17.0 million for which a liability was recognized for the deferred consideration. A liability was recognized for the acquisition date fair value of the acquisition-related consideration for this deferred fixed purchase price. Any change in the fair value of the acquisition-related consideration subsequent to the acquisition date, including changes from events after the acquisition date will be recognized in earnings in the period the estimated fair value changes.

In connection with the Merger, C.P. Atlas assumed $16.7 million of liabilities which consisted of $10.1 million of term loans at the Company’s clinics and $6.6 million of Merger-related transaction expenses which C.P. Atlas settled on behalf of the Company.

In connection with the Merger, the Company’s shareholders were allowed to receive shares of C.P. Atlas in exchange for foregoing cash payments. The fair value of the shares issued in connection with such payments were approximately $24.1 million.

F-48

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements—(Continued)

September 30, 2010

(dollars in thousands, except per share amounts)

NOTE B—SIGNIFICANT ACCOUNTING POLICIES—(Continued)

Basis of Presentation and Consolidation

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) for interim financial reports and the instructions for Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared under generally accepted accounting principles have been condensed or omitted pursuant to such regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, the accompanying financial statements include all adjustments necessary to present a fair presentation of the consolidated financial statements for the periods shown. These statements should be read in conjunction with the Company’s annual audited consolidated statements, including Note B which discusses principles of consolidation and summary of significant accounting policies. These statements have been prepared in accordance with generally accepted accounting principles, which require management to make certain estimates and assumptions that affect reported amounts of assets, liabilities and noncontrolling interests and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates include valuation of net operating revenues (contractual allowances) and the allowance for doubtful accounts, valuation of goodwill and intangibles, fair value of noncontrolling interests, provision for income taxes, stock-based compensation and contingencies. Actual results could differ from these estimates and actual results are not necessarily indicative of results for the remainder of 2010 or future periods thereafter. The Company has evaluated subsequent events through December 6, 2010, which is the date these unaudited consolidated financial statements were issued.

F-49

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements—(Continued)

September 30, 2010

(dollars in thousands, except per share amounts)

NOTE B—SIGNIFICANT ACCOUNTING POLICIES—(Continued)

During the period from January 1, 2010 to May 7, 2010, the Company determined that it had developed sufficient and relevant historical experience with Medicare bad debt cost reporting to use as a basis for reliably estimating Medicare bad debt cost recoveries. As such, the Company revised its estimate on the collectability of Medicare bad debt claims related to 2008 and 2009 which resulted in a favorable adjustment of $1.8 million to our provision for uncollectible accounts.

Recent Accounting Pronouncements

In January 2010, the FASB issued ASC Topic 820, Fair Value Measurements and Disclosures—Improving Disclosures About Fair Value Measurements. The Accounting Standards Update (“ASU”) requires new disclosures about transfers into and out of Levels 1 and 2 and separate disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurements. It also clarifies existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair value. The new disclosures and clarifications of existing disclosures are effective January 1, 2010, except for the disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurements, which are effective January 1, 2011. Other than requiring additional disclosures, the adoption of this new guidance did not have a material impact on the Company’s consolidated results of operations and financial position.

In August 2010, the FASB issued guidance that requires health care entities to use cost as the measurement basis for charity care disclosures and defines cost as the direct and indirect costs of providing charity care. The amended disclosure requirements are effective for fiscal years beginning after December 15, 2010 and must be applied retrospectively. The Company will adopt the amended disclosure requirements for their fiscal year beginning January 1, 2011. Since the new guidance amends disclosure requirements only, its adoption will not impact the Company’s statement of financial position, statement of operations, or cash flow statement.

In August 2010, the FASB issued ASU 2010-24 to address how health care entities should account for medical malpractice claims and related anticipated insurance recoveries. The new guidance, which amends ASC 954-450, Contingencies, and ASC 954-720, Other Expenses, also applies to similar contingent liabilities. Under the new guidance, health care entities are prohibited from presenting claim liabilities net of insurance recoveries. Further, the guidance requires health care entities to disregard insurance recoveries when measuring the amount of a claim liability. However, a related insurance receivable should be recorded concurrently with the liability, subject to a valuation allowance, if necessary. The new guidance is effective beginning January 1, 2011. In the period of adoption, entities must recognize in opening retained earnings any cumulative-effect adjustment resulting from the application of the new guidance. Entities may apply the new guidance retrospectively, and early application is permitted. The Company is currently assessing the impact this may have on its consolidated financial statements.

NOTE C—FAIR VALUE MEASUREMENTS

Certain of the Company’s assets and noncontrolling interests are accounted for at fair value on a recurring basis and are classified and disclosed in one of the following three categories:

Level 1: Financial instruments with unadjusted, quoted prices listed on active market exchanges. The Company’s Level 1 assets include cash equivalent investments held in money market funds.

Level 2: Financial instruments determined using prices for recently traded financial instruments with similar underlying terms, as well as directly or indirectly observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals.

F-50

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements—(Continued)

September 30, 2010

(dollars in thousands, except per share amounts)

NOTE C—FAIR VALUE MEASUREMENTS—(Continued)

Level 3: Financial instruments not actively traded on a market exchange. This category includes situations where there is little, if any, market activity for the financial instrument. The prices are determined using significant unobservable inputs or valuation techniques.

The asset or liabilities fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The following is a description for the valuation methodologies used for assets and noncontrolling interests measured at fair value. There were no changes in the methodologies used at September 30, 2010.

Cash equivalent—The cash equivalent represents investments in a money market fund and U.S. government obligations with an original maturity of less than 90 days which are recorded at fair value based on their quoted market prices.

Noncontrolling interest subject to put provision—See Note E for a discussion of the Company’s methodology for estimating fair value of noncontrolling interest subject to put obligations.

	September 30, 2010
	Total		Level 1		Level 2		Level 3
Temporary Equity
Noncontrolling interests subject to put provisions	$	42,739	$	—	$	—	$	42,739
	December 31, 2009
	Total		Level 1		Level 2		Level 3
Assets
Cash equivalent	$	9,506	$	9,506	$	—	$	—
Temporary Equity
Noncontrolling interests subject to put provisions	$	38,431	$	—	$	—	$	38,431

NOTE D—INTANGIBLE ASSETS

In connection with the Transactions, the Company’s intangible assets were revalued based on an appraisal of estimated fair values at the date of acquisition. The carrying amount and accumulated amortization of identifiable intangible assets at September 30, 2010 and December 31, 2009 was:

	Estimated Life (Years)		Successor			Predecessor
			September 30, 2010			December 31, 2009
Noncompete agreements		5 years	$	19,156		$	1,794
Other intangible assets				138			426
				19,294			2,220
Less accumulated amortization				(1,516	)		(802	)
Net intangible assets subject to amortization				17,778			1,418
Indefinite-lived trademarks				21,334			—
			$	39,112		$	1,418

F-51

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements—(Continued)

September 30, 2010

(dollars in thousands, except per share amounts)

NOTE D—INTANGIBLE ASSETS—(Continued)

For the period from May 8, 2010 through September 30, 2010, the three months ended September 30, 2010, the period from January 1, 2010 through May 7, 2010 and the three and nine months ended September 30, 2009, amortization expense of $1.5 million, $0.9 million, $0.1 million, $0.1 million and $0.1 million, respectively, was recognized by the Company.

The remaining amortization of identifiable intangible assets, net, by year as of September 30, 2010 is as follows:

Fiscal Year	Amortization
2010 (remainder)	$	958
2011		3,859
2012		3,859
2013		3,859
2014		3,859
2015 and thereafter		1,384
Total	$	17,778

NOTE E—NONCONTROLLING INTERESTS SUBJECT TO PUT PROVISIONS

The Company has potential obligations to purchase the noncontrolling interests held by third parties in several of its consolidated subsidiaries. These obligations are in the form of put provisions and are exercisable at the third-party owners’ discretion within specified periods as outlined in each specific put provision. If these put provisions were exercised, the Company would be required to purchase the third-party owners’ noncontrolling interests at the appraised fair value. In connection with the Transactions, the obligations were recorded based on an appraisal of estimated fair values as of the date of the acquisition. The appraisal estimated the fair value of the noncontrolling interests subject to these put provisions using a discounted cash flow approach and other factors. The estimated fair values of the noncontrolling interests subject to these put provisions can also fluctuate. The amount for which noncontrolling interests may ultimately be settled could vary significantly from our current estimates depending upon market conditions including potential purchasers’ access to the credit and capital markets, which can impact the level of competition for dialysis and non-dialysis related businesses, the economic performance of these businesses and the restricted marketability of the third-party owners’ noncontrolling interests.

As of September 30, 2010 and December 31, 2009, the Company’s potential obligations under these put provisions totaled approximately $33,883 and $29,295, respectively. Additionally, the Company has certain put agreements which are exercisable upon the occurrence of specific events, including third-party members’ death, disability, bankruptcy, retirement, or if third-party members are dissolved. As of September 30, 2010 and December 31, 2009, the Company’s potential additional obligations under these put provisions were approximately $8,856 and $9,136, respectively. The Company’s potential obligations for all of these put provisions are included in noncontrolling interests subject to put provisions in the accompanying consolidated balance sheets.

F-52

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements—(Continued)

September 30, 2010

(dollars in thousands, except per share amounts)

NOTE E—NONCONTROLLING INTERESTS SUBJECT TO PUT PROVISIONS—(Continued)

During 2010, the Company purchased the following additional membership interests from a noncontrolling interest partner. These purchases have been accounted for as equity transactions.

Membership interest	Amount
7.5% during predecessor period	$	870
3.8% during predecessor period		168
3.5% during predecessor period		145
5.4% during successor period		234
10.0% during successor period		1,880
24.5% during successor period		464
3.8% during successor period		138

During the nine months ended September 30, 2009, the Company purchased an additional 7.5% membership interest from a noncontrolling interest partner for $942. This purchase has been accounted for as an equity transaction.

F-53

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements—(Continued)

September 30, 2010

(dollars in thousands, except per share amounts)

NOTE F—LONG-TERM DEBT

Long-term debt consists of the following at December 31, 2009 and September 30, 2010:

	Successor			Predecessor
	September 30, 2010			December 31, 2009
Senior secured notes issued May 7, 2010, interest payable semi-annually at a fixed rate of 8.375% with a balloon payment due on May 15, 2018	$	250,000		$	—
Term loan A, principal payments of $550 and interest at variable rates (8.50% as of December 31, 2009) payable quarterly through December 2010, repaid in May 2010 in connection with the Transactions		—			2,750
Term loan D, principal payments of $45 and interest at variable rates (8.5% as of December 31, 2009) payable quarterly through September 2011, with a $39,010 balloon payment due December 2011, repaid in May 2010 in connection with the Transactions		—			39,325
Term loans, principal payments due of $25 and interest at variable monthly rates (2.04% as of September 30, 2010) payable monthly through November 2011, with a balloon payment of $1,983 due December 2011		1,844			2,065
Term loan, principal payments of $9 and interest at variable rates (2.38% as of September 30, 2010) through May 2014, with a $536 balloon payment due May 2014		920			1,001
Term loans, principal and interest payable monthly at rates between 3.85% and 8.67% over varying periods through December 2013		4,804			29,802
Mortgage payable, principal and interest due monthly through February 2012 at a rate of 7%, repaid in May 2010 in connection with the Transactions		—			509
Mortgage payable, principal and interest due monthly through March 2014 at a rate of 4.79%		222			268
Lines of credit, variable interest (4.25% as of September 30, 2010), due monthly through January 2011 convertible to term loans payable over an additional term of 36 months through January 2014		200			2,850
		257,990			78,570
Less: discounts and fees, net of accumulated amortization		(7,643	)		—
Less: current maturities		(2,863	)		(14,309	)
	$	247,484		$	64,261

Scheduled maturities of long-term debt as of September 30, 2010 are as follows for the periods ending December 31:

2010 (remainder)	$	841
2011		4,095
2012		1,563
2013		895
2014		596
Thereafter		250,000
	$	257,990

F-54

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements—(Continued)

September 30, 2010

(dollars in thousands, except per share amounts)

NOTE F—LONG-TERM DEBT—(Continued)

Senior Secured Notes

In connection with the Transactions, the Company issued $250.0 million of Senior Secured Notes (the “Notes”) at an offering price of 99.28%. The Notes are secured, subject to certain exceptions, by (i) all of the Company’s capital stock and (ii) substantially all of the assets of our wholly owned subsidiary guarantors. The Notes are guaranteed by the Company’s direct parent, C. P. Atlas Intermediate Holdings, LLC and all of our existing and future wholly owned domestic subsidiaries. The Notes mature on May 15, 2018. Interest is payable semi-annually at 8.375% per annum, commencing November 15, 2010.

On or after May 15, 2015, the Company may redeem the Notes at its option, subject to certain notice periods, at a price equal to 100% of the aggregate principal amount of the Notes plus accrued and unpaid interest. From May 15, 2013 to May 14, 2015, the Company may redeem the Notes at prices ranging from 102.094% to 104.188% of the aggregate principal balance of the Notes plus accrued and unpaid interest prior to May 15, 2013, the Company has the option to redeem during each 12-month period commencing on the issue date of May 7, 2010 up to 10% of the aggregate principal amount of the notes at 103% of the aggregate principal amount of the Notes redeemed plus accrued and unpaid interest to the date of redemption. In addition, the Company may redeem up to 35% of the Notes before May 15, 2013, with the net cash proceeds from certain equity offerings at 108.375% of the aggregate principal amount of the Notes redeemed plus accrued and unpaid interest. The Company may also redeem some or all of the Notes before May 15, 2013 at a redemption price of 100% of the principal amount thereof plus accrued and unpaid interest, if any, to the redemption date, plus a “make-whole” premium. Upon a change in control, the Company must offer to purchase the Notes at 101% of the principal amount, plus accrued interest to the purchase date.

Credit Facility

In connection with the Transactions, the Company entered into a $25.0 million Senior Secured Revolving Credit Facility (the Credit Facility). The Credit Facility expires on May 7, 2015. Borrowings under the Credit Facility bear interest at a rate equal to, at the Company’s option, either (a) an alternate base rate determined by reference to the higher of (1) the prime rate in effect on such day, (2) the federal funds effective rate plus 0.50% and (3) the Eurodollar rate applicable for an interest period of one month plus 1.00% or (b) the LIBOR rate, plus an applicable margin. The initial applicable margin for borrowings under the Credit Facility is 3.50% with respect to alternate base rate borrowings and 4.50% with respect to LIBOR borrowings. In addition to paying interest on outstanding principal under the Credit Facility, the Company is required to pay a commitment fee, initially 0.75% per annum, in respect of the unutilized revolving credit commitments thereunder. Beginning September 30, 2010, the Company is subject to leverage and fixed charge financial covenants under the Credit Facility as set forth below.

We have agreed that beginning on September 30, 2010, we will not permit the Consolidated Net Debt to Consolidated EBITDA (both as defined in the agreement) Ratio for any 12 month period (last four fiscal quarters) ending during a period set forth below to be greater than the ratio set forth below opposite such period:

Period	Ratio
September 30, 2010 through September 30, 2011		5.75:1.00
December 31, 2011 through September 30, 2012		5.50:1.00
December 31, 2012 through September 30, 2013		5.00:1.00
December 31, 2013 through September 30, 2014		4.75:1.00
December 31, 2014 and thereafter		4.25:1.00

F-55

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements—(Continued)

September 30, 2010

(dollars in thousands, except per share amounts)

NOTE F—LONG-TERM DEBT—(Continued)

We have also agreed that beginning on September 30, 2010, we will not permit the Consolidated EBITDA to Fixed Charges (both as defined in the agreement) Ratio for any 12 month period (last four fiscal quarters) ending during a period set forth below to be lower than the ratio set forth below opposite such period:

Period	Ratio
September 30, 2010 through September 30, 2011		1.80:1.00
December 31, 2011 through September 30, 2012		1.80:1.00
December 31, 2012 through September 30, 2013		2.00:1.00
December 31, 2013 through September 30, 2014		2.25:1.00
December 31, 2014 and thereafter		2.50:1.00

As of September 30, 2010, there were no borrowings outstanding under the Credit Facility and the Company is in compliance with its covenants.

NOTE G—INCOME TAXES

The income tax expense included in the accompanying consolidated statements of operations principally relates to the Company’s proportionate share of the pre-tax income of its majority-owned subsidiaries. The Predecessor’s effective income tax rate during the period from January 1, 2010 through May 7, 2010 was 25.6% which differed from the statutory federal rate of 35% primarily due to non-deductible transaction costs and interest expense, including original issue discount related to the Series X Preferred Stock. The Successor’s effective income tax rate for the three months ended September 30, 2010 was 10.4% which approximates the statutory federal tax rate on the Company’s proportionate share of pre-tax income from our majority-owned subsidiaries. The Successor’s effective income tax rate for the period from May 8, 2010 through September 30, 2010 was (16.3)%. This differs from the statutory federal tax rate primarily due to non-deductible transaction costs.

NOTE H—STOCK-BASED COMPENSATION

The Predecessor issued stock options and other stock awards to executive management and employees under its stock-based compensation plans. During the three and nine months ended September 30, 2009, the Company recognized $0.3 million and $0.9 million, respectively, of stock-based compensation. Related tax benefits of $0.1 million and $0.2 million, respectively, were recognized for those periods. During the period from January 1, 2010 to May 7, 2010, the Predecessor recognized $0.2 million of stock-based compensation. A summary of the activity in the Company’s stock option plans for the period from January 1, 2010 through May 7, 2010 is presented below:

	Number of Options			Weighted- Average Exercise Price per Share
2000 Stock Option Plan
Outstanding at December 31, 2009		2,567,500		$	0.54
Exercised		(43,750	)		0.14
Converted/Rolled-over		(2,523,750	)		0.55
Outstanding at May 7, 2010		—		$	—

F-56

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements—(Continued)

September 30, 2010

(dollars in thousands, except per share amounts)

NOTE H—STOCK-BASED COMPENSATION—(Continued)

	Number of Options			Weighted- Average Exercise Price per Share
2005 Stock Option Plan
Outstanding at December 31, 2009		3,443,300		$	3.83
Canceled		(12,750	)		4.93
Converted/Rolled-over		(3,430,550	)		3.83
Outstanding at May 7, 2010		—		$	—

In connection with the Merger, all unvested options were vested and all outstanding stock options were either converted into the right to receive the difference between $9.50 and the exercise price of the stock option or were rolled-over into fully vested options in the Successor. As a result, the Company paid approximately $45.3 million related to the conversion of stock options of which $3.7 million was recorded as stock-based compensation expense during the period from May 8, 2010 to June 30, 2010 and the remaining $41.6 million was accounted for as part of purchase price of the Transaction. In connection with the conversion of these options, the Company recognized a tax benefit of $9.1 million in the period from January 1, 2010 to May 7, 2010 for compensation deducted in tax returns filed for this period which has been credited to additional paid-in capital in the predecessor period. Under the terms of the Merger Agreement, this tax savings is to be paid to the selling shareholders as part of the purchase price. A summary of the activity in the Company’s option plan activity for the 2000 Stock Option Plan and the 2005 Stock Option Plan on a combined basis for the period from May 8, 2010 through September 30, 2010 is presented below:

	Number of Options			Weighted- Average Exercise Price per Share
2000 Stock Option Plan and 2005 Stock Option Plan
Converted in connection with the Merger		214,308		$	4.51
Exercised		(5,149	)		3.01
Outstanding at September 30, 2010		209,159		$	4.59

In May 2010, the Parent adopted the C.P. Atlas Holdings, Inc. 2010 Stock Incentive Plan (the 2010 Plan) under which 1,574,782 shares of the Parent’s common stock were reserved for issuance to the Company’s employees, directors and consultants. Options granted under the 2010 Plan must be nonstatutory stock options. Stock appreciation rights may also be granted under the 2010 Plan. The Board of Directors determines the period over which options become exercisable; however, such awards generally require that certain performance conditions and service conditions be met before the awards would vest. During the period from May 8, 2010 to June 30, 2010, the Company’s Parent did not grant any awards under the 2010 Plan. During the three months ended September 30, 2010, the Company’s Parent granted 1,184,050 options under the 2010 Plan to the Company’s employees at an exercise price of $21.00 per share, all of which were outstanding as of September 30, 2010 and none of which were vested as of September 30, 2010. During the three months ended September 30, 2010, the Company recorded $0.5 million in stock-based compensation expense ($0.3 million net of taxes) related to these grants. Vesting of share-based awards issued with performance-based vesting criteria must be deemed “probable” before we begin recording compensation expense. At each reporting period, we review the likelihood that these awards will vest and if the vesting is deemed probable, we begin to recognize

F-57

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements—(Continued)

September 30, 2010

(dollars in thousands, except per share amounts)

NOTE H—STOCK-BASED COMPENSATION—(Continued)

compensation expense at that time. If ultimately performance goals are not met, for any awards where vesting was deemed probable, previously recognized compensation cost will be reversed.

The weighted-average assumptions used to estimate the fair values of 2010 Plan stock options on the dates of grant are as follows:

Risk-free interest rates		2.4	%
Expected dividend yield		0	%
Expected term of option		6.5 years
Expected volatility		44	%
Weighted-average grant date fair value per share of options granted	$	9.86

Expected volatility is based on a selected group of comparable companies’ volatility over the expected term. Expected life of an option is based on the “short-cut method” as prescribed by SEC SAB No. 110 as the Company has never granted performance-based awards and, as such, the Company does not have any historical experience from which to estimate an expected life. The risk-free interest rate represents the implied yields available from the U.S. Treasury zero-coupon yield curve. Expected dividend yield is 0% because the Company has not paid dividends in the past, and currently has no known intention to do so in the future. Compensation expense is recognized net of forfeitures.

Based on equity awards outstanding as of September 30, 2010, there was $10.3 million of unrecognized compensation costs, net of estimated forfeitures, related to unvested share-based compensation arrangements. Such costs are expected to be recognized over a period of five years if certain performance criteria continue to be deemed probable and are met. The following table summarizes the estimated future annual stock-based compensation expense related to share-based arrangements, existing as of September 30, 2010, that are expected to vest:

2010 (remainder)	$	544
2011		2,178
2012		2,178
2013		2,178
2014		2,178
2015		1,089
	$	10,345

NOTE I—RELATED PARTY TRANSACTIONS

The Company has lease agreements for dialysis clinics with noncontrolling interest members or entities under the control of noncontrolling interest members. The amount of rent expense under these lease arrangements was approximately $0.9 million and $1.0 million for the period from January 1, 2010 to May 7, 2010 and May 8, 2010 to September 30, 2010, respectively. In addition, in 2008, the Company sub-leased space at one of its dialysis clinics to the noncontrolling interest member. Rent income under this sub-lease arrangement, which extends to 2023, was approximately $0.2 million and $0.2 million for the period from January 1, 2010 to May 7, 2010, and May 8, 2010 to September 30, 2010, respectively.

F-58

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements—(Continued)

September 30, 2010

(dollars in thousands, except per share amounts)

NOTE I—RELATED PARTY TRANSACTIONS—(Continued)

Upon consummation of the Merger, the Company entered into a management services agreement with Centerbridge. Under this management services agreement, Centerbridge agreed to provide to the Company certain investment banking, management, consulting, and financing planning services on an ongoing basis. In consideration for these services, the Company will pay Centerbridge, commencing May 7, 2010 an annual advisory services fee (payable quarterly) for each fiscal year from and including fiscal year 2010 of the greater of (i) an amount equal to the greater of (x) $550,000 and (y) the advisory services fee of the previous fiscal year or (ii) an amount equal to 1.25% of EBITDA, minus a personnel expense deduction, if applicable. During the period from May 8, 2010 to September 30, 2010, the Company recorded $0.2 million of expense related to this agreement. In addition, Centerbridge is entitled to receive an additional fee equal to 1.0% of the enterprise value and/or aggregate value, as applicable, for any future fundamental or significant transactions in which Centerbridge is involved. The Company paid a transaction fee of $4.8 million (including reimbursement of expenses) to Centerbridge for financial advisory services rendered in connection with the Merger all of which was expensed as a merger and transaction related cost in the period May 8, 2010 to June 30, 2010. These services included assisting the Company in structuring the Merger, taking into account tax considerations and optimal access to financing, and assisting in the negotiation of the Company’s material agreements and financing arrangements in connection with the Merger.

NOTE J—COMMITMENTS AND CONTINGENCIES

Healthcare provider revenues may be subject to adjustment as a result of (i) examination by government agencies or contractors, for which the resolution of any matters raised may take extended periods of time to finalize; (ii) differing interpretations of government regulations by different fiscal intermediaries or regulatory authorities; (iii) differing opinions regarding a patient’s medical diagnosis or the medical necessity of service provided; (iv) retroactive applications or interpretations of governmental requirements; and (v) claims for refund from private payors, including as the result of government actions. Management believes it has recorded adequate provisions to consider potential revenue adjustments.

Professional Liability Coverage

The Company maintains professional liability insurance coverage on a claims-made basis. Under this type of policy, claims based on occurrences during its term, but reported subsequently, will be uninsured should the policy not be renewed or replaced with other coverage. Management expects to be able to obtain renewal or other coverage in future periods, and has accrued the estimated cost associated with coverage of past occurrences reported in subsequent periods.

Litigation

The Company is a defendant in various legal actions in the normal course of business. In the opinion of the Company’s management, based in part on the advice of outside counsel, the resolution of these matters will not have a material effect on the Company’s financial position, results of operations or cash flows.

Regulatory

The healthcare industry is subject to numerous laws and regulations of federal, state, and local governments. Recently, government activity has increased with respect to investigations and allegations concerning possible violations by healthcare providers of fraud and abuse statutes and regulations, which could result in the

F-59

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements—(Continued)

September 30, 2010

(dollars in thousands, except per share amounts)

NOTE J—COMMITMENTS AND CONTINGENCIES—(Continued)

imposition of significant fines and penalties, as well as significant repayments for patient services previously billed. Compliance with such laws and regulations are subject to government review and interpretations, as well as regulatory actions unknown or unasserted at this time.

NOTE K—SUPPLEMENTAL INFORMATION

As set forth in Note F, the Notes are guaranteed, jointly and severally, by all wholly-owned domestic current or future subsidiaries of the Company and C.P. Atlas Intermediate Holdings, LLC. (the Guarantors).

The following tables present the condensed consolidating financial information for ARH, the subsidiary Guarantors and the Non-Guarantors, together with eliminations, as of and for the periods indicated. As a result of the Merger, all of ARH’s issued and outstanding capital stock is owned by CP Atlas Intermediate Holdings, LLC which is CP Atlas Intermediate Holdings, LLC’s only asset. As such, the consolidated financial statements of CP Atlas Intermediate Holdings, LLC are identical to the consolidated financial statements of ARH.

The information as of September 30, 2010 and for the period from May 8, 2010 to September 30, 2010 presents the financial position, results of operations and cash flows of the Successor entity. The information as of December 31, 2009, and for the period from January 1, 2010 through May 7, 2010 presents the financial position, results of operations and cash flows of the Predecessor entity. The consolidating information may not necessarily be indicative of the financial position, results of operations or cash flows had ARH, Guarantors and Non-Guarantors operated as independent entities.

Condensed Consolidating Balance Sheet—September 30, 2010

	ARH		Subsidiary Guarantors		Non- Guarantors		Eliminations			Successor Consolidated
Assets
Cash and cash equivalents	$	—	$	5,379	$	22,200	$	—		$	27,579
Accounts receivable		—		181		45,806		—			45,987
Inventories		—		16		1,961		—			1,977
Prepaid expenses and other current assets		10,303		14,156		3,874		(14,200	)		14,133
Deferred tax assets		4,043		—		—		—			4,043
Total current assets		14,346		19,732		73,841		(14,200	)		93,719
Property and equipment, net		—		1,963		54,668		—			56,631
Deferred financing costs, net		4,993		—		—		—			4,993
Intangible assets, net		—		26,735		12,377		—			39,112
Other long-term assets		3,625		25,468		1,983		(25,408	)		5,668
Receivables from subsidiaries		—		12,339		—		(12,339	)		—
Investment in subsidiaries		43,844		—		—		(43,844	)		—
Goodwill, net		389,087		—		892		113,381			503,360
Total assets	$	455,895	$	86,237	$	143,761	$	17,590		$	703,483

F-60

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements—(Continued)

September 30, 2010

(dollars in thousands, except per share amounts)

NOTE K—SUPPLEMENTAL INFORMATION—(Continued)

	ARH		Subsidiary Guarantors		Non- Guarantors			Eliminations			Successor Consolidated
Liabilities and Shareholders Equity (Deficit)
Current liabilities	$	22,291	$	2,765	$	65,928		$	(26,509	)	$	64,475
Long-term debt, less current portion		242,327		469		30,096			(25,408	)		247,484
Capital lease obligations, less current portion		—		—		175			—			175
Other long-term liabilities		—		312		2,156			—			2,468
Deferred tax liability		16,968		—		—			—			16,968
Noncontrolling interests subject to put provisions		—		650		(133,658	)		175,747			42,739
Total American Renal Holdings Inc. equity		174,309		82,041		24,431			(106,240	)		174,541
Noncontrolling interests not subject to put provisions		—		—		154,633			—			154,633
Total equity		174,309		82,041		179,064			(106,240	)		329,174
Total liabilities and equity	$	455,895	$	86,237	$	143,761		$	17,590		$	703,483

Condensed Consolidating Balance Sheet—December 31, 2009

	ARH			Subsidiary Guarantors		Non- Guarantors		Eliminations			Predecessor Consolidated
Assets
Cash and cash equivalents	$	—		$	11,423	$	17,756	$	—		$	29,179
Accounts receivable		—			215		45,439		—			45,654
Inventories		—			22		2,272		—			2,294
Prepaid expenses and other current assets		—			2,313		3,107		(3,054	)		2,366
Deferred tax assets		4,845			—		—		—			4,845
Total current assets		4,845			13,973		68,574		(3,054	)		84,338
Property and equipment, net		—			2,054		57,351		—			59,405
Deferred financing costs, net		—			1,000		44		—			1,044
Intangible assets, net		—			363		1,055		—			1,418
Other long-term assets		—			5,161		3,251		(5,093	)		3,319
Receivables from subsidiaries		—			12,267		—		(12,267	)		—
Investment in subsidiaries		38,021			—		—		(38,021	)		—
Goodwill, net		(13,349	)		—		32,973		4,574			24,198
Total assets	$	29,517		$	34,818	$	163,248	$	(53,861	)	$	173,722

F-61

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements—(Continued)

September 30, 2010

(dollars in thousands, except per share amounts)

NOTE K—SUPPLEMENTAL INFORMATION—(Continued)

	ARH			Subsidiary Guarantors			Non- Guarantors			Eliminations			Predecessor Consolidated
Liabilities and Deficit
Current liabilities	$	—		$	7,095		$	63,814		$	(15,292	)	$	55,617
Long-term debt, less current portion		—			40,185			29,169			(5,093	)		64,261
Capital lease obligations, less current portion		—			—			214			—			214
Other long-term liabilities		—			137			7,527			—			7,664
Deferred tax liability		4,548			—			—			—			4,548
Series X preferred stock		62,799			—			—			—			62,799
Noncontrolling interests subject to put provisions		—			750			(99,184	)		136,865			38,431
Total American Renal Holdings Inc. equity (deficit)		(37,830	)		(13,349	)		145,651			(170,341	)		(75,869	)
Noncontrolling interests not subject to put provisions		—			—			16,057			—			16,057
Total equity (deficit)		(37,830	)		(13,349	)		161,708			(170,341	)		(59,812	)
Total liabilities and deficit	$	29,517		$	34,818		$	163,248		$	(53,861	)	$	173,722

Condensed Consolidating Statement of Operations—May 8, 2010 to September 30, 2010

	ARH			Subsidiary Guarantors			Non- Guarantors			Eliminations			Successor Consolidated
Net operating revenues	$	—		$	582		$	120,251		$	—		$	120,833
Total operating expenses		14,840			6,617			94,163			—			115,620
Operating income (loss)		(14,840	)		(6,035	)		26,088			—			5,213
Interest expense, net		(7,777	)		(36	)		(1,392	)					(9,205	)
Income before (loss) taxes		(22,617	)		(6,071	)		24,696						(3,992	)
Income tax expense (benefit)		(913	)		—			264						(649	)
Net income (loss) before earnings in subsidiaries		(21,704	)		(6,071	)		24,432			—			(3,343	)
Equity earnings in subsidiaries		7,411			13,483			—			(20,894	)		—
Net income (loss)		(14,293	)		7,412			24,432			(20,894	)		(3,343	)
Less: Net income attributable to noncontrolling interests		—			—			—			(10,949	)		(10,949	)
Net income (loss) attributable to American Renal Holdings Inc.	$	(14,293	)	$	7,412		$	24,432		$	(31,843	)	$	(14,292	)

F-62

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements—(Continued)

September 30, 2010

(dollars in thousands, except per share amounts)

NOTE K—SUPPLEMENTAL INFORMATION—(Continued)

Condensed Consolidating Statement of Operations—three months ended September 30, 2010

	ARH			Subsidiary Guarantors			Non- Guarantors			Eliminations			Successor Consolidated
Net operating revenues	$	—		$	312		$	76,919		$	—		$	77,231
Total operating expenses		22,218			(20,537	)		60,249			—			61,930
Operating income (loss)		(22,218	)		20,849			16,670			—			15,301
Interest expense, net		(4,978	)		(31	)		(876	)		—			(5,885	)
Income before (loss) taxes		(27,196	)		20,818			15,794			—			9,416
Income tax expense (benefit)		837			—			140						977
Net income (loss) before earnings in subsidiaries		(28,033	)		20,818			15,654			—			8,439
Equity earnings in subsidiaries		29,564			8,747			—			(38,311	)		—
Net income		1,531			29,565			15,654			(38,311	)		8,439
Less: Net income attributable to noncontrolling interests		—			—			—			(6,907	)		(6,907	)
Net income attributable to American Renal Holdings Inc.	$	1,531		$	29,565		$	15,654		$	(45,218	)	$	1,532

Condensed Consolidating Statement of Operations—January 1, 2010 to May 7, 2010

	ARH			Subsidiary Guarantors			Non- Guarantors			Eliminations			Predecessor Consolidated
Net operating revenues	$	—		$	587		$	101,507		$	—		$	102,094
Total operating expenses		7,378			1,040			79,113			—			87,531
Operating income (loss)		(7,378	)		(453	)		22,394			—			14,563
Interest expense, net		(4,119	)		(10	)		(1,588	)		—			(5,717	)
Income (loss) before taxes		(11,497	)		(463	)		20,806			—			8,846
Income tax expense		1,963			—			301			—			2,264
Net income (loss) before earnings in subsidiaries		(13,460	)		(463	)		20,505			—			6,582
Equity earnings in subsidiaries		10,776			11,240			—			(22,016	)		—
Net income (loss)		(2,684	)		10,777			20,505			(22,016	)		6,582
Less: Net income attributable to noncontrolling interests		—			—			—			(9,266	)		(9,266	)
Net income (loss) attributable to American Renal Holdings Inc.	$	(2,684	)	$	10,777		$	20,505		$	(31,282	)	$	(2,684	)

F-63

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements—(Continued)

September 30, 2010

(dollars in thousands, except per share amounts)

NOTE K—SUPPLEMENTAL INFORMATION—(Continued)

Condensed Consolidating Statement of Operations—Three Months Ended September 30, 2009

	ARH			Subsidiary Guarantors			Non- Guarantors			Eliminations			Predecessor Consolidated
Net operating revenues	$	—		$	378		$	67,706		$	—		$	68,084
Total operating expenses		—			1,216			53,068			—			54,284
Operating income (loss)		—			(838	)		14,638			—			13,800
Interest expense, net		(2,058	)		(738	)		(959	)		—			(3,755	)
Income (loss) before taxes		(2,058	)		(1,576	)		13,679			—			10,045
Income tax expense		2,275			—			307			—			2,582
Net income (loss) before earnings in subsidiaries		(4,333	)		(1,576	)		13,372			—			7,463
Equity earnings in subsidiaries		6,042			7,618			—			(13,660	)		—
Net income		1,709			6,042			13,372			(13,660	)		7,463
Less: Net income attributable to noncontrolling interests		—			—			—			(5,756	)		(5,756	)
Net income attributable to American Renal Holdings Inc.	$	1,709		$	6,042		$	13,372		$	(19,416	)	$	1,707

Condensed Consolidating Statement of Operations—Nine Months Ended September 30, 2009

	ARH			Subsidiary Guarantors			Non- Guarantors			Eliminations			Predecessor Consolidated
Net operating revenues	$	—		$	1,092		$	192,017		$	—		$	193,109
Total operating expenses		—			3,050			151,471			—			154,521
Operating income (loss)		—			(1,958	)		40,546			—			38,588
Interest expense, net		(5,955	)		(2,445	)		(2,812	)		—			(11,212	)
Income (loss) before taxes		(5,955	)		(4,403	)		37,734			—			27,376
Income tax expense		6,255			—			781			—			7,036
Net income (loss) before earnings in subsidiaries		(12,210	)		(4,403	)		36,953			—			20,340
Equity earnings in subsidiaries		16,729			21,133			—			(37,862	)		—
Net income		4,519			16,730			36,953			(37,862	)		20,340
Less: Net income attributable to noncontrolling interests		—			—			—			(15,823	)		(15,823	)
Net income attributable to American Renal Holdings Inc.	$	4,519		$	16,730		$	36,953		$	(53,685	)	$	4,517

F-64

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements—(Continued)

September 30, 2010

(dollars in thousands, except per share amounts)

NOTE K—SUPPLEMENTAL INFORMATION—(Continued)

Condensed Consolidating Statement of Cash Flows—May 8, 2010 to September 30, 2010

	ARH			Subsidiary Guarantors			Non- Guarantors			Eliminations			Successor Consolidated
Operating activities
Net income (loss)	$	(14,293	)	$	7,411		$	24,432		$	(20,893	)	$	(3,343	)
Change in operating assets and liabilities and noncash items included in net income (loss)		12,005			(4,742	)		8,263			4,654			20,180
Net cash provided by (used in) operating activities		(2,288	)		2,669			32,695			(16,239	)		16,837
Investing Activities
Other		—			4,654			—			(4,654	)		—
Purchases of property and equipment		—			(70	)		(6,071	)		—			(6,141	)
Merger		(315,957	)		61,834			(9,239	)		13,646			(252,608	)
Cash paid for acquisitions		—			—			(275	)		—			(275	)
Net cash provided by (used in) investing activities		(315,957	)		66,418			(15,585	)		8,992			(259,024	)
Financing Activities
Proceeds from borrowings		—			—			—			—			—
Payments on long-term debt obligations		—			(40,893	)		(24,211	)		—			(65,104	)
Other		318,245			(24,240	)		18,485			7,247			322,629
Net cash provided by (used in) financing activities		318,245			(65,133	)		(5,726	)		7,247			257,525
Net increase (decrease) in cash		—			3,954			11,384			—			15,338
Cash, at beginning of year		—			1,426			10,815			—			12,241
Cash, at ending of year	$	—		$	5,380		$	22,199			—		$	27,579

F-65

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements—(Continued)

September 30, 2010

(dollars in thousands, except per share amounts)

NOTE K—SUPPLEMENTAL INFORMATION—(Continued)

Condensed Consolidating Statement of Cash Flows—January 1, 2010 to May 7, 2010

	ARH			Subsidiary Guarantors			Non- Guarantors			Eliminations			Predecessor Consolidated
Operating activities
Net income (loss)	$	(2,685	)	$	10,776		$	20,507		($	22,016	)	$	6,582
Change in operating assets and liabilities and noncash items included in net income (loss)		(6,300	)		(6,067	)		(371	)		11,451			(1,287	)
Net cash provided by (used in) operating activities		(8,985	)		(4,709	)		20,136			(10,565	)		5,295
Investing Activities
Other		(2,691	)		(8,493	)		—			11,240			56
Purchases of property and equipment		—			(187	)		(4,717	)		—			(4,904	)
Cash paid for acquisitions		—			—			(200	)		—			(200	)
Net cash provided by (used in) investing activities		(2,691	)		(8,680	)		(4,917	)		11,240			(5,048	)
Financing Activities
Proceeds from borrowings		—			—			1,250			(1,250	)		—
Payments on long-term debt obligations		—			(1,201	)		(4,765	)		575			(5,391	)
Other		11,676			(4,825	)		(18,645	)		—			(11,794	)
Net cash provided by (used in) financing activities		11,676			(6,026	)		(22,160	)		(675	)		(17,185	)
Net increase (decrease) in cash		—			(9,997	)		(6,941	)		—			(16,938	)
Cash, at beginning of period		—			11,423			17,756			—			29,179
Cash, at ending of period	$	—		$	1,426		$	10,815		$	—		$	12,241

F-66

AMERICAN RENAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements—(Continued)

September 30, 2010

(dollars in thousands, except per share amounts)

NOTE K—SUPPLEMENTAL INFORMATION—(Continued)

Consolidating Statement of Cash Flows—Nine Months Ended September 30, 2009

	ARH			Subsidiary Guarantors			Non- Guarantors			Eliminations			Predecessor Consolidated
Operating activities
Net income	$	4,519		$	16,726		$	36,956		$	(37,861	)	$	20,340
Change in operating assets and liabilities, and non-cash items included in net income		6,820			2,845			3,986			3,231			16,882
Net cash provided by (used in) operating activities		11,339			19,571			40,942			(34,630	)		37,222
Investing Activities
Purchase of other intangible assets		—			—			—			—			—
Purchases of property and equipment		—			(119	)		(9,638	)		—			(9,757	)
Acquisition		—			—			—			—			—
Cash paid for Acquisitions		—			—			(3,964	)		—			(3,964	)
Net cash provided by (used in) investing activities		—			(119	)		(13,602	)		—			(13,721	)
Financing Activities
Proceeds from borrowings		—			(246	)		1,254			—			1,008
Payments on long-term debt obligations		—			(1,799	)		(6,888	)		—			(8,687	)
Other		(11,339	)		(17,067	)		(21,682	)		34,630			(15,458	)
Net cash provided by (used in) financing activities		(11,339	)		(19,112	)		(27,316	)		34,630			(23,137	)
Net increase (decrease) in cash		—			340			24			—			364
Cash, at beginning of period		—			11,869			17,313			—			29,182
Cash, at ending of period	$	—		$	12,209		$	17,337		$	—		$	29,546

F-67

PROSPECTUS

Offer to Exchange

$250,000,000 principal amount of our 8.375% Senior Secured Notes due 2018, which have been registered under the Securities Act of 1933, for any and all of our outstanding 8.375% Senior Secured Notes due 2018.

Until the date that is 90 days from the date of this prospectus, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters with respect to their unsold allotments or subscriptions or otherwise.

II. INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20. Indemnification of Directors and Officers

(a) American Renal Holdings Inc. is incorporated under the laws of Delaware.

Section 145 of the Delaware General Corporation Law (the “DGCL”) grants each corporation organized thereunder the power to indemnify any person who is or was a director, officer, employee or agent of a corporation or enterprise, against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, other than an action by or in the right of the corporation, by reason of being or having been in any such capacity, if he acted in good faith in a manner 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 reasonable cause to believe his conduct was unlawful. Section 102(b)(7) of the DGCL enables a corporation in its certificate of incorporation or an amendment thereto to eliminate or limit the personal liability of a director to the corporation or its stockholders of monetary damages for violations of the directors’ fiduciary duty of care, except (i) for any breach of the directors’ duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the DGCL (providing for liability of directors for unlawful payment of dividends or unlawful stock purchases or redemptions) or (iv) for any transaction from which a director derived an improper personal benefit.

The Certificate of Incorporation and the By-Laws of American Renal Holdings Inc. indemnifies and holds harmless, to the fullest extent permitted by the DGCL, as the same exists or may hereafter be amended (but only to the extent such amendment permits broader indemnification rights), each person who was or is made a party or is threatened to be made a party to or is or was involved in any action, suit or proceeding, whether, civil, criminal, administrative or investigative, by reason of the fact that he or she or a person of whom he or she is the legal representative is or was a director of American Renal Holdings Inc. or is or was serving at the request of American Renal Holdings Inc. as a director of another entity. The Articles of Incorporation and By-Laws of American Renal Holdings Inc. also permit American Renal Holdings Inc. to maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of American Renal Holdings Inc. or another entity against any expense, liability or loss, whether or not American Renal Holdings Inc. would have the power to indemnify such person under the DGCL.

(b) C.P. Atlas Intermediate Holdings, LLC, American Renal Associates LLC, American Renal Management LLC, AKC Holdings LLC, JKC Holdings LLC, ARA-Boca Raton Holding LLC, ARA-Ohio Holdings LLC, ARA-Rhode Island Dialysis II LLC, Texas-ARA LLC and Acute Dialysis Services-ARA LLC are limited liability companies organized under the laws of Delaware.

Section 18-108 of the Delaware Limited Liability Company Act empowers a Delaware limited liability company to indemnify and hold harmless any member or manager of the limited liability company from and against any and all claims and demands whatsoever.

The Limited Liability Company Agreement of C.P. Atlas Intermediate Holdings, LLC provides that the sole LLC member, the officers and any respective affiliates or agents of C.P. Atlas Intermediate Holdings, LLC are entitled to indemnification from C.P. Atlas Intermediate Holdings, LLC, to the fullest extent permitted by applicable law, for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such person in good faith on behalf of C.P. Atlas Intermediate Holdings, LLC and in a manner reasonably believed to be within the scope of authority conferred upon such person.

(c) American Renal Texas L.P. and American Renal Texas II, L.P. are limited partnerships formed under the laws of Texas.

II-1

American Renal Texas L.P. and American Renal Texas II, L.P. are limited partnerships formed under the laws of Texas.

Chapter 8 of the Texas Business Organizations Code (“TBOC”) requires a limited partnership to indemnify a general partner or former general partner who incurs expenses in connection with a legal proceeding relating to such current or former general partner’s position with the partnership. Indemnification is mandatory only if (i) the current or former general partner is wholly successful in the underlying legal proceeding, and (ii) such indemnification is not otherwise prohibited by a written partnership agreement.

Additionally, Chapter 8 permits a limited partnership to indemnify a general partner or former general partner who acted in good faith and reasonably believed that (i) the conduct was in the partnership’s best interests (if performed in the general partner’s official capacity), or (ii) the conduct was not opposed to the partnership’s best interests (if performed outside of the general partner’s official capacity). In the case of a criminal proceeding, indemnification is permitted only if the general partner had no reasonable belief that the conduct was unlawful. Chapter 8 permits indemnification of a general partner without the necessity of indemnification provisions in the partnership agreement. In the absence of such provisions, however, the partnership must make the determination to indemnify a general partner according to the guidelines provided in Section 8.103 of the TBOC.

In all instances, Chapter 8 prohibits a limited partnership from indemnifying a general partner or former general partner in relation to a proceeding in which the general partner is found to be liable for (i) willful or intentional misconduct, (ii) breach of the duty of loyalty or (iii) an act or omission not in good faith constituting a breach of the general partner’s duty to the partnership.

Chapter 8 provides that limited partners, employees and others who are not also general partners may be indemnified by provisions in the partnership agreement, by contract, by common law or through other action by the partnership’s governing authority.

The Agreement of Limited Partnership of American Renal Texas L.P. and the Agreement of Limited Partnership of American Renal Texas II, L.P. provide for the indemnification of officers, employees and current and former general partners so long the person seeking indemnification meets certain standards of conduct consistent with those set forth in Chapter 8.

EXHIBIT NUMBER	EXHIBIT DESCRIPTION
2.1*	Contribution and Merger Agreement, dated as of March 22, 2010, by and among American Renal Holdings Inc., the rollover stockholders named therein, Wachovia Capital Partners GP I, LLC, C.P. Atlas Holdings, Inc., C.P. Atlas Intermediate Holdings, LLC and C.P. Atlas Acquisition Corp.
3.1*	Restated Certificate of Incorporation of American Renal Holdings Inc., as amended.
3.2*	American Renal Associates Inc. By-Laws.
3.3*	Certificate of Formation of C.P. Atlas Intermediate Holdings, LLC.
3.4*	Limited Liability Company Agreement of C.P. Atlas Intermediate Holdings, LLC.
3.5*	Certificate of Formation of American Renal Associates LLC.
3.6*	Limited Liability Company Agreement of American Renal Associates LLC.
3.7*	Certificate of Formation of Texas-ARA LLC.
3.8*	Texas-ARA LLC Operating Agreement.
3.9*	Certificate of Formation of JKC Holding LLC.

II-2

EXHIBIT NUMBER	EXHIBIT DESCRIPTION
3.10*	JKC Holding LLC Operating Agreement.
3.11*	Certificate of Formation of ARA-Rhode Island Dialysis II LLC.
3.12*	ARA-Rhode Island Dialysis II LLC Operating Agreement.
3.13*	Certificate of Formation of ARA-Ohio Holdings LLC.
3.14*	ARA-Ohio Holding LLC Operating Agreement.
3.15*	Certificate of Formation of ARA-Boca Raton Holding LLC.
3.16*	ARA-Boca Raton Holding LLC Operating Agreement.
3.17*	Certificate of Formation of American Renal Management LLC.
3.18*	American Renal Management LLC Operating Agreement.
3.19*	Certificate of Formation of AKC Holding LLC
3.20*	AKC Holding LLC Operating Agreement.
3.21*	Certificate of Formation of Acute Dialysis Services-ARA LLC.
3.22*	Acute Dialysis Services-ARA LLC Operation Agreement.
3.23*	Certificate of Limited Partnership of American Renal Texas L.P.
3.24*	American Renal Texas L.P. Agreement of Limited Partnership.
3.25*	Certificate of Limited Partnership of American Renal Texas II, L.P.
3.26*	American Renal Texas II, L.P. Agreement of Limited Partnership.
3.27†	Form of Joint Venture Operating Agreement.
4.1*	Indenture, dated as May 7, 2010, among American Renal Holdings Inc., the guarantors named therein and Wilmington Trust FSB, as trustee.
4.2*	Registration Rights Agreement, dated as May 7, 2010, among American Renal Holdings Inc., the guarantors named therein, and Banc of America Securities LLC, Barclays Capital Inc. and Wells Fargo Securities, LLC, as representatives to the several initial purchasers.
4.3*	Form of 8.375% Senior Secured Note due 2018 (included in Exhibit 4.1).
4.4*	Security Agreement dated as May 7, 2010, among American Renal Holdings Inc., the guarantors named therein and Wilmington Trust FSB, as collateral agent.
4.5*	Trademark Security Agreement, dated as of May 7, 2010, between American Renal Associates LLC and Wilmington Trust FSB, as collateral agent.
4.6*	Intercreditor Agreement among American Renal Holdings Inc., C.P. Atlas Acquisition Corp., the guarantors named therein, Bank of America, N.A., as credit agreement administrative agent, and Wilmington Trust FSB, as collateral agent.
5.1*	Opinion of Simpson Thacher & Bartlett LLP.
5.2*	Opinion of Greenberg Traurig, LLP.
10.1†	Credit Agreement, dated as of May 7, 2010, among C.P. Atlas Acquisition Corp. (to be merged with and into American Renal Holdings Inc.), C.P. Intermediate Holdings, LLC, Bank of America, N.A. and the other lenders party thereto.
10.2*	Guaranty, dated as of May 7, 2010, among C.P. Atlas Acquisition Corp. (to be merged with and into American Renal Holdings Inc.), the guarantors named therein, Bank of America, N.A. and the other secured parties named therein.

II-3

EXHIBIT NUMBER	EXHIBIT DESCRIPTION
10.3†	Security Agreement, dated as of May 7, 2010, among C.P. Atlas Acquisition Corp. (to be merged with and into American Renal Holdings Inc.), the guarantors party thereto and Bank of America, N.A., as administrative agent.
10.4*	Employment Agreement, dated as of March 22, 2010, among American Renal Management LLC, American Renal Holdings Inc. and Christopher T. Ford.
10.5*	Employment Agreement, dated as of March 22, 2010, among American Renal Management LLC, American Renal Holdings Inc. and Syed T. Kamal.
10.6*	Employment Agreement, dated as of March 22, 2010, among American Renal Management LLC, American Renal Holdings Inc. and Joseph A. Carlucci.
10.7*	Employment Agreement, dated as of March 22, 2010, among American Renal Management LLC, American Renal Holdings Inc. and John J. McDonough.
10.8*	2010 C.P. Atlas Holdings, Inc. Stock Incentive Plan.
10.9*	Subscription Agreement, dated as of May 7, 2010, by and between C.P. Atlas Holdings, Inc., Centerbridge Capital Partners, L.P., Centerbridge Capital Partners SBS, L.P., Centerbridge Capital Partners Strategic, L.P., AFOS Equity LLC, Black Diamond Partners LLC, JJ Bark LLC and Tribeca Investments LLC.
10.10*	Equity Contribution, Exchange and Subscription Agreement, dated as of March 22, 2010, by and between C.P. Atlas Holdings, Inc. and Joseph A. Carlucci.
10.11*	Equity Contribution, Exchange and Subscription Agreement, dated as of March 22, 2010, by and between C.P. Atlas Holdings, Inc. and Christopher T. Ford 2005 Grantor Retained Annuity Trust.
10.12*	Equity Contribution, Exchange and Subscription Agreement, dated as of March 22, 2010, by and between C.P. Atlas Holdings, Inc. and Christopher T. Ford 2008 Grantor Retained Annuity Trust.
10.13*	Equity Contribution, Exchange and Subscription Agreement, dated as of April 30, 2010, by and between C.P. Atlas Holdings, Inc. and Wesley V. Forgue.
10.14*	Equity Contribution, Exchange and Subscription Agreement, dated as of March 22, 2010, by and between C.P. Atlas Holdings, Inc. and Syed T. Kamal.
10.15*	Equity Contribution, Exchange and Subscription Agreement, dated as of March 22, 2010, by and between C.P. Atlas Holdings, Inc. and John McDonough.
10.16*	Equity Contribution, Exchange and Subscription Agreement, dated as of April 29, 2010, by and between C.P. Atlas Holdings, Inc. and Lakhan Saha.
10.17*	Transaction Fee and Advisory Services Agreement, dated as of May 7, 2010, by and among C.P. Atlas Holdings, Inc., C.P. Atlas Intermediate Holdings, LLC, American Renal Holdings Inc. and Centerbridge Advisors, LLC.
12.1†	Statement of Computation of Ratio of Earnings to Fixed Charges.
21.1*	Subsidiaries of American Renal Holdings Inc.
23.1*	Consent of Simpson Thacher & Bartlett LLP (included as part of its opinion in Exhibit 5.1).
23.2*	Consent of Greenberg Traurig, LLP (included as part of its opinion in Exhibit 5.2).
23.3†	Consent of Grant Thornton LLP.
24.1*	Power of Attorney (included in the signature pages of this registration statement).

II-4

EXHIBIT NUMBER	EXHIBIT DESCRIPTION
25.1*	Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of Wilmington Trust FSB as trustee under the Indenture, dated May 7, 2010, among American Renal Holdings Inc., the guarantors named therein and Wilmington Trust FSB, as trustee.
99.1*	Form of Letter of Transmittal.
99.2*	Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
99.3*	Form of Letter to Clients.
99.4*	Form of Notice of Guaranteed Delivery.

* Previously filed.

† Filed herewith.

Item 22. Undertakings.

(a) Each of 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;

(ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the 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 Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

(iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

(2) that, for the purpose of determining any liability under the Securities Act of 1933, 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 purpose of determining liability under the Securities Act of 1933 to any purchaser: each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use; and

(5) that, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a

II-5

primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i) any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

(ii) any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

(iii) the portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

(iv) any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

(b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 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 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 Act and will be governed by the final adjudication of such issue.

(c) The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.

(d) Each of the undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.

II-6

SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Beverly, State of Massachusetts, on this 6^th day of December, 2010.

AMERICAN RENAL HOLDINGS INC.
/S/    MICHAEL R. COSTA
Name:	Michael R. Costa
Title:	Vice President, General Counsel

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
* Joseph A. Carlucci	Chief Executive Officer, Director (Principal Executive Officer)	December 6, 2010
* John J. McDonough	Chief Financial Officer, Executive Vice President (Principal Financial Officer)	December 6, 2010
* Syed T. Kamal	President, Director	December 6, 2010
* Christopher T. Ford	Chairman of the Board	December 6, 2010
/S/    MICHAEL R. COSTA       Michael R. Costa	Vice President, General Counsel	December 6, 2010
* Steven M. Silver	Director	December 6, 2010
* Jared S. Hendricks	Director	December 6, 2010
* Michael E. Boxer	Director	December 6, 2010

*By: /S/    MICHAEL R. COSTA       Michael R. Costa Attorney-in-Fact

SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Beverly, State of Massachusetts, on this 6^th day of December, 2010.

C.P. ATLAS INTERMEDIATE, LLC
By:	C.P. Atlas, Inc., its Sole Member
/S/    MICHAEL R. COSTA
Name:	Michael R. Costa
Title:	Secretary

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
* Joseph A. Carlucci	President (Principal Executive Officer)	December 6, 2010
* John J. McDonough	Treasurer (Principal Financial Officer)	December 6, 2010

*By: /S/    MICHAEL R. COSTA       Michael R. Costa Attorney-in-Fact

SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Beverly, State of Massachusetts, on this 6^th day of December, 2010.

AMERICAN RENAL ASSOCIATES LLC
By: American Renal Holdings Inc.
AMERICAN RENAL MANAGEMENT LLC
AKC HOLDING LLC
JKC HOLDING LLC
ARA-BOCA RATON HOLDING LLC
ARA-OHIO HOLDINGS LLC
ARA-RHODE ISLAND DIALYSIS II LLC
TEXAS-ARA LLC
ACUTE DIALYSIS SERVICES-ARA LLC
By: American Renal Associates LLC
AMERICAN RENAL TEXAS L.P.
AMERICAN RENAL TEXAS II, L.P.
By: Texas-ARA LLC
*
Name:	Joseph A. Carlucci
Title:	Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
* Joseph A. Carlucci	Chief Executive Officer (Principal Executive Officer)	December 6, 2010
* John J. McDonough	Chief Financial Officer (Principal Financial Officer)	December 6, 2010

*By: /S/    MICHAEL R. COSTA       Michael R. Costa Attorney-in-Fact

EXHIBIT INDEX

EXHIBIT NUMBER	EXHIBIT DESCRIPTION
2.1*	Contribution and Merger Agreement, dated as of March 22, 2010, by and among American Renal Holdings Inc., the rollover stockholders named therein, Wachovia Capital Partners GP I, LLC, C.P. Atlas Holdings, Inc., C.P. Atlas Intermediate Holdings, LLC and C.P. Atlas Acquisition Corp.
3.1*	Restated Certificate of Incorporation of American Renal Holdings Inc., as amended.
3.2*	American Renal Associates Inc. By-Laws.
3.3*	Certificate of Formation of C.P. Atlas Intermediate Holdings, LLC.
3.4*	Limited Liability Company Agreement of C.P. Atlas Intermediate Holdings, LLC.
3.5*	Certificate of Formation of American Renal Associates LLC.
3.6*	Limited Liability Company Agreement of American Renal Associates LLC.
3.7*	Certificate of Formation of Texas-ARA LLC.
3.8*	Texas-ARA LLC Operating Agreement.
3.9*	Certificate of Formation of JKC Holding LLC.
3.10*	JKC Holding LLC Operating Agreement.
3.11*	Certificate of Formation of ARA-Rhode Island Dialysis II LLC.
3.12*	ARA-Rhode Island Dialysis II LLC Operating Agreement.
3.13*	Certificate of Formation of ARA-Ohio Holdings LLC.
3.14*	ARA-Ohio Holding LLC Operating Agreement.
3.15*	Certificate of Formation of ARA-Boca Raton Holding LLC.
3.16*	ARA-Boca Raton Holding LLC Operating Agreement.
3.17*	Certificate of Formation of American Renal Management LLC.
3.18*	American Renal Management LLC Operating Agreement.
3.19*	Certificate of Formation of AKC Holding LLC
3.20*	AKC Holding LLC Operating Agreement.
3.21*	Certificate of Formation of Acute Dialysis Services-ARA LLC.
3.22*	Acute Dialysis Services-ARA LLC Operation Agreement.
3.23*	Certificate of Limited Partnership of American Renal Texas L.P.
3.24*	American Renal Texas L.P. Agreement of Limited Partnership.
3.25*	Certificate of Limited Partnership of American Renal Texas II, L.P.
3.26*	American Renal Texas II, L.P. Agreement of Limited Partnership.
3.27†	Form of Joint Venture Operating Agreement.
4.1*	Indenture, dated as May 7, 2010, among American Renal Holdings Inc., the guarantors named therein and Wilmington Trust FSB, as trustee.
4.2*	Registration Rights Agreement, dated as May 7, 2010, among American Renal Holdings Inc., the guarantors named therein, and Banc of America Securities LLC, Barclays Capital Inc. and Wells Fargo Securities, LLC, as representatives to the several initial purchasers.

EXHIBIT NUMBER	EXHIBIT DESCRIPTION
4.3*	Form of 8.375% Senior Secured Note due 2018 (included in Exhibit 4.1).
4.4*	Security Agreement dated as May 7, 2010, among American Renal Holdings Inc., the guarantors named therein and Wilmington Trust FSB, as collateral agent.
4.5*	Trademark Security Agreement, dated as of May 7, 2010, between American Renal Associates LLC and Wilmington Trust FSB, as collateral agent.
4.6*	Intercreditor Agreement among American Renal Holdings Inc., C.P. Atlas Acquisition Corp., the guarantors named therein, Bank of America, N.A., as credit agreement administrative agent, and Wilmington Trust FSB, as collateral agent.
5.1*	Opinion of Simpson Thacher & Bartlett LLP.
5.2*	Opinion of Greenberg Traurig, LLP.
10.1†	Credit Agreement, dated as of May 7, 2010, among C.P. Atlas Acquisition Corp. (to be merged with and into American Renal Holdings Inc.), C.P. Intermediate Holdings, LLC, Bank of America, N.A. and the other lenders party thereto.
10.2*	Guaranty, dated as of May 7, 2010, among C.P. Atlas Acquisition Corp. (to be merged with and into American Renal Holdings Inc.), the guarantors named therein, Bank of America, N.A. and the other secured parties named therein.
10.3†	Security Agreement, dated as of May 7, 2010, among C.P. Atlas Acquisition Corp. (to be merged with and into American Renal Holdings Inc.), the guarantors party thereto and Bank of America, N.A., as administrative agent.
10.4*	Employment Agreement, dated as of March 22, 2010, among American Renal Management LLC, American Renal Holdings Inc. and Christopher T. Ford.
10.5*	Employment Agreement, dated as of March 22, 2010, among American Renal Management LLC, American Renal Holdings Inc. and Syed T. Kamal.
10.6*	Employment Agreement, dated as of March 22, 2010, among American Renal Management LLC, American Renal Holdings Inc. and Joseph A. Carlucci.
10.7*	Employment Agreement, dated as of March 22, 2010, among American Renal Management LLC, American Renal Holdings Inc. and John J. McDonough.
10.8*	2010 C.P. Atlas Holdings, Inc. Stock Incentive Plan.
10.9*	Subscription Agreement, dated as of May 7, 2010, by and between C.P. Atlas Holdings, Inc., Centerbridge Capital Partners, L.P., Centerbridge Capital Partners SBS, L.P., Centerbridge Capital Partners Strategic, L.P., AFOS Equity LLC, Black Diamond Partners LLC, JJ Bark LLC and Tribeca Investments LLC.
10.10*	Equity Contribution, Exchange and Subscription Agreement, dated as of March 22, 2010, by and between C.P. Atlas Holdings, Inc. and Joseph A. Carlucci.
10.11*	Equity Contribution, Exchange and Subscription Agreement, dated as of March 22, 2010, by and between C.P. Atlas Holdings, Inc. and Christopher T. Ford 2005 Grantor Retained Annuity Trust.
10.12*	Equity Contribution, Exchange and Subscription Agreement, dated as of March 22, 2010, by and between C.P. Atlas Holdings, Inc. and Christopher T. Ford 2008 Grantor Retained Annuity Trust.
10.13*	Equity Contribution, Exchange and Subscription Agreement, dated as of April 30, 2010, by and between C.P. Atlas Holdings, Inc. and Wesley V. Forgue.
10.14*	Equity Contribution, Exchange and Subscription Agreement, dated as of March 22, 2010, by and between C.P. Atlas Holdings, Inc. and Syed T. Kamal.

EXHIBIT NUMBER	EXHIBIT DESCRIPTION
10.15*	Equity Contribution, Exchange and Subscription Agreement, dated as of March 22, 2010, by and between C.P. Atlas Holdings, Inc. and John McDonough.
10.16*	Equity Contribution, Exchange and Subscription Agreement, dated as of April 29, 2010, by and between C.P. Atlas Holdings, Inc. and Lakhan Saha.
10.17*	Transaction Fee and Advisory Services Agreement, dated as of May 7, 2010, by and among C.P. Atlas Holdings, Inc., C.P. Atlas Intermediate Holdings, LLC, American Renal Holdings Inc. and Centerbridge Advisors, LLC.
12.1†	Statement of Computation of Ratio of Earnings to Fixed Charges.
21.1*	Subsidiaries of American Renal Holdings Inc.
23.1*	Consent of Simpson Thacher & Bartlett LLP (included as part of its opinion in Exhibit 5.1).
23.2*	Consent of Greenberg Traurig, LLP (included as part of its opinion in Exhibit 5.2).
23.3†	Consent of Grant Thornton LLP.
24.1*	Power of Attorney (included in the signature pages of this registration statement).
25.1*	Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of Wilmington Trust FSB as trustee under the Indenture, dated May 7, 2010, among American Renal Holdings Inc., the guarantors named therein and Wilmington Trust FSB, as trustee.
99.1*	Form of Letter of Transmittal.
99.2*	Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
99.3*	Form of Letter to Clients.
99.4*	Form of Notice of Guaranteed Delivery.

* Previously filed.

† Filed herewith.

EX-3.27

Exhibit 3.27

OPERATING AGREEMENT

of

__________________ DIALYSIS CENTER LLC

THIS AGREEMENT is made and entered into as of this ___ day of ______ 2010, by and between American Renal Associates, LLC, a Delaware limited liability company (“ARA”) ____________________ as the Members. ______________ and its successors are referred to herein collectively as the “Partner.”

WHEREAS, the Members, upon execution of this Agreement and payment of the Capital Contributions indicated herein, shall own, in the aggregate, all of the membership interests in _____________ Dialysis LLC (the “Company”);

WHEREAS, the Members have formed the Company for the purpose of establishing, owning and operating one or more outpatient renal dialysis facilities (the “Facility”) to be located in or around ____________, ____________; and

WHEREAS, the Members and the Company desire to enter into this Agreement to provide for the terms and conditions governing the structure, operation and management of the Company;

NOW, THEREFORE, in consideration of these premises and the mutual covenants and agreements hereinafter set forth, the Members and the Company hereby agree as follows:

ARTICLE I

DEFINED TERMS

Section 1.1. Defined Terms. When used in this Agreement, the following terms shall have the meanings set forth below:

“Act” means the Limited Liability Company Act of the State of Delaware, as amended from time to time.

“Actor” has the meaning specified in Section 6.8 of this Agreement.

“Affiliate” means: (i) any, direct or indirect, shareholder, partner, member or other type of equity owner of a Member, (ii) any officer, director, manager or executive of any Member, (iii) any Person or group of Persons who, directly or indirectly, controls, is controlled by, or is under common control with, a Member or any Person or entity referred to in clause (i) or (ii) above, and (iv) any entity which, directly or indirectly, is controlled by one or more of the individuals referred to in clauses (i), (ii) or (iii) above.

“Affiliated Entity” means any limited liability company, corporation or trust the equity holders or beneficiaries of which consist exclusively of (i), in relation to a Member which is not a natural Person, such Member and/or one or more of its Affiliates, and (ii), in relation to a Member who is a natural Person, such Member and/or one or more of such Member’s descendants, spouse, parents, parents-in-law, nephews, nieces, brothers, sisters, brothers-in-law or sisters-in-law.

“Agreement” means this Operating Agreement as amended or restated from time to time.

“ARA” has the meaning specified in the Preamble to this Agreement.

“ARM” has the meaning specified in Section 5.13 of this Agreement.

“Audit” has the meaning specified in Section 7.2 of this Agreement.

“Bankruptcy” has the meaning specified in Section 9.1 of this Agreement.

“Base Rate” has the meaning specified in Section 9.3(b) of this Agreement.

“Bona Fide Offer” has the meaning specified in Section 8.5(a) of this Agreement.

“Breach Event” has the meaning specified in Section 9.1 of this Agreement.

“Buying Member” has the meaning specified in Section 8.5(b) of this Agreement.

“Capital Account” means the capital account of a Member maintained as provided in Section 3.6 hereof.

“Capital Call” has the meaning specified in Section 3.3 of this Agreement.

“Capital Contribution” means the contributions by Members to the Company’s capital in the form of cash or property.

“Capital Contribution Commitment” has the meaning specified in Section 3.1 of this Agreement.

“Charter Document” means the Company’s Certificate of Formation filed with the Delaware Secretary of State (in the form attached hereto as Exhibit A), as amended or restated from time to time.

“Code” means the Internal Revenue Code of 1986 (or the corresponding provisions of any succeeding law), as amended from time to time.

“Company” means ____________ Dialysis Center LLC.

“Company Property” means all property, real or personal, tangible or intangible, then owned by the Company.

“Departing Member” has the meaning specified in Section 9.1 of this Agreement.

-2-

“Facility” has the meaning specified in the Preamble to this Agreement.

“Major Actions” means any of the following (i) a sale, transfer, liquidation or reorganization of all or substantially all of the Company Property, a merger of the Company or a dissolution of the Company, (ii) a lease of all or substantially all of the Company Property, (iii) the admission of a new or substituted Member, (iv) an amendment or modification of this Agreement or the Charter Document (including any conversion or reformation thereof), except where such amendment or modification is determined necessary by counsel for the Company to comply with applicable law, (v) any transaction or contract (including any amendment thereto) with a Member or an Affiliate of a Member, except to the extent specifically provided for hereunder, (vi) any distribution in kind of assets of the Company, (vii) any capital calls except to the extent specifically provided for herein, (viii) any Transfer of all or any part of a Membership Interest other than a Permitted Transfer, and (ix) any substantial expansion or capital improvement of the Facility.

“Majority in Interest” means in excess of 50%.

“Majority in Interest of the Members” means those Members holding over 50% of the total Membership Interests.

“Management Agreement” has the meaning specified in Section 5.13 of this Agreement.

“Managing Committee” means the committee referenced as such in Article VI of this Agreement.

“Medical Director Agreement” has the meaning specified in Section 5.13 of this Agreement.

“Member” means each Person who executes this Agreement or a counterpart hereof as a member of the Company and, in the case of any new Member or transferee of a Membership Interest, is admitted as a Member pursuant to the provisions of Section 5.5 and Article VIII of this Agreement.

“Membership Interest” means a Member’s ownership interest in the Company; the ratio that a Member’s Membership Interest bears to the total Membership Interests of the Company shall be set forth on Exhibit B which shall be amended from time to time to reflect changes in ownership.

“Net Cash Flow” has the meaning specified in Section 4.2(e) of this Agreement.

“Net Losses” has the meaning specified in Section 4.2(c) of this Agreement.

“Net Profits” has the meaning specified in Section 4.2(c) of this Agreement.

“Note” has the meaning specified in Section 9.3(b) of this Agreement.

-3-

“Occurrence” has the meaning specified in Section 9.1 of this Agreement.

“Permitted Transfer” has the meaning specified Section 8.1 of this Agreement.

“Person” means any natural person; partnership, limited partnership, trust, estate, association, limited liability company, or corporation; any custodian, nominee, trustee, executor, administrator, or other fiduciary; or any other individual or entity in its own or any representative capacity.

“Sale Transaction” has the meaning specified in Section 8.8 of this Agreement.

“Selling Member” has the meaning specified in Section 8.5 of this Agreement.

“State” means, when used without any particular state reference, the State of ____________; and “state”, when used generically, shall be deemed to include the State of ______.

“Tax Matters Partner” has the meaning specified in Section 7.2 of this Agreement.

“Transfer” and “Transferred” have the meanings specified in Section 8.1 of this Agreement.

“Treasury Regulations or Treas. Reg.” means the regulation(s) in connection with the provisions of the Code.

“Withdrawal” has the meaning specified in Section 9.1 of this Agreement.

Section 1.2. Other Terms. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Act.

ARTICLE II

FORMATION; GENERAL PURPOSES

Section 2.1. Formation. The Company was formed on __________, 2009, in expectation of execution of this Agreement by the filing of the Charter Document with the Secretary of State of the State of Delaware. The Company’s affairs and the conduct of its business shall be governed by the Act, except as otherwise expressly provided herein and in the Charter Document. The Members further agree and acknowledge, solely to the extent permitted by law, that the provisions set forth in the Charter Document shall supersede any comparable provisions contained herein and the provisions contained in the Charter Document shall govern any conflict by and between these provisions and the provisions contained therein.

-4-

Section 2.2. Purposes.

(a) The Company shall engage in any lawful activity for which limited liability companies may be organized under the Act, including, but not limited to:

(i) the establishment, ownership and operation of one or more outpatient renal dialysis facilities to be located in or around ____________; and

(ii) such other activities or transactions necessary or appropriate in connection with or to effectuate the foregoing.

(b) It is expressly understood by the parties hereto that the Company’s operations and its Members are subject to various State and federal laws regulating permissible relationships between the Members and entities such as the Company, including 42 U.S.C. §1320a-7(b)b (the “Fraud and Abuse Statute”) and 42 U.S.C. §1395nn (the “Stark Act”). It is the intent of the parties that the Company operate in a manner consistent with the foregoing statutes. Accordingly, notwithstanding anything else contained in this Agreement to the contrary,

(i) No contract or other agreement may be entered into by the Company with any Member or Affiliate or any other third party, unless such contract or agreement is at arms-length and for fair market value compensation and is approved in accordance with this Agreement;

(ii) There is no intent to induce the referral of patients to the Company by any Person in connection with the formation and operation of the Company, and each Member, its Affiliates and its employees are not precluded or discouraged from referring patients to any provider of services other than the Company, and the referral of patients to the Company is not a condition to remaining a Member;

(iii) The Company or any Member (or any Person acting on behalf of a Member) shall not loan funds to or guarantee a loan for any Member to enable such Member to make a Capital Contribution;

(iv) Any distributions to Members shall be directly proportional to such Members’ then Membership Interests; and

(v) The Company shall not furnish or provide services to patients who are referred by Members, their Affiliates or employees, on terms different from those offered to patients referred by any other Person.

Section 2.3. Term of Company’s Existence. The Company commenced its existence on the date the Charter Document was filed with the Delaware Secretary of State and shall continue in existence until dissolved pursuant to the terms hereof or as otherwise provided by law.

-5-

Section 2.4. Title to Company Property. Company Property shall be held and owned in the name of the Company. Conveyance of Company Property shall be made in the name of the Company.

Section 2.5. Principal Office. The principal office of the Company shall be located at such office, either within or without the State, as the business of the Company may require from time to time.

Section 2.6. Fiscal Year. The fiscal year of the Company shall be the calendar year unless otherwise designated by the Managing Committee.

Section 2.7. Registered Agent/Registered Office. If the Act requires the Company to maintain a registered agent and/or a registered office, the address of such registered agent and/or registered office may be identical to the principal office of the Company or may be some other address designated by the Members.

ARTICLE III

MEMBERSHIP INTEREST; CAPITAL CONTRIBUTIONS; FINANCING

Section 3.1. Capital Contributions of Members. As of the date of this Agreement, each Member agrees to contribute to the Company the consideration set forth on the attached Exhibit B (the “Capital Contribution Commitment”) in exchange for the Membership Interest percentage set forth therein. Capital Contributions may be required to be made by the Members, up to the amounts of the respective Capital Contribution Commitments of the Members, in one or more than one installment.

Section 3.2. Financing; Guaranties. It is contemplated that the Company will obtain a loan to fund all or a substantial portion of the costs of development, construction, and equipping the Facility, as well as for the initial working capital. Such loan will be secured by all the assets of the Company and each of the Members agrees to guaranty the loan, in addition to their Capital Contribution Commitments; provided that the amount of obligations of the Company which any Member may be required to guaranty shall not exceed such Member’s Membership Interest percentage of the total amount of obligations of the Company which all Members are required to guaranty. Guaranty obligations incurred pursuant to this Section 3.2 shall not constitute Capital Contributions, unless and except to the extent that payment is made upon demand under a guaranty (and, in the case of any Excess Guaranty Payment, where an election shall not have been made to treat the same as a loan) in accordance with Section 3.4.

Section 3.3. Additional Capital Contributions. In addition to each Member’s Capital Contribution Commitment and guaranties as provided above, in the event the Managing Committee determines that the Company requires additional financing for its operations and such financing is not reasonably available from third parties, then upon a vote of a Majority in Interest of the Members, the Company may require from time to time each Member to make an additional Capital Contribution to the Company in proportion to such Member’s percentage of Membership Interest (a “Capital Call”). Any request for additional

-6-

Capital Contributions hereunder shall specify in detail the proposed use of the funds subject to the Capital Call. If a Member fails to timely make a required Capital Contribution after a Capital Call (which shall be no sooner than twenty (20) days after the date of such Capital Call), the other Members by a written vote of a Majority in Interest delivered to the Company may exercise either of the options set forth below within thirty (30) days of the due date of such Capital Contribution (such options to be the sole remedy of the Company and the other Members for the failure of a Member to make the required Capital Contribution pursuant to a Capital Call):

(i) the amount contributed by the other Member(s) shall be treated as loans to the Company and shall be repayable to the loaning Member(s) (in proportion to their loans) with interest payable monthly in arrears from the date of such loans to the date of repayment at a rate equal to the higher of twelve percent (12%) per annum or five percent (5%) in excess of the Base Rate. Such loan(s) shall be repaid prior to any payment of any distributions of Net Cash Flow pursuant to Section 4.2 hereof and shall have a maturity date five years from the date made; or

(ii) the amounts advanced by such other Members shall dilute the Membership Interest of any Member who failed to make its Capital Contribution pursuant to the Capital Call and increase the Membership Interest of the other Members in accordance with the following formula (and such changed percentages shall apply for all purposes of this Agreement thereafter): each Member’s Membership Interest percentage shall be equal to (a) its prior Capital Contributions plus the Capital Contribution made by it in connection with such Capital Call, divided by (b) the sum of all prior Capital Contributions plus the sum of all Capital Contributions made in connection with such Capital Call.

provided, however, that where the additional capital funding is required for short-term cash flow needs and the other Member(s) fail to make the Capital Contributions pursuant to the Capital Call therefor, ARA agrees that it shall make such capital available in the form of a loan pursuant to clause (i) above for a term not to exceed sixty (60) days, and if such loan and accrued interest thereon is not paid in full on or before the sixtieth day after made, ARA shall exercise with respect to such unpaid amount either of the options set forth in clauses (i) and (ii) above.

Section 3.4. Guaranty Payments. In the event that any demand is made under a guaranty or guaranties by a Member of obligations of the Company, all guaranty payments made by any Member, up to the extent of such guaranty payments equal to such Member’s Membership Interest percentage of the total guaranty payments made by all Members, shall be deemed a Capital Contribution to the Company. To the extent that any Member shall have made a payment upon demand under a guaranty or guaranties of obligations of the Company in excess of such Member’s Membership Interest percentage of the total guaranty payments made by all Members (the “Excess Guaranty Payment”), then at the option of the Member (or, as the case may be, the Majority in Interest of the Members) which shall have made Excess Guaranty Payments, (a) such Member or Members shall have a right of contribution against any Member failing to pay its Membership Interest percentage of the total guaranty payments, (b) such Excess Guaranty Payments shall be treated as loans to the Company in accordance with the provisions of Section 3.3(i), or (c) such Excess Guaranty

-7-

Payments shall dilute the Membership Interest of each Member which shall not have made guaranty payments equal to such Member’s Membership Interest percentage of the total guaranty payments made by all Members, in accordance with the provisions of Section 3.3(ii). Any Capital Contribution by a Member resulting from a payment upon demand under such Member’s guaranty of obligations of the Company, shall not be deemed to reduce any outstanding and unpaid Capital Contribution commitments of such Member.

Section 3.5. Member Loans. To the extent the Company requires additional financing for its operations and such financing is not reasonably available from third parties, then upon a vote of a Majority in Interest of the Members, the Company may borrow funds from Members (with each Member being given the opportunity, without obligation, to participate in such loan as a creditor in proportion to his then Membership Interest) up to the amount determined necessary, such borrowing to be in accordance with Section 3.3(i) above.

Section 3.6. Capital Accounts. A Capital Account shall be established and maintained by the Company for each Member in accordance with and subject to the requirements of the Code.

(a) In general, each Member’s Capital Account is increased by:

(i) the amount of money contributed by the Member;

(ii) the fair market value of property contributed by the Member (net of liabilities secured by the property that the Company is considered to assume or take subject to); and

(iii) allocations of Net Profits (as defined below) to such Member.

(b) In general, each Member’s Capital Account is decreased by:

(i) the amount of money distributed to such Member;

(ii) the fair market value of property distributed to such Member (net of liabilities secured by the distributed property that the Member is considered to assume or take subject to); and

(iii) allocations of Net Losses (as defined below) to such Member.

(c) If all or a portion of a Member’s Membership Interest is Transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent it relates to the Transferred Membership Interest.

(d) This Section 3.6 and other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulations Section 1.704-1(b), and shall be interpreted and applied in a manner consistent with the Agreement and such Treasury Regulations. If the Tax Matters Partner designated pursuant to Section 7.2 determines that it is prudent to modify the manner in which the Capital Accounts, or any charges or credits thereto (including charges or credits relating to liabilities which are

-8-

secured by contributions or distributed property or which are assumed by the Company or by Members), are computed in order to comply with such Regulations, the Tax Matters Partner may make such modification, but only if it will not have a material effect on the amounts to be distributed to any Member pursuant to Section 4.2 or pursuant to Section 10.4 upon the dissolution of the Company. The Tax Matters Partner also shall (i) make recommendations to the Members of any adjustments that may be necessary or appropriate to maintain equality between the Capital Accounts of the Members and the amount of capital reflected on the Company’s balance sheet, as computed for book purposes, in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(q), and (ii) make recommendations to the Members of any appropriate modifications in the event unanticipated events might otherwise cause any one or more of the provisions of this Agreement not to comply with Treasury Regulations Section 1.704-1(b). The Members shall then vote, within five (5) days of receipt of any such suggestions in written form. Members holding greater than 66% of the Membership Interests must consent before any such adjustments or modifications are made.

Section 3.7. Contingency Reserves. The Managing Committee shall have the right to set aside Company funds in such reserves as it in its reasonable discretion determines to be prudent for the operation of the Company’s business, including any sums the Managing Committee deems necessary to reserve for the future payment or reduction of any Company obligations.

Section 3.8. Return of Capital Contributions. Except as otherwise provided in this Agreement, no Member shall be entitled to demand the return of the Member’s Capital Account or Capital Contribution at any particular time, except upon dissolution of the Company. Except as otherwise provided in this Agreement, no Member shall be entitled at any time to demand or receive property other than cash. Unless otherwise provided by law, no Member shall be personally liable for the return or repayment of all or any part of any other Member’s Capital Account or Capital Contribution, it being expressly agreed that any such return of capital pursuant to this Agreement shall be made solely from the assets (which shall not include any right of contribution from a Member) of the Company.

Section 3.9. No Third Party Beneficiary Rights. The provisions of this Agreement are not intended to be for the benefit of any creditor or any other Person (other than a Member in its capacity as such) to whom any debts, liabilities or obligations are owed by (or who otherwise has any claim against) the Company or any of the Members or any Affiliate; and no such creditor or other Person shall obtain any right under any of such provisions or shall by reason of any of such provisions make any claim in respect of any debt, liability or obligation (or otherwise) against the Company or any of the Members or any Affiliate.

ARTICLE IV

DISTRIBUTIONS AND ALLOCATIONS

Section 4.1. Company Expenses. The Company will pay all expenses of the Company, including without limitation (i) all costs of borrowed money, taxes, insurance and assessments with respect to the assets and operation of the Company; (ii) legal and accounting fees incurred by the Company in the operation of its business (but not legal

-9-

expenses incurred by the Members in connection with the negotiation of this Agreement and related initial agreements for the establishment of the Company); and (iii) expenses for the acquisition, financing, operation, construction and disposition of the assets of the Company. Except upon express agreement, no Member shall have any liability for the expenses of the Company.

Section 4.2. Allocation and Distribution of Profits and Losses.

(a) The Company’s Net Profits (as hereinafter defined), if any, shall be allocated no less often than annually to Members in proportion to holdings of Membership Interests.

(b) The Company’s Net Losses (as hereinafter defined), if any, shall be allocated no less often than annually to Members in proportion to holdings of Membership Interests.

(c) For purposes of this Agreement, “Net Profits” shall mean, the gross revenues of the Company, less all losses, deductions and expenses of the Company, all as determined by generally accepted accounting principles applicable to partnerships. “Net Losses” shall mean, for purposes of this Agreement, losses as determined by generally accepted accounting principles applicable to partnerships.

(d) If any items to be allocated pursuant to this Article IV include any ordinary income attributable to the recapture of any prior income tax deductions including, without limitation, the recapture of depreciation, as specified in Sections 1245 and 1250 of the Code, such items of recapture, insofar as may be practicable, shall be allocated among the Members in the same proportions as the original allocations of the deductions giving rise to such recapture items.

(e) Distributions shall be made only out of available Net Cash Flow and at such times and in such amounts as is determined by a Majority in Interest of the Members. Distributions shall, when made, be made to the Members in accordance with their Membership Interests at the time thereof. For purposes of this Agreement, “Net Cash Flow” shall mean all cash revenues, funds and proceeds received by the Company (including both operating and non-operating cash revenues), less the sum of the following:

(i) all payments of the current portion of the principal and interest due on any indebtedness of the Company and all other sums paid to lenders;

(ii) all cash expenditures paid incident to the operations of the Company’s business; and

(iii) such working capital reserves and reserves for contingencies determined to be advisable by the Managing Committee.

(f) In furtherance of Section 4.2(e) above, the Members have agreed that, as provided below, during each calendar year the Company shall distribute to each Member who is a Member on a date of distribution an amount sufficient to pay federal, state and local

-10-

income taxes on an amount equal to such Member’s share of Company’s taxable income for the applicable calendar year, but only to the extent (1) available cash for distribution exceeds a ninety (90) day reserve for working capital, as determined by the Company, and (2) such distributions will not cause a breach under any loan, lease or other Company documents. Distributions under this Section 4.2(f) with respect to any calendar year shall occur on the following dates for each calendar year: March 31, May 31, August 31 and December 31. All payments shall be based on a Company estimate of the tax liability for the applicable calendar year taking into account unused losses from previous calendar years (assuming they are used solely to offset Company taxable income until fully used) with the first payment on March 31 to equal twenty five percent (25%) of that estimate, the second payment on May 31 to equal fifty percent (50%) of that estimate, reduced by prior payments, the third payment on August 31 to equal seventy five percent (75%) of that estimate, reduced by prior payments, and the final payment on December 31 to equal one hundred percent (100%) of that estimate, reduced by prior payments. Additional payments shall be made in April of the year following an applicable calendar year if the estimated payments were not sufficient to cover the entire tax liability; and if the estimated payments exceeded the actual tax liability, the excess shall offset following year mandatory distributions hereunder. For the purposes of this Section 4.2(f), it is agreed that distributions will be based on the assumption that income taxes are being paid at the highest federal, state and local income tax rates applicable to individuals. Should part of the taxable income allocable with respect to any year be treated as a long-term capital gain or have any other preferential tax treatment, appropriate adjustments in the mandatory distributions hereunder shall be made to reflect any lower maximum federal income tax rate which may apply. All determinations as to the amount of taxable income and its treatment, including, for example, the character of a portion of said income as long-term capital gains, shall be made by the accountants for the Company, whose determination, as reflected in the tax return of the Company, shall be final and binding on all concerned.

Section 4.3. Retroactive Allocation Not Permitted. The income, gains, losses, deductions and credits of the Company are allocable to a Member only if they are earned, paid or incurred by the Company during the portion of the fiscal year that such Member is a Member of the Company.

Section 4.4. Return of Improper Distributions. If a Member receives a distribution in violation of the Act, such Member agrees to return the full amount of such distribution to the Company promptly after such Member’s discovery of (or receipt from the Company of notice of) the improper distribution.

ARTICLE V

MEMBERS

Section 5.1. Members. The Company shall have one class of Members. The criteria for participation in the Company as a Member shall be determined from time to time by the Members.

-11-

Section 5.2. Other Business Interests of the Members. This Agreement shall not be construed to grant any right, privilege or option to a Member to participate in any manner in any other business, corporation, joint venture, limited partnership, general partnership, limited liability company, limited liability partnership or investment in which the other Members may participate, including those which may be the same as or similar to the Company’s business. Each Member expressly waives the doctrine of corporate opportunity (or any analogous doctrine) with respect to any other such business, corporation, partnership or investment of any other Member or Affiliate.

Section 5.3. Acknowledgement. Each of the parties hereto agrees that nothing contained herein shall be construed as restricting or limiting any Member’s (or Affiliate’s) right, to the extent applicable, to practice medicine, consistent with the Member’s (or Affiliate’s) medical judgment and medical standards and ethics, or limit the ability of the Member (or Affiliate) to participate in managed care programs on a professional basis, or to provide services to end stage renal disease patients at other dialysis facilities.

Section 5.4. Liability of Members/Duty of Care.

(a) No Member shall have any personal liability whatsoever whether to the Company, to any of the other Members, or to the creditors of the Company (except to the extent specifically assumed by such Member) for the debts of the Company or any of the Company’s losses beyond its, his or her Capital Contribution to the Company. The failure of the Company to observe any formalities or requirements relating to the exercise of its powers or the management of its business or affairs under this Agreement or the Act shall not be grounds for the imposition of personal liability on the Members for the Company’s liabilities.

(b) The Members’ duty of care in the discharge of their duties as Members to the Company shall be limited to refraining from engaging in grossly negligent conduct, intentional misconduct, or knowing violations of law. In discharging their respective duties, the Members shall be fully protected in relying in good faith upon the records required to be maintained under this Agreement and upon such information, opinions, reports or statements by any of its agents, or by any other Person, as to matters the Member reasonably believes are within such other Person’s professional or expert competence and who has been selected by or on behalf of the Company, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, profits or losses of the Company or any other facts pertinent to the existence and amount of assets from which distributions to the Members might properly be paid.

Section 5.5. Admission of Additional Members. Additional and substituted Members may be admitted to the Company upon the approval of the Members, which approval may be withheld for any reason or no reason. The vote to admit a new Member shall set forth the Membership Interest that the new Member shall acquire and the Capital Contribution required for acquisition of such Membership Interest. Upon approval of a new Member by the Members, such new Member shall be admitted to the Company upon execution and delivery of a counterpart of this Agreement attached hereto as Exhibit C, delivery of the required Capital Contribution and execution and/or delivery of such other documents, instruments and items as the Members may require. Exhibit B shall be amended from time to time to reflect the admission of new Members.

-12-

Section 5.6. Meetings. Meetings of the Members shall be held on such dates as shall be mutually agreed to by the Members holding a Majority in Interest of the Membership Interests for the transaction of such business as may come before the meeting.

Section 5.7. Notice of Meetings. Written notice stating the place, date, and hour of the meeting shall be delivered not less than five (5) nor more than sixty (60) days before the date of the meeting or, in the case of a merger, consolidation, share exchange, dissolution or sale, lease or exchange of substantially all of the Company’s assets, not less than twenty (20) nor more than sixty (60) days before the meeting, to each Member of record entitled to vote at such meeting. When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken.

Section 5.8. Quorum. The Members holding a Majority in Interest of the Membership Interests entitled to vote upon a matter, present in person or represented by proxy, shall constitute a quorum at any meeting of Members. In the case that a Member is a Person other than an individual, such Member may be represented at any meeting of the Members by a duly authorized representative of the Member. Withdrawal of Members from any meeting shall not cause failure of a duly constituted quorum at that meeting; provided, however, any voting requirement set forth in this Agreement shall require the vote of the percentage indicated of all of the Company’s outstanding Membership Interests not simply those present at the meeting.

Section 5.9. Proxies. Each Member entitled to vote at a meeting of Members or to express consent or dissent to action in writing without a meeting may authorize another Person or Persons to act for such Member by proxy. Such proxy shall be filed with the Company before or at the time of the meeting.

Section 5.10. Voting of Membership Interests; Telephonic Communication. There shall be no cumulative voting of Membership Interests. Except as specifically set forth herein, at a meeting of Members at which a quorum is present, in person or represented by proxy, the affirmative vote of the Members holding of at least a Majority in Interest of the Membership Interests entitled to vote on the matter shall be the act of the Members. Notwithstanding the foregoing, the affirmative vote of Members holding at least sixty-six percent (66%) of the Membership Interests shall be required with respect to Major Actions. Members may participate in any act at any meeting of the Members by means of conference telephone or similar communication equipment if all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this sentence shall constitute presence at the meeting.

Section 5.11. Action by Consent of Members without a Meeting. Any action required to be taken at a meeting of the Members or any other action which may be taken at a meeting of the Members, may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by the Members holding the Membership Interests

-13-

required to vote affirmatively with respect to the subject matter thereof. A notice of any action approved by the Members pursuant to this Section 5.11, shall be sent to all Members who did not consent in writing to such action setting forth the action so approved within ten (10) business days of the date of such written consent.

Section 5.12. Voting by Ballot. Voting on any question may be by voice unless the presiding officer shall order or any Member shall demand that voting be by ballot.

Section 5.13. Other Agreements. Concurrent with the execution of this Agreement, the parties shall also enter in the following agreements:

(a) A Management Agreement (the “Management Agreement”) between the Company and American Renal Management LLC (“ARM”), an Affiliate of ARA under 100% common ownership, pursuant to which ARM will provide certain management services to the Company in connection with the operation of the Facility.

(b) A Medical Director Agreement (the “Medical Director Agreement”) between the Company and ____________, pursuant to which he will provide certain medical director services to the Company in connection with the operation of the Facility.

ARTICLE VI

MANAGING COMMITTEE

Section 6.1. Managing Committee. The Members agree that the management of the Company shall be vested in the Members, but that the Members shall appoint a Managing Committee annually for purposes of running the operations of the Company. The Managing Committee shall be the governing body for the Company, as provided herein. The number of members of the Managing Committee shall be set at five (5) members, with ARA entitled to appoint three (3) members and Partner being entitled to appoint two (2) members. Subject to the provisions hereof, each Member shall have the right to appoint and remove its representatives to the Managing Committee at any time subject solely to its discretion. Any member of the Managing Committee not designated in accordance with the foregoing procedure shall be chosen and removed by the Members pursuant to Section 5.10 hereof.

Section 6.2. Rights and Powers of Managing Committee.

(a) Except for powers expressly reserved to the Members under the Charter Document, this Agreement or the Act including, but not limited to, approving Major Actions, the Managing Committee shall have full, exclusive and complete power to manage and control the business and affairs of the Company. The members of the Managing Committee shall constitute the “managers” of the Company under the Act. Except as otherwise provided for herein, decisions of the Managing Committee shall require the affirmative vote of a majority of the members of the Managing Committee. Notwithstanding the foregoing, ARM shall be responsible for running the day-to-day operations of the Facility pursuant to the terms of the Management Agreement.

-14-

(b) Any third party not affiliated with the Members shall be entitled to rely on all actions of any member of the Managing Committee. A third party not affiliated with the Members shall not be required to verify whether any consents required hereby have been obtained from or by the Managing Committee.

Section 6.3. Action by Managing Committee. Any action required or permitted to be taken at a meeting of the Managing Committee may be taken without a meeting, without prior notice, if a consent in writing, setting forth the action so taken, shall be signed by members of the Managing Committee representing the percentage of members necessary to approve the action at a meeting. Such action shall be as valid a Company action as though it had been authorized at a meeting of the Managing Committee. A notice of any action approved by the Managing Committee pursuant to this Section 6.3 shall be sent to all members of the Managing Committee who did not consent in writing to such action setting forth the action so approved within ten (10) business days of the date of such written consent. Members of the Managing Committee may participate in and act at any meeting of the Managing Committee by means of conference telephone or similar communications equipment if all persons participating in the meeting can hear each other simultaneously, and participation in a meeting pursuant to this sentence shall constitute presence at the meeting.

Section 6.4. Actions Regarding Member Transactions. Any decision regarding any contract or other arrangement between the Company and a Member or an Affiliate or Affiliated Entity with respect to a Member may only be approved by the Members pursuant to Section 5.10 and shall be treated as a Major Action for purposes of such approval. The Managing Committee shall make a recommendation to the Members regarding such contract or other arrangement.

Section 6.5. Filing of Documents. The Managing Committee shall file or cause to be filed all certificates or documents as may be determined by the Managing Committee to be necessary or appropriate for the formation, continuation, qualification and operation of a limited liability company in the State and any other state in which the Company may elect to do business. To the extent that the Managing Committee determines the action to be necessary or appropriate, the Managing Committee shall do all things to maintain the Company as a limited liability company under the laws of the State of Delaware and any other state in which the Company may elect to do business.

Section 6.6. Meetings of the Managing Committee. The Managing Committee shall hold such meetings at such times and places and in accordance with such notice as it determines. Meetings of the Managing Committee shall be held on such dates and times as determined by the chairperson of the Managing Committee or as determined or approved by a majority of the members of the Managing Committee. A special meeting of the Managing Committee may be called by any member of the Committee. Written notice of the date, hour and purpose of a special meeting shall be delivered not less than five (5) nor more than sixty (60) days before the meeting to each member of the Managing Committee. A majority of the members of the Managing Committee shall constitute a quorum at any meeting thereof. Withdrawal of a member of the Managing Committee shall not cause failure of a duly constituted quorum at that meeting.

-15-

Section 6.7. Managing Committee Chairperson. The Chairperson of the Managing Committee shall be appointed by the members of the Managing Committee and shall preside at meetings of the Managing Committee. The Chairperson shall serve for a one year term and until their successor is appointed by the members of the Managing Committee.

Section 6.8. Duties of Members of Managing Committee; Indemnification.

(a) In taking actions or making decisions on behalf of the Company in the capacity as a member of the Managing Committee, each member of the Managing Committee shall take all actions and make all decisions with respect to the Company consistent with the standards applicable with respect to the duty of care and duty of loyalty owed by a manager under the Act, or a director of a corporation to its shareholders under the business corporation laws of the State of Delaware.

(b) The Company shall, to the maximum extent provided by law, indemnify, defend and hold harmless the members of the Managing Committee, the Members, their respective Affiliates and any officers of the Company (each, an “Actor”), to the extent of the Company’s assets, for, from and against any liability, damage, cost, expense, loss, claim or judgment incurred by the Actor arising out of any claim based upon acts performed or omitted to be performed by the Actor in connection with the business of the Company, including without limitation, attorneys’ fees and costs incurred by the Actor in settlement or defense of such claims. Notwithstanding the foregoing, no Actor shall be so indemnified, defended or held harmless for (i) claims based upon its acts or omissions which constitute fraud, gross negligence, or intentional misconduct, (ii) for acts or omissions for which the Company is prohibited from indemnifying under the Act or (iii) for such Actor’s failure to satisfy his obligations under Section 6.8(a) hereof.

(c) An Actor (as defined paragraph (b) above) shall not be personally liable for the failure of the Company to make distributions as set forth in this Agreement and shall not be liable, responsible, accountable in damages or otherwise to the Company or the Members for any act or omission which entitles such Actor to the right to indemnification under Section 6.8(b). Notwithstanding the foregoing, an Actor shall in all instances be liable for acts or omissions which constitute fraud, gross negligence, or intentional misconduct.

(d) Nothing in this Section 6.8 or in Section 5.4 applies to acts, omissions, claims or liabilities arising under or in connection with the Management Agreement or the Medical Director Agreement.

-16-

Section 6.9. Compensation of Managing Committee.

(a) The Company will not pay the Managing Committee any fees or other compensation for its services except as set forth in this Agreement; provided, however, that the foregoing sentence shall not preclude members of the Managing Committee from receiving compensation from the Company for other services rendered to the Company.

(b) The Company will reimburse members of the Managing Committee for all actual out-of-pocket third-party expenses reasonably incurred by them in connection with the carrying out of the duties set forth in this Agreement.

ARTICLE VII

REPORTS, TAXES, ETC.

Section 7.1. Deposits. All funds of the Company not otherwise employed shall be deposited from time to time to the credit of the Company in such banks, trust companies or other financial institutions as the Members may select by a Majority in Interest of the Members.

Section 7.2. Tax Matters Partner. The Members shall designate the “Tax Matters Partner” (as defined in Code Section 6231). The Tax Matters Partner is authorized and required to represent the Company (at the Company’s expense) in connection with all examinations of the Company’s affairs by tax authorities, including, without limitation, administrative and judicial proceedings (collectively, “Audits”), and to expend Company funds for professional services and costs associated therewith. The Members agree to cooperate with each other and to do any and all things reasonably required to conduct such proceedings. The Company shall indemnify and hold harmless the Tax Matters Partner and its directors, officers, employees and agents from and against any loss, expense, damage or injury suffered or sustained by them by reason of any acts, omissions or alleged acts or omissions undertaken by the Tax Matters Partner in good faith and arising out of its activities on behalf of the Company as Tax Matters Partner. Except for any such actions (or omissions) which constitute fraud, gross negligence or intentional misconduct and subject to the immediate preceding sentence, the Members specifically acknowledge that the Tax Matters Partner shall not be liable, responsible or accountable in damages or otherwise to the Company or any Member with respect to any action taken by the Tax Matters Partner with respect to an Audit.

Section 7.3. Company Books, Records and Information. At all times during the existence of the Company, the Company shall keep or cause to be kept complete and accurate books and records necessary, appropriate and adequate for the Company’s business. To the maximum extent permitted by the Act, the Company shall permit each Member and its authorized representatives to inspect, audit and/or copy books, records and other information about the Company or its business for any purpose reasonably related to the Member’s Membership Interest in the Company. A Member desiring to exercise such rights shall do so by written notice to the Company stating the purpose of the request. The cost of inspecting, auditing and copying records shall be borne by the requesting Member. The Company may

-17-

not deny or delay a Member’s access to records on the basis of confidentiality or any other grounds except to the extent provided by law; provided that the requesting Member shall undertake not to disclose to any Person other than the Company, other Members and the requesting Member’s professional advisors who agree to be bound by such undertaking any secret or confidential information, patient lists or other data or proprietary information of or pertaining to the Company or ARA to the extent such information is not generally ascertainable or known or is not a matter of public knowledge.

Section 7.4. Reports to Members. The Company shall use its best efforts to provide each Member, by the first day of April of each year, information regarding the Company needed by such Member in the preparation of such Member’s federal and state tax returns for the prior fiscal year and by the thirtieth day of April of each year a copy of an accountant’s report for the prior fiscal year or a summary thereof.

Section 7.5. Taxation as a Partnership. The Members and the Tax Matters Partner acknowledge that the Company shall be taxed for federal income tax purposes as a partnership, and that they shall take all actions and file all elections consistent with assuring such treatment.

ARTICLE VIII

MEMBERSHIP INTERESTS AND THEIR TRANSFER; RESTRICTIONS

Section 8.1. Restriction on Transfers.

(a) Except as expressly permitted herein, no Member may Transfer all or any part of such Member’s Membership Interest without the prior written approval of the Members, which shall not be unreasonably withheld. For purposes hereof, the term “Transfer” shall mean (the term “Transferred” having the corresponding meaning in the past tense) any transfer, sale, gift, bequest, pledge, encumbrance, hypothecation, assignment, or other act or action, either voluntary or involuntary, by operation of law or otherwise, whereby or as a result of which, a Member’s ownership, interest or rights in any Membership Interest are disposed of, impaired or affected in any way. Any Membership Interest Transferred in contravention of this Article VIII shall be void.

(b) Notwithstanding anything in this Agreement to the contrary, any Transfer (i) by one Member to another Member, (ii) by a Member to an Affiliated Entity, or (iii) by a Member to a physician serving as the Medical Director of the Company or an Affiliated Entity thereof, shall, subject to Sections 8.2 and 8.4 hereof, be deemed approved (any Transfer enumerated in this sentence, any Transfer pursuant to Sections 8.8, and any other Transfer with the prior written approval of the Members being referred to herein as a “Permitted Transfer”). The transferee of any Permitted Transfer shall become a substituted Member hereunder (subject to Sections 8.2 and 8.4) with all rights of his transferor with respect to the interest transferred, including voting rights. A Permitted Transfer will not be subject to the provisions of Section 8.5 hereof.

-18-

Section 8.2. Additional Limitations on Transfer. Notwithstanding any other provision in this Agreement to the contrary: a Transfer shall not be valid or of any force or effect if it would, in the opinion of counsel for the Company, result in (i) a violation of any applicable United States federal or state securities laws or (ii) the Company being treated for income tax purposes as an association taxable as a corporation. As a condition to the Company recognizing the effectiveness of any Transfer, the Members may require the transferor or transferee, as the case may be, to execute, acknowledge and deliver to the Company such instruments of transfer, assignment and assumption and such other certificates, representations and documents, and to perform all such other acts, which the Members may deem necessary or desirable to: (i) verify the Transfer, (ii) confirm that the proposed transferee has accepted, assumed and agreed to be subject and bound by all of the terms, obligations and conditions of this Agreement, (iii) maintain the status of the Company as an association taxable as a partnership for federal tax purposes, and (iv) assure compliance with any applicable state and federal laws, including securities laws and regulations.

Section 8.3. Irreparable Harm. Each Member specifically acknowledges that a breach of Section 8.1 would cause the Company and the Members to suffer immediate and irreparable harm which could not be remedied by the payment of money. In the event of a breach or threatened breach by a Member of the provisions of this Section, the Company or other Members shall be entitled to injunctive relief to prevent or end such breach without the requirement to post bond. Nothing herein shall be construed to prevent the Company or other Members from pursuing any other remedies available to them for such breach or such threatened breach, including the recovery of monetary damages.

Section 8.4. All Membership Interests Subject to Restriction. In the case of any approved transfer or disposition of a Membership Interest or the addition of a new Member, each such transferee or new Member shall execute an appropriate instrument agreeing to be bound by this Agreement as a Member and any guaranty or other instrument which has been executed by the other Members in connection with their ownership in the Company or financing which the Company has obtained. Any permitted transferee or transferees of a Membership Interest shall receive and hold such Membership Interest subject to this Agreement and all of the restrictions, obligations and rights created hereunder, and the Members and each transferee shall be bound by their obligations under this Agreement with respect to each subsequent transferee.

Section 8.5. Right of First Refusal. A Member may sell all of its Membership Interests in the Company if the sale is effected as follows:

(a) In the event a Member (a “Selling Member”) receives a bona fide written offer (a “Bona Fide Offer”) from an unrelated third party, such Selling Member shall first offer to sell the Membership Interest that the Selling Member intends to sell to the third party to the Company and to the other Members by delivering a written offer to the Company and to the other Members on the same terms and conditions of such Bona Fide Offer or its cash equivalent (based on fair market value of the Bona Fide Offer if it contains consideration other than cash) and a copy of said Bona Fide Offer.

-19-

(b) The Company shall have the right to accept the offer as to all, but not less than all, of the Membership Interest to be sold pursuant to the Bona Fide Offer by notifying the Selling Member and all other Members within thirty (30) days after receipt of the offer from the Selling Member. The Company’s decision as to whether to accept the Selling Member’s Bona Fide Offer shall be determined by Majority in Interest of the Members entitled to vote thereon, it being agreed that the Selling Member is not entitled to vote thereon and shall not be counted for purposes of determining a quorum at such a meeting of the Members. If the Company does not accept as to all of the offered Membership Interest of the Selling Member, the other Members shall have ten (10) days from receipt of the notice from the Company indicating it is not accepting to accept the offer as to all, but not less than all, of the Membership Interest to be sold pursuant to the Bona Fide Offer by notifying the Selling Member of such other Member’s acceptance (any such accepting Member being a “Buying Member”) within such ten (10) day period. If there is more than one Buying Member, each shall buy that portion of the Selling Member’s Membership Interest to be sold equal to his Membership Interest as a percentage of the Membership Interests of all Buying Members.

(c) If the offer of the Selling Member is accepted as to all of the offered Membership Interest by the Company or any other Member, the closing of said purchase and sale shall take place at the office of the Company or such other place as the parties may agree at a date designated by the Company or the Buying Member, if applicable, which shall not be more than sixty (60) days following the expiration of the period set forth in Section 8.5(b), at which closing the purchase and payments shall be made to the Selling Member by the Company or the Buying Member, if applicable, as contemplated by the Bona Fide Offer.

(d) If the offer of the Selling Member is not accepted as to all of the offered Membership Interest pursuant to the preceding paragraphs (a) through (c) within the times specified above, then the Selling Member may then sell the offered Membership Interest on the same terms and conditions as set forth in the Bona Fide Offer except that the transferee of such Membership Interest shall have only the rights specified in Section 8.6 unless such transferee is admitted to the Company as a substituted Member in accordance with the terms and conditions of this Agreement. Such sale must be made within one (1) year after the date the offer was originally made to the Company and the other Members and the purchaser must agree in writing to be bound by this Agreement, including the restrictions on transfer, as fully as though such purchaser were the Member which sold the Membership Interest, otherwise, this Agreement shall remain in full force and effect as to the Selling Member and any transfer shall be null and void ab initio.

(e) Upon the closing of the sale of Membership Interest pursuant to this Section, the selling and purchasing parties shall execute and deliver to each other such documents which may be required to carry out their undertakings hereunder including the payment of cash and/or delivery of notes and the assignment and delivery of certificates, if any. Upon the closing, the Selling Member shall also deliver to the Company the resignation of such Member’s nominee, if any, as member of the Managing Committee and the purchasing party shall be entitled to elect its nominees in their stead to the Managing Committee. Any acquisition of a Selling Member’s interest by the Company or one or more Buying Members shall be a Permitted Transfer.

-20-

Section 8.6. Assignee of a Member’s Membership Interest. If a Member transfers all or any portion of its Membership Interest (whether voluntarily, involuntarily or by operation of law or otherwise) and a Person acquires such Membership Interest but is not admitted as a substitute Member pursuant to the terms of this Agreement, such Person shall:

(a) be treated as an assignee of a Member’s Membership Interest;

(b) have no right to participate in the business and affairs of the Company or to exercise any rights of a Member under this Agreement or the Act; and

(c) share in the Company’s distributions or allocations of income, gains, losses, deductions, credit, or similar items on the same basis as the transferring Member.

Section 8.7. No Right to Withdraw. Except as otherwise provided herein, no Member may withdraw from the Company without the consent of all of the other Members. Any other withdrawal constitutes a material breach of this Agreement for which the Company shall have all remedies provided under this Agreement and applicable law.

Section 8.8. Drag Along Rights. Notwithstanding any other provision contained in this Agreement to the contrary, the other Members agree that in the event ARA either (a) proposes to transfer its Membership Interest to one or more independent third parties in any bona fide arm’s-length transaction or a series of transactions or (b) proposes to have the Company sell or transfer substantially all of its assets to one or more independent third parties in any bona fide arm’s-length transaction or related series of transactions (collectively a “Sale Transaction”), which, in either event, is in connection with or part of a roll-up, initial public offering or similar transaction involving all or substantially all of the other dialysis facilities in which ARA or its Affiliates own interests, ARA shall have the right to do so and may, upon notice to the other Members, compel them to participate in such Sale Transaction in accordance with this Section 8.8 at the same purchase price per percentage of Membership Interest as ARA, and to vote their Membership Interests in favor of such Sale Transaction. In connection with a Sale Transaction, the Members other than ARA shall not be required to make any representations or warranties concerning any matter other than title to their Membership Interests and their power and authority to enter into the Sale Transaction, and shall not be required to indemnify the purchaser for any matter other than the breach of such representations and warranties. The allocation of the aggregate purchase price in the Sales Transaction between the Company and the other ARA and/or ARA Affiliate facilities to be sold shall be determined by a qualified independent investment banker or appraiser, the cost of whose services will be borne by ARA. The Members agree that a breach of this Section 8.8 by any Member would cause ARA to suffer immediate and irreparable harm and that ARA shall have the right to seek specific performance of the provisions of this Section 8.8 in the event of such breach.

-21-

ARTICLE IX

PURCHASE OBLIGATIONS AND RIGHTS

Section 9.1. Termination of Membership. It is agreed and understood that the provisions of this Article IX serve the best interests of the Company and its Members by providing for the Company’s ability to remain a closely-held business entity, the equity owners of which (including for this purpose equity owners whose Affiliates are actively involved in the conduct of the Company’s business). The Membership Interest in the Company of a Member which is a Medical Director (as defined in the Medical Director Agreement) or an Affiliated Entity to which a Medical Director shall have transferred his Membership Interest pursuant to a Permitted Transfer, shall continue until such Member suffers an Occurrence. For purposes of this Article IX, an “Occurrence” shall be defined as: (a) such Member dissolves, or the death, retirement or Disability (as defined in the Medical Director Agreement) of such Member; (b) such Member files for bankruptcy or has a petition in bankruptcy filed against it, which filing is not dismissed within sixty (60) days (“Bankruptcy”); (c) such Member withdraws by prior written notice as a Member of the Company or provides notice of its desire to sell its Membership Interest (a “Withdrawal”); or (d) such Member materially breaches this Agreement which breach is not cured within thirty (30) days of the Member’s receipt of written notice of the breach by the Company (any of the events described in this clause (d), a “Breach Event”). A Member who suffers an Occurrence, or which is an Affiliated Entity deriving its Membership Interest from a Medical Director who suffers an Occurrence, shall hereinafter be referred to as a “Departing Member.”

Section 9.2. Redemption by Company in Event of an Occurrence.

(a) In the event of an Occurrence, the Company shall have the option to redeem all, but not less than all, of the Departing Member’s Membership Interest at the redemption price determined in accordance with Section 9.3.

(b) The Company’s decision as to whether to exercise the foregoing option shall be determined pursuant to Section 5.10 of this Agreement; provided, however, that for purposes of such determination, the Departing Member shall not be entitled to vote and the presence of any such Persons shall not be required for purposes of a quorum. The Company shall give notice of its intent to redeem the Membership Interest of the Departing Member by serving written notice upon the Departing Member (or the Departing Member’s personal representative, heir, successor, trustee or custodian) within sixty (60) days following the Company’s notification or discovery of the Occurrence. The Departing Member shall be obligated to sell such Member’s Membership Interest to the Company upon receipt of such notice upon the terms and conditions of the redemption price determined in accordance with Section 9.3 below. The closing of the redemption of Departing Member’s Membership Interest shall proceed in accordance with Section 9.4 below.

(c) Notwithstanding the preceding Sections 9.2(a) and (b), so long as one or more physicians serving as the Medical Director of the Company (or an Affiliated Entity deriving its Membership Interest from such a person) remains as a Member, the Company’s

-22-

redemption option under this Article IX shall be subject to a first refusal right of such Member, or Members pro rata, to purchase all but not less than all of the Membership Interest of the Departing Member, at a fair market price determined mutatis mutandis in accordance with Section 9.3(a)(ii) below. In order to exercise such first refusal right, such Member or Members shall give written notice to the Departing Member and the Company within thirty (30) days following the Company’s notification of the Occurrence; and the Member or Members exercising such first refusal right shall purchase, and the Departing Member shall be obligated to sell, the Departing Member’s Membership Interest upon receipt of such notice at such fair market value purchase price and upon the other terms and conditions (as applicable) set forth in Sections 9.3, 9.4, and 9.5.

Section 9.3. Purchase Price and Payment Terms.

(a) In the event a Member suffers an Occurrence, the purchase price for the Departing Member’s Membership Interest shall be calculated as follows:

(i) In the event the Occurrence occurs as the result of a Breach Event or Withdrawal, the purchase price shall be equal to the book value of the Departing Member’s Membership Interest as of the date of the Occurrence based upon the Book Value of the Company’s assets (including accounts receivable) and liabilities determined by the accountant who regularly prepares the Company’s financial statements as of the date of the Occurrence. “Book Value” shall be defined as the carrying value of all assets (including accounts receivable) less the sum of all liabilities and the amount of any distributions payable to the Members which were declared prior to the date of the Occurrence. Book Value shall be determined in accordance with the regular financial statements prepared by or for the Company and in accordance with the accounting principles consistently applied by the Company in preparing such financial statements.

(ii) In the event the Occurrence occurs other than by reason of a Breach Event or Withdrawal, the purchase price shall be equal to the fair market value of the Departing Member’s Membership Interest as of the date of the Occurrence as determined by an independent appraiser. In the event the Company and the Departing Member cannot agree upon a mutually acceptable appraiser within fifteen (15) days of the date of the Occurrence, the Company and the Departing Member shall each select an appraiser, which appraisers shall in turn select a third appraiser who shall determine the fair market value of the Departing Member’s Membership Interest.

In determining the Book Value or fair market value of the Company, no asset value shall be included which is attributable to life insurance policies (or proceeds thereof) on Members or their Affiliates.

(b) The Company shall pay the purchase price as calculated pursuant to Section 9.3(a) in cash at the closing of any purchase by reason of an Occurrence. However, in the event such purchase price exceeds Two Hundred Fifty Thousand Dollars ($250,000), the Company may, at its option: (i) elect to pay the amount of the purchase price in full by certified check or bank draft; or (ii) elect to pay the amount of the purchase price in three (3) equal annual installments by delivery at the closing of the certified check or bank draft equal

-23-

to one installment and an installment promissory note (the “Note”) for the balance, bearing interest from the date of the closing at an interest rate equal to the prime rate of interest as of the date of closing as published by The Wall Street Journal (the “Base Rate”) plus one percent (1%). The interest rate applicable to the principal of the Note shall be adjusted annually on the anniversary of the closing. If the Company elects to pay in installments and issues a Note, the Note will be secured by a pledge or perfected security interest in the Membership Interest being acquired, with all voting rights and distributions with respect to the secured interest being payable to the Company except for periods where there is an uncured default in payment under the Note.

Section 9.4. Closing. The closing of any purchase pursuant to this Article IX shall occur in accordance with the following terms and conditions:

(a) The closing of said purchase and sale shall take place at the office of the Company or such other place as the parties may agree at a date designated by the Company which shall not be more than sixty (60) days following the date the Company (or, as applicable, first refusal purchaser) provides notice of its intent to purchase the Departing Member’s Membership Interest; and

(b) At the closing, the documents representing the interest in the Membership Interest to be purchased shall be executed and delivered in form ready for transfer against delivery of the payments as determined under Section 9.3 hereof.

Section 9.5. Documents. Upon the closing of the sale of a Departing Member’s Membership Interest, the selling and purchasing parties shall execute and deliver to each other the various documents which shall be required to carry out their undertakings hereunder including the payment of cash and/or delivery of notes. Upon the closing and such deliveries, the Departing Member shall transfer to the Company such Departing Member’s Membership Interest free and clear of any liens, charges or other encumbrances and shall deliver to the Company the resignation of such Departing Member’s nominees, if any, as member of the Managing Committee.

ARTICLE X

DISSOLUTION, TERMINATION AND LIQUIDATION

Section 10.1. Events Causing Dissolution of the Company. The first to occur of the following events shall cause a dissolution of the Company:

(a) the unanimous consent of the Members to the dissolution of the Company;

(b) the sale or exchange of all or substantially all of the Company Property; or

(c) the failure of the Company to obtain within six (6) months after the date of this Agreement a binding commitment from a third-party lender for the Facility loan referred to in Section 3.2, unless a Majority in Interest of the Members shall elect in its or their sole discretion (by a signed instrument in writing) to extend such 6-month period for a specified additional period of time, or to continue the Company notwithstanding the failure to obtain such financing commitment.

-24-

The Company shall continue in existence notwithstanding, and shall not be dissolved by, the termination of any Member’s membership in the Company, so long as there remains another Member of the Company.

Section 10.2. Effect of Dissolution. If the Company is dissolved, the Company shall be wound up and terminated in accordance with this Article X.

Section 10.3. Final Accounting. Upon dissolution of the Company, an accounting shall be made of the Capital Account of each Member, of the Company Property and of the Company’s liabilities and operations, from the date of the last previous accounting to the date of such dissolution.

Section 10.4. Distribution. Following the payment of all debts and liabilities of the Company (other than loans or advances that have been made by any of the Members) and all expenses of liquidation, and subject to the right of the Members to set up cash reserves as deemed reasonably necessary for any contingent or unforeseen liabilities or obligations of the Company, the proceeds of the liquidation and any other funds of the Company shall be distributed in the following order of priority:

(a) First, to the repayment of any loans or advances that may have been made by any of the Members to the Company, but if the amount available for repayment of such loans or advances shall be insufficient, then to the Members on account thereof in proportion to their respective advances;

(b) Second, after allocation of all income, profits, losses and deductions in accordance with Article IV hereof and after adjustment to the Capital Accounts required by Treasury Regulation §1.704-1(b), to the Members in payment of the amount of their Capital Accounts, but if the amount available for such repayment shall be insufficient, then to the Members on account thereof in proportion to their respective Capital Accounts; and

(c) Then, to the Members in accordance with their Membership Interests.

Each Member shall look solely to the Company Property for all distributions with respect to the Company and shall have no recourse against any other Member therefor. No Member shall have any rights to demand or receive Company Property other than cash upon distribution and liquidation of the Company, but the Members may, in their discretion by vote, distribute Company Property other than cash to a Member.

Section 10.5. Termination. A reasonable time shall be allowed for the orderly liquidation of the assets of the Company and the discharge of liabilities to creditors so as to enable the Members to minimize the normal losses attendant upon a liquidation. Each of the Members shall be furnished with a statement prepared by the Company’s accountant, which shall set forth the property and liabilities of the Company as of the date of complete liquidation. Upon compliance with the distribution plan set forth herein, the Members shall

-25-

cease to be such, and the Members or an authorized person shall execute, acknowledge and cause to be filed an appropriate certificate or articles of dissolution of the Company in accordance with the Act. Upon completion of the dissolution, winding up, liquidation and distribution of the liquidation proceeds, the Company and this Agreement shall terminate.

ARTICLE XI

MISCELLANEOUS

Section 11.1. Notices and Addresses. All notices required to be given under this Agreement shall be in writing and shall be mailed by certified or registered mail, sent by overnight delivery service or shall be personally delivered. Such notices as are mailed shall be mailed to the Members at the addresses set forth on Exhibit B hereof or such other address of which a Member may notify the Company and the other Members in writing in accordance with this Section. Any notices to be sent to the Company shall be mailed to the principal office of the Company with a copy to the principal offices of ARA. Any notices provided for hereunder shall be deemed given as of the fifth (5^th) business day after mailing by certified or registered mail, the next business day after deposit with a recognized overnight delivery service or upon personal delivery, as the case may be.

Section 11.2. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without regard to the conflict of law provisions thereof.

Section 11.3. Amendments. This Agreement may be amended only as set forth in Section 5.10 hereof, provided no amendment shall be made which adversely effects a Member without such Member’s prior written consent.

Section 11.4. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Members, their permitted assigns and their respective legal representatives, heirs, successors and assigns. This Agreement is entered into between the Company and the Members for the exclusive benefit of the Company, its Members and their successors and assigns. This Agreement is expressly not intended for the benefit of any creditor of the Company or other Person. Except and only to the extent required by applicable law, no such creditor or third party shall have any rights under this Agreement or any other agreement between the Company and the Members with respect to any Capital Contribution or otherwise.

Section 11.5. Counterparts. This Agreement may be executed in multiple and separate counterparts, each of which shall be an original, but all of which together shall constitute one instrument.

Section 11.6. Entire Agreement. This Agreement, the Exhibits attached hereto and the provisions contained in the Charter Document constitute the entire understanding of the parties hereto with respect to the subject matter hereof and no amendment, modification or alteration of the terms hereof shall be binding unless the same be in writing and adopted in accordance with the provisions of this Agreement.

-26-

Section 11.7. Partition Action. Each of the parties hereto irrevocably waives any right which such party may have to maintain an action for partition with respect to Company Property.

Section 11.8. Validity and Severability. If any provision herein shall be held invalid or unenforceable, such provision shall not affect the validity or enforceability of any other provisions hereof, all of which other provisions shall, in such case, remain in full force and effect.

Section 11.9. Statutory References. Each reference in this Agreement to a particular statute or regulation, or a provision thereof, shall, at any particular time, be deemed to be a reference to such statute or regulation, or provision thereof, or to any similar or superseding statute or regulation, or provision thereof, as at such time is in effect.

Section 11.10. Securities Laws; Other Restrictions. THE MEMBERSHIP INTERESTS HAVE BEEN ACQUIRED BY THE MEMBERS FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “SECURITIES ACT”) OR THE SECURITIES LAWS OF ANY STATE OR ANY OTHER JURISDICTION. SUCH MEMBERSHIP INTERESTS MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF COMPLIANCE WITH THIS AGREEMENT, THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS AND, IF THE COMPANY SO REQUESTS, UNTIL THE COMPANY HAS RECEIVED FROM COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY AN OPINION REASONABLY ACCEPTABLE TO THE COMPANY THAT THE PROPOSED DISPOSITION WILL NOT VIOLATE THE SECURITIES ACT OR ANY OTHER APPLICABLE SECURITIES LAWS AND THE TRANSFER HAS BEEN ACCOMPLISHED IN ACCORDANCE WITH THE OTHER TERMS OF THIS AGREEMENT.

Section 11.11. Section Titles. Section titles are for descriptive purposes only and shall not control or alter the meaning of this Agreement as set forth in the text.

Section 11.12. Arbitration. All disputes or claims arising under this Agreement shall be settled by arbitration before a panel of three (3) arbitrators, with one arbitrator designated by the party initiating the dispute or claim and the other arbitrator designated by the Members (excluding any Member initiating the dispute or claim), and the third arbitrator designated by the first two. The arbitration shall be conducted in accordance with the rules of the American Arbitration Association, and shall take place in Boston, Massachusetts. Arbitration may be commenced at any time by any Member giving written notice to the other Member or Members requesting that the matter in dispute be referred to arbitration in accordance with this Section 11.12. The first two arbitrators shall be designated within thirty (30) days after such written request for arbitration; and the third arbitrator shall be selected within thirty (30) days after the appointment of the second of the first two arbitrators. In the event that one or more arbitrators shall fail to be selected within the periods above specified, the remaining arbitrator or arbitrators shall be selected pursuant to the rules of the American Arbitration Association from the Commercial Arbitration Panel maintained by such Association. Any award rendered by the arbitrators shall be conclusive and binding upon the

-27-

parties. This provision for arbitration shall be specifically enforceable by the parties. Each of the parties to a dispute submitted to arbitration shall pay its own expenses of arbitration and the expenses of the arbitrators shall be equally shared; provided, however, that if in the opinion of a majority of the arbitrators, any claim or any defense or objection thereto was frivolous or in bad faith, the arbitrators may assess all or any part of the arbitration expenses of the other party, including reasonable attorneys’ fees, and of the arbitrators against the party raising such unreasonable claim, defense or objection.

Section 11.13. Limited Renegotiation. This Agreement shall be construed to be in accordance with any and all applicable federal and state laws, including without limitation Medicare, Medicaid and other federal and state statutes, rules, regulations, principles and interpretations. In the event there is a change in Medicare, Medicaid or other federal or state statutes, rules, regulations, principles or interpretations that renders any of the material terms of this Agreement unlawful or unenforceable as determined by qualified health law counsel for a Member or the Company, any Member shall have the immediately right to initiate the good faith renegotiation of the affected term or terms of this Agreement, upon notice to the other Members, to remedy such condition. Should the parties be unable in good faith to renegotiate the term or terms so affected so as to bring it/them into compliance with the statute, rule, regulation, principle or interpretation that rendered it/them unlawful or unenforceable, within ninety (90) days of the date on which notice of a desired renegotiation is given, then any Member shall be entitled, after the expiration of said initial ninety (90) day period, to require that the Company be sold.

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

AMERICAN RENAL ASSOCIATES, LLC
By:
	Name:
	Title:
PARTNER:
By:
	Name:
	Title:

-28-

Shareholders of Partner:

Name:

Name:

Name:

-29-

EXHIBIT A

CHARTER DOCUMENT

EXHIBIT B

MEMBERSHIP

Member Name and Address	Percentage of Membership Interest			Capital  Contribution Commitment
American Renal Associates, LLC 66 Cherry Hill Drive Beverly, MA 01915		%		Up to $	________	*
		%		Up to $	________	*
Totals:		100	%	Up to $	_________

* The Capital Contribution commitments listed above may be made in one or more than one installment. The maximum Capital Contribution amounts listed above shall be deemed, notwithstanding the actual making of such Capital Contribution in more than one installment, absolute Capital Contribution Commitments of the Members and not “additional Capital Contributions” pursuant to a Capital Call under Section 3.3 of the Agreement. If made in more than one installment, each installment shall be made by each Member in his or its Membership Interest percentage of the total installment amount required of all Members on any occasion. Guaranty obligations incurred pursuant to Section 3.2 shall not constitute Capital Contributions, unless and except to the extent that payment is made upon demand under any guaranty (and, in the case of any Excess Guaranty Payment, where an election shall not have been made to treat the same as a loan) in accordance with Section 3.4. Any Capital Contribution by a Member resulting from a payment upon demand under such Member’s guaranty shall not be deemed to reduce any outstanding and unpaid Capital Contribution commitment of such Member.

EXHIBIT C

COUNTERPART SIGNATURE PAGE

_____________ DIALYSIS CENTER LLC

The undersigned, desiring to become a Member in ______________ Dialysis Center LLC, a Delaware limited liability company (the “Company”), and further desiring to be bound by the Operating Agreement between the Company and all of its Members, dated as of _________, 2007 (the “Agreement”), hereby joins in and executes the Agreement, agrees to all of the terms and conditions of the Agreement and agrees to be bound thereby. The undersigned authorizes this Signature Page to be attached to the Agreement.

Dated as of _________________.

Percentage of Membership Interests: __________________

Capital Contribution: _______________________________

Signature:

Member Name:

Address:

21005

EX-10.1

Exhibit 10.1

Published CUSIP Number:                     

$25,000,000

CREDIT AGREEMENT

Dated as of May 7, 2010

among

C.P. ATLAS ACQUISITION CORP. (to be merged

with and into American Renal Holdings Inc.),

as the Borrower,

C.P. ATLAS INTERMEDIATE HOLDINGS, LLC,

as Holdings,

BANK OF AMERICA, N.A.,

as Administrative Agent, Swing Line Lender and

L/C Issuer,

and

The Other Lenders Party Hereto

BANC OF AMERICA SECURITIES LLC,

BARCLAYS CAPITAL and

WELLS FARGO SECURITIES, LLC,

as Joint Lead Arrangers and Book Managers

TABLE OF CONTENTS

Section		Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.01.	Defined Terms		1
1.02.	Other Interpretive Provisions		30
1.03.	Accounting Terms		30
1.04.	Rounding		31
1.05.	Times of Day		31
1.06.	Letter of Credit Amounts		31
1.07.	Currency Equivalents Generally		31
ARTICLE II
THE COMMITMENTS AND CREDIT EXTENSIONS
2.01.	The Loans		31
2.02.	Borrowings, Conversions and Continuations of Loans		31
2.03.	Letters of Credit		33
2.04.	Swing Line Loans		39
2.05.	Prepayments		41
2.06.	Termination or Reduction of Commitments		41
2.07.	Repayment of Loans		43
2.08.	Interest		43
2.09.	Fees		44
2.10.	Computation of Interest and Fees		44
2.11.	Evidence of Debt		44
2.12.	Payments Generally; Administrative Agent’s Clawback		45
2.13.	Sharing of Payments by Lenders		46
2.14.	Cash Collateral		47
2.15.	Defaulting Lenders		48
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01.	Taxes		49
3.02.	Illegality		51
3.03.	Inability to Determine Rates		52
3.04.	Increased Costs		52
3.05.	Compensation for Losses		53
3.06.	Mitigation Obligations; Replacement of Lenders		54
3.07.	Survival		54
ARTICLE IV
CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
4.01.	Conditions of Initial Credit Extension		54
4.02.	Conditions to All Credit Extensions		56
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01.	Existence, Qualification and Power		57

-i-

		Page
5.02.	Authorization; No Contravention		57
5.03.	Governmental Authorization; Other Consents		57
5.04.	Binding Effect		57
5.05.	Financial Statements; No Material Adverse Effect		58
5.06.	Litigation		58
5.07.	Ownership of Property; Liens; Investments		58
5.08.	Environmental Compliance		59
5.09.	Insurance		59
5.10.	Taxes		59
5.11.	ERISA Compliance		59
5.12.	Subsidiaries; Equity Interests; Loan Parties		60
5.13.	Margin Regulations; Investment Company Act		60
5.14.	Disclosure		60
5.15.	Compliance with Laws		60
5.16.	Intellectual Property; Licenses, Etc		61
5.17.	Solvency		61
5.18.	Labor Matters		61
5.19.	Collateral Documents		61
5.20.	Use of Proceeds		61
5.21.	Status as Senior Debt		61
ARTICLE VI
AFFIRMATIVE COVENANTS
6.01.	Financial Statements		61
6.02.	Certificates; Other Information		62
6.03.	Notices		64
6.04.	Payment of Taxes		64
6.05.	Preservation of Existence, Etc		64
6.06.	Maintenance of Properties		64
6.07.	Maintenance of Insurance		64
6.08.	Compliance with Laws		64
6.09.	Books and Records		65
6.10.	Inspection Rights		65
6.11.	ERISA Compliance		65
6.12.	Covenant to Guarantee Obligations and Give Security		65
6.13.	Compliance with Environmental Laws		67
6.14.	Further Assurances		67
6.15.	Material Contracts		67
6.16.	Qualified Subsidiaries		67
6.17.	Post-Closing Deliverables		68
ARTICLE VII
NEGATIVE COVENANTS
7.01.	Liens		68
7.02.	Indebtedness		70
7.03.	Investments		73
7.04.	Fundamental Changes		76
7.05.	Dispositions		76
7.06.	Restricted Payments		78
7.07.	Change in Nature of Business		79
7.08.	Transactions with Affiliates		80
7.09.	Burdensome Agreements		81
7.10.	Financial Covenants		83

-ii-

		Page
7.11.	Sale and Leaseback Transactions		83
7.12.	Amendments of Organization Documents		83
7.13.	Fiscal Year		83
7.14.	Prepayments, etc. of Indebtedness		83
7.15.	Holding Company		83
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
8.01.	Events of Default		84
8.02.	Remedies upon Event of Default		85
8.03.	Application of Funds		86
ARTICLE IX
ADMINISTRATIVE AGENT
9.01.	Appointment and Authority		87
9.02.	Rights as a Lender		87
9.03.	Exculpatory Provisions		87
9.04.	Reliance by Administrative Agent		88
9.05.	Delegation of Duties		88
9.06.	Resignation of Administrative Agent		88
9.07.	Non-Reliance on Administrative Agent and Other Lenders		89
9.08.	No Other Duties, Etc		89
9.09.	Administrative Agent May File Proofs of Claim		89
9.10.	Collateral and Guaranty Matters		90
9.11.	Secured Cash Management Agreements and Secured Hedge Agreements		91
ARTICLE X
CONTINUING GUARANTY
10.01.	Guaranty		91
10.02.	Rights of Lenders		92
10.03.	Certain Waivers		92
10.04.	Obligations Independent		92
10.05.	Subrogation		92
10.06.	Termination; Reinstatement		92
10.07.	Subordination		92
10.08.	Stay of Acceleration		93
10.09.	Condition of Borrower		93
ARTICLE XI
MISCELLANEOUS
11.01.	Amendments, Etc		93
11.02.	Notices; Effectiveness; Electronic Communications		94
11.03.	Reliance by Administrative Agent, L/C Issuer and Lenders		96
11.04.	No Waiver; Cumulative Remedies; Enforcement		96
11.05.	Expenses; Indemnity; Damage Waiver		96
11.06.	Payments Set Aside		98
11.07.	Successors and Assigns		98
11.08.	Treatment of Certain Information; Confidentiality		101
11.09.	Right of Setoff		102
11.10.	Interest Rate Limitation		102
11.11.	Counterparts; Integration; Effectiveness		102

-iii-

		Page
11.12.	Survival of Representations and Warranties		102
11.13.	Severability		103
11.14.	Replacement of Lenders		103
11.15.	Governing Law; Jurisdiction; Etc		103
11.16.	WAIVER OF JURY TRIAL		104
11.17.	No Advisory or Fiduciary Responsibility		104
11.18.	Electronic Execution of Assignments and Certain Other Documents		105
11.19.	USA PATRIOT Act		105

-iv-

SCHEDULES
2.01	Commitments and Applicable Percentages
5.03	Certain Authorizations
5.06	Litigation
5.07(b)	Existing Liens
5.07(c)	Material Real Property
5.12	Subsidiaries and Other Equity Investments; Loan Parties
5.16	Intellectual Property Matters
5.19	Collateral Documents
6.12	Guarantors
6.17	Post-Closing Deliverables
7.02	Existing Indebtedness
7.03	Existing Investments
7.08	Affiliate Transactions
11.02	Administrative Agent’s Office, Certain Addresses for Notices
EXHIBITS
Form of
A	Committed Loan Notice
B	Swing Line Loan Notice
C	Note
D	Compliance Certificate
E	Assignment and Assumption
F	Guaranty
G	Security Agreement
H	Tax Status Certificates
I	Perfection Certificate
J-1	Opinion Matters – Counsel to Loan Parties
J-2	Opinion Matters – Local Counsel to Loan Parties
K	Solvency Certificate
L	Intercreditor Agreement

-v-

CREDIT AGREEMENT

This CREDIT AGREEMENT (as amended, modified, waived, amended and restated, or otherwise changed, in each case in accordance with the terms hereof, this “Agreement”) is entered into as of May 7, 2010, among C.P. ATLAS ACQUISITION CORP., a Delaware corporation (“MergerCo” or the “Borrower”), which shall be merged with and into AMERICAN RENAL HOLDINGS INC. (the “Company”) on the Closing Date, upon and following which the Borrower shall be the Company, C.P. ATLAS INTERMEDIATE HOLDINGS, LLC, a Delaware limited liability company (“Holdings”), each lender from time to time party hereto (collectively, the “Lenders” and individually, a “Lender”), and BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer.

PRELIMINARY STATEMENTS:

Sponsor has established C.P. Atlas Holdings, Inc., a Delaware corporation (“Parent”), which has established Holdings, and MergerCo was organized by Holdings to acquire the Company.

Pursuant to the contribution and merger agreement (together with all exhibits, schedules and disclosure letters thereto) dated March 22, 2010 (the “Purchase Agreement”) among Holdings, Parent, MergerCo, the Company, certain shareholders of the Company party thereto and Wachovia Capital Partners GP I, LLC, MergerCo shall consummate a merger (the “Merger”) with and into the Company, and the Company shall be the surviving corporation and thereafter the Borrower hereunder.

MergerCo has requested that (a) on the Closing Date, the Lenders lend to the Borrower up to $5,000,000 in order to finance costs and expenses incurred in connection with the Transaction and (b) from time to time, the Lenders make revolving credit loans to the Borrower and the L/C Issuer issue letters of credit for the account of the Borrower.

In furtherance of the foregoing, the Borrower has requested that the Lenders provide a revolving credit facility, and the Lenders have indicated their willingness to lend and the L/C Issuer has indicated its willingness to issue letters of credit, in each case, on the terms and subject to the conditions set forth herein.

In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

1.01. Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below:

“Acquired Debt” means, with respect to any specified Person:

(a) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Subsidiary of, such specified Person; and

(b) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

“Acquisition Consideration” means the purchase consideration for any Investment made pursuant to Section 7.03(g) and all other payments by Holdings or any of its Subsidiaries in exchange for, or as part of, or in connection with, such Investment, whether in cash or non cash (including by exchange of Equity Interests or of properties or otherwise) and whether payable at or prior to the consummation of such Investment or deferred for payment at any future time, whether or not any such future payment is subject to the occurrence of any contingency, and includes any and all payments representing the purchase price (including the amount of any deferred purchase price obligations) and any assumptions of Indebtedness, “earn-outs” and other agreements to make any payment the

amount of which is, or the terms of payment of which are, in any respect subject to or contingent upon the revenues, income, cash flow or profits (or the like) of any person or business; provided that any such future payment that is subject to a contingency shall be considered Acquisition Consideration only to the extent of the reserve, if any, required under GAAP at the time of such sale to be established in respect thereof by Holdings or any of its Subsidiaries.

“Act” means the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).

“Administrative Agent” means Bank of America in its capacity as administrative agent under any of the Loan Documents and the Intercreditor Agreement, or any successor administrative agent.

“Administrative Agent’s Office” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 11.02, or such other address or account as the Administrative Agent may from time to time notify to the Borrower and the Lenders.

“Administrative Questionnaire” means an Administrative Questionnaire in a form approved by the Administrative Agent.

“Affiliate” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. No Person in whom a Receivables Subsidiary makes an Investment in connection with a Qualified Receivables Transaction will be deemed to be an Affiliate of the Borrower or any of its Subsidiaries solely by reason of such Investment.

“Agent Parties” has the meaning specified in Section 11.02(c).

“Agreement” has the meaning specified in the introductory paragraph hereto.

“Applicable Fee Rate” means, at any time, 0.75% per annum.

“Applicable Percentage” means, with respect to any Lender at any time, the percentage (carried out to the ninth decimal place) of the Facility represented by such Lender’s Commitment at such time, subject to adjustment as provided in Section 2.15. If the commitment of each Lender to make Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have been terminated pursuant to Section 8.02, or if the Commitments have expired, then the Applicable Percentage of each Lender in respect of the Facility shall be determined based on the Applicable Percentage of such Lender in respect of the Facility most recently in effect, giving effect to any subsequent assignments. The initial Applicable Percentage of each Lender in respect of the Facility is set forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.

“Applicable Rate” means (i) from the Closing Date to the date on which the Administrative Agent receives a Compliance Certificate pursuant to Section 6.02(b) for the fiscal quarter ending September 30, 2010, 3.50% per annum for Base Rate Loans and 4.50% per annum for Eurodollar Rate Loans and Letter of Credit Fees and (ii) thereafter, the applicable percentage per annum set forth below determined by reference to the Consolidated Leverage Ratio as set forth in the most recent Compliance Certificate received by the Administrative Agent pursuant to Section 6.02(b):

Applicable Rate
Pricing Level	Consolidated Leverage Ratio	Eurodollar Rate Loans (Letter of Credit Fees)	Base Rate Loans
1	³4.00:1	4.50%	3.50%
2	<4.00:1 but ³3.50:1	4.00%	3.00%
3	<3.50:1	3.50%	2.50%

-2-

Any increase or decrease in the Applicable Rate resulting from a change in the Consolidated Leverage Ratio shall become effective as of the first Business Day immediately following the date a Compliance Certificate is delivered pursuant to Section 6.02(b); provided, however, that if a Compliance Certificate is not delivered when due in accordance with such Section, then, upon the request of the Required Lenders, Pricing Level 1 shall apply, in each case as of the first Business Day after the date on which such Compliance Certificate was required to have been delivered and in each case shall remain in effect until the date on which such Compliance Certificate is delivered.

If, as a result of any restatement of or other adjustment to the financial statements of the Borrower or for any other reason, the Borrower or the Lenders determine that (i) the Consolidated Leverage Ratio as calculated by the Borrower as of any applicable date was inaccurate and (ii) a proper calculation of the Consolidated Leverage Ratio would have resulted in higher pricing for such period, the Borrower shall immediately and retroactively be obligated to pay to the Administrative Agent for the account of the applicable Lenders or the L/C Issuer, as the case may be, promptly on demand by the Administrative Agent (or, after the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code of the United States, automatically and without further action by the Administrative Agent, any Lender or the L/C Issuer), an amount equal to the excess of the amount of interest that should have been paid for such period over the amount of interest actually paid for such period. This paragraph shall not limit the rights of the Administrative Agent, any Lender or the L/C Issuer, as the case may be, under Section 2.03(c)(iii), 2.03(h) or 2.08(b) or under Article VIII. The Borrower’s obligations under this paragraph shall survive the termination of the Commitments and the repayment of all other Obligations hereunder.

“Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

“Assignee Group” means two or more Eligible Assignees that are Affiliates of one another or two or more Approved Funds managed by the same investment advisor.

“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 11.06(b)), and accepted by the Administrative Agent, in substantially the form of Exhibit E-1 or any other form approved by the Administrative Agent.

“Audited Financial Statements” means the audited consolidated balance sheet of the Company and its Subsidiaries for the fiscal years ended December 31, 2007, 2008 and 2009 and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal years of the Company and its Subsidiaries, including the notes thereto.

“Auto-Extension Letter of Credit” has the meaning specified in Section 2.03(b)(iii).

“Auto-Reinstatement Letter of Credit” has the meaning specified in Section 2.03(b)(iv).

“Availability Period” means the period from and including the Closing Date to the earliest of (i) the Maturity Date, (ii) the date of termination of the Commitments pursuant to Section 2.06, and (iii) the date of termination of the commitment of each Lender to make Revolving Credit Loans and of the obligation of the L/C Issuer to make L/C Credit Extensions pursuant to Section 8.02.

“Bank of America” means Bank of America, N.A. and its successors.

“Barclays” has the meaning specified in Section 11.17.

“Base Rate” means for any day a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus  ¹/2 of 1%, (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate,” and (c) the Eurodollar Rate for an Interest Period of one month beginning on such day plus 1.00%. The “prime rate” is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point

-3-

for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such prime rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.

“Base Rate Loan” means a Revolving Credit Loan or a Swing Line Loan that bears interest based on the Base Rate.

“Borrower” has the meaning specified in the introductory paragraph hereto.

“Borrower Financial Advisor” has the meaning specified in Section 11.17.

“Borrower Materials” has the meaning specified in Section 6.02.

“Borrowing” means a Revolving Credit Borrowing or a Swing Line Borrowing, as the context may require.

“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Administrative Agent’s Office is located and, if such day relates to any Eurodollar Rate Loan or any Base Rate Loan bearing interest at a rate based on the Eurodollar Rate, means any such day that is also a London Banking Day.

“Calculation Date” has the meaning specified in the definition of “Pro Forma Basis.”

“Capitalized Leases” means all leases that have been or should be, in accordance with GAAP, recorded as capitalized leases.

“Cash Collateralize” means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the Administrative Agent, L/C Issuer or Swing Line Lender (as applicable) and the Lenders, as collateral for L/C Obligations, Obligations in respect of Swing Line Loans, or obligations of Lenders to fund participations in respect of either thereof (as the context may require), cash or deposit account balances or, if the L/C Issuer or Swing Line Lender benefiting from such collateral shall agree in its sole discretion, other credit support, in each case pursuant to documentation in form and substance reasonably satisfactory to (a) the Administrative Agent and (b) the L/C Issuer or the Swing Line Lender (as applicable). “Cash Collateral” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.

“Cash Equivalents” means any of the following types of investments, to the extent owned by the Borrower or any of its Subsidiaries free and clear of all Liens (other than Liens created under the Collateral Documents and other Liens permitted hereunder):

(a) readily marketable obligations issued or directly and fully guaranteed or insured by the United States or any agency or instrumentality thereof having maturities of not more than 12 months from the date of acquisition thereof; provided that the full faith and credit of the United States is pledged in support thereof;

(b) direct obligations issued by any state of the United States or any political subdivision of any such state, or any public instrumentality thereof, in each case having maturities of not more than 12 months from the date of acquisition;

(c) time deposits with, or insured certificates of deposit or bankers’ acceptances of, any commercial bank that (i) (A) is a Lender or (B) is organized under the laws of the United States of America, any state thereof or the District of Columbia or is the principal banking subsidiary of a bank holding company organized under the laws of the United States, any state thereof or the District of Columbia, and is a member of the Federal Reserve System, (ii) issues (or the parent of which issues) commercial paper rated as described in clause (c) of this definition and (iii) has combined capital and surplus of at least $500,000,000, in each case with maturities of not more than 12 months from the date of acquisition thereof;

-4-

(d) commercial paper and variable or fixed rate notes issued by any Person organized under the laws of any state of the United States and rated at least “Prime-1” (or the then equivalent grade) by Moody’s or at least “A-2” (or the then equivalent grade) by S&P, in each case with maturities of not more than 12 months from the date of acquisition thereof;

(e) repurchase obligations with a term of not more than one year for underlying securities of the types described in clauses (a) and (c) above entered into with any financial institution meeting the qualifications specified in clause (c) above; and

(f) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (a) through (d) of this definition or money market funds that comply with the criteria set forth in SEC Rule 2a-7 under the Investment Company Act of 1940, as amended.

“Cash Management Agreement” means any agreement to provide cash management services, including treasury, depository, overdraft, credit or debit card, electronic funds transfer and other cash management arrangements.

“Cash Management Bank” means any Person that, at the time it enters into a Cash Management Agreement, is a Lender or an Affiliate of a Lender, in its capacity as a party to such Cash Management Agreement.

“CERCLA” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980.

“CERCLIS” means the Comprehensive Environmental Response, Compensation and Liability Information System maintained by the U.S. Environmental Protection Agency.

“CFC” means a Person that is a controlled foreign corporation under Section 957 of the Code.

“Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority.

“Change of Control” means an event or series of events by which:

(a) at any time prior to the creation of a Public Market, the Permitted Holders shall cease to own and control legally and beneficially (free and clear of all Liens), either directly or indirectly, equity securities in Holdings representing more than 50% of the combined voting power of all of equity securities entitled to vote for members of the board of directors or equivalent governing body of Holdings on a fully diluted basis (and taking into account all such securities that the Permitted Holders have the right to acquire pursuant to any option right (as defined in clause (b) below)); or

(b) at any time upon or after the creation of a Public Market, any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan, unless such plan is part of a group) other than the Permitted Holders becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “option right”)), directly or indirectly, of 35% or more of the equity securities of Holdings entitled to vote for members of the board of directors or equivalent governing body of Holdings on a fully diluted basis (and taking into account all such securities that such “person” or “group” has the right to acquire pursuant to any option right); or

-5-

(c) Holdings shall cease, directly or indirectly, to own and control legally and beneficially all of the Equity Interests in the Borrower; or

(d) a “change of control” or any comparable term under, and as defined in, the Senior Secured Notes Indenture or other Indebtedness incurred pursuant to Section 7.02(b) shall have occurred.

“Closing Date” means the first date all the conditions precedent in Section 4.01 are satisfied or waived in accordance with Section 11.01.

“Closing Date Material Adverse Change” means any event, circumstance, development, change or effect that individually or in the aggregate, with all other events, circumstances, developments, changes and effects, has had or would reasonably be expected have, a material adverse effect on (i) the business, condition (financial or otherwise), properties, assets, liabilities, or results of operations of the Company Entities, taken as a whole, other than any event, circumstance, development, change or effect resulting from any of the following: (A) changes, after the date hereof, in general economic, financial or securities market conditions in the United States or global economy, including changes in interest or exchange rates, (B) general changes or developments, after the date hereof, in the industries in which the Company Entities operate, including general changes, after the date hereof, in any Legal Requirement of any Governmental Authority of general applicability to companies in the industries in which the Company Entities operate, (C) the impact of the announcement or consummation of the transactions contemplated by the Purchase Agreement on the Company Entities’ customers, suppliers or payers (provided that, to the extent applicable, the exceptions in this clause (C) shall be disregarded in determining whether there is a breach of the representations or warranties contained in Section 3.5, 3.8(b)(iv), 3.16(a) or 3.18(b) of the Purchase Agreement), (D) changes, after the date hereof, in GAAP, (E) actions taken or omissions by the Company Entities with the prior written consent of Buyer (which consent was approved by the Lead Arrangers) or expressly required by the Purchase Agreement, (F) any hostilities, act of war, sabotage, terrorism or military actions, or any escalation or worsening of any such hostilities, act of war, sabotage, terrorism or military actions, in each case, generally affecting the industries in which the Company Entities operate, (G) the failure of the Company Entities, in and of itself, to meet internal or published projections, forecasts or revenue or earning predictions for any period (provided that the underlying causes of such failure shall be considered in determining whether there is a Closing Date Material Adverse Change), or (H) changes, after the date hereof, in any Legal Requirement affecting the validity, enforceability or legality of the Intercompany Loans, except, in the case of the foregoing clauses (A), (B), (D) or (F), to the extent such events, circumstances, developments, changes or effects referred to therein have or would reasonably be expected to have a materially disproportionate impact on the Company Entities, taken as a whole, as compared to other companies in the industry in which any of the Company Entities operate or (ii) the ability of the Company Entities to perform their respective obligations under the Purchase Agreement and the other Transaction Documents and to consummate the transactions contemplated hereby and thereby on a timely basis. Capitalized terms within the preceding sentence have the meanings given to them in the Purchase Agreement.

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and rules and regulations related thereto.

“Collateral” means all of the “Collateral” and “Mortgaged Property” referred to in the Collateral Documents and all of the other property that is or is intended under the terms of the Collateral Documents to be subject to Liens in favor of the Administrative Agent for the benefit of the Secured Parties.

“Collateral Documents” means, collectively, the Security Agreement, the Intellectual Property Security Agreement, the Mortgages, each Account Control Agreement (as referred to in the Security Agreement), each Securities Account Control Agreement (as referred to in the Security Agreement), each of the mortgages, collateral assignments, Security Agreement Supplements, IP Security Agreement Supplements, security agreements, pledge agreements and other instruments and agreements pursuant to which Liens are granted to the Administrative Agent as security for the Obligations pursuant to Section 4.01, 6.12 or otherwise.

“Commitment” means, as to each Lender, its obligation to (a) make Revolving Credit Loans to the Borrower pursuant to Section 2.01, (b) purchase participations in L/C Obligations, and (c) purchase participations in Swing Line Loans, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth

-6-

opposite such Lender’s name on Schedule 2.01 under the caption “Commitment” or opposite such caption in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.

“Committed Loan Notice” means a notice of (a) a Revolving Credit Borrowing, (b) a conversion of Loans from one Type to the other, or (c) a continuation of Eurodollar Rate Loans, pursuant to Section 2.02(a), which, if in writing, shall be substantially in the form of Exhibit A.

“Company” has the meaning specified in the introductory paragraph hereto.

“Compliance Certificate” means a certificate substantially in the form of Exhibit D.

“Consolidated Adjusted Secured Debt Ratio” means, as of any date of determination, the ratio of (1) Consolidated Adjusted Secured Net Debt as of such date after giving effect to all incurrences and repayments or discharges of Indebtedness and Liens to occur on such date to (2) the Borrower’s Consolidated EBITDA on a Pro Forma Basis for the most recently ended four full fiscal quarters for which financial statements have been delivered pursuant to Section 6.01.

“Consolidated Adjusted Secured Net Debt” means, as of any date, (a) the aggregate principal amount of Indebtedness of the type specified in clauses (a), (b) and (g) of the definition thereof of the Borrower and its Subsidiaries outstanding as of such date determined on a consolidated basis, if such Indebtedness is (x) secured by a Lien or (y) owing by a Subsidiary that is not a Subsidiary Guarantor, minus (b) the amount of cash and Cash Equivalents held, on such date, by the Borrower and the Subsidiary Guarantors, minus (c) the amount of cash and Cash Equivalents held, on such date, by any Subsidiary that is not a Subsidiary Guarantor, up to the greater of (x) the aggregate principal amount of Indebtedness of such Subsidiary that is not a Subsidiary Guarantor included in clause (a) of this definition and (y) the amount of such cash and Cash Equivalents of such Subsidiary that is not a Subsidiary Guarantor times the percentage of such Subsidiary owned directly or indirectly by the Borrower or a Subsidiary Guarantor.

“Consolidated EBITDA” means Consolidated Net Income for any period plus

(a) without duplication and to the extent deducted in determining such Consolidated Net Income for such period, the sum of:

(i) consolidated interest expense (and solely for purposes of calculating the Fixed Charge Coverage Ratio, other Fixed Charges) of the Borrower and its Subsidiaries for such period and, to the extent not reflected in such total interest expense, increased by payments made by the Borrower or any Subsidiary in respect of hedging obligations or other derivative instruments entered into for the purpose of hedging interest rate risk, minus the sum of (x) any payments received in respect of such hedging obligations or other derivative instruments and (y) for purposes of calculating the Fixed Charge Coverage Ratio only, interest income of the Borrower and its Subsidiaries),

(ii) consolidated tax expense of the Borrower and its Subsidiaries based on income, profits or capital, including state, franchise, capital and similar taxes and withholding taxes paid or accrued during such period,

(iii) all amounts attributable to depreciation and amortization expense of the Borrower and its Subsidiaries for such period,

(iv) any Non- Cash Charges of the Borrower and its Subsidiaries for such period,

(v) costs associated with the Transactions made or incurred by the Borrower and its Subsidiaries in connection with the Transactions for such period that are paid, accrued or reserved for within 365 days of the consummation of the Transactions,

-7-

(vi) without duplication of any Pro Forma Cost Savings, any restructuring charges (including restructuring costs related to acquisitions pursuant to Section 7.03(g) or (i) and to closure or consolidation of facilities) for such period and any “Specified Payments” as defined in Schedule 11.2(a)(vi) to the Purchase Agreement made during such period,

(vii) without duplication of any Pro Forma Cost Savings, any unusual or nonrecurring fees, cash charges and other cash expenses for such period (A) made or incurred by the Borrower and its Subsidiaries in connection with any Investment pursuant to Section 7.03(g) or (i), including severance, relocation and facilities closing costs, including any earnout payments, whether or not accounted for as such, that are paid, accrued or reserved for within 365 days of such Investment or (B) incurred in connection with the issuance of Equity Interests or Indebtedness by the Borrower and its Subsidiaries,

(viii) cash expenses incurred by the Borrower and its Subsidiaries during such period in connection with an acquisition pursuant to Section 7.03(g) or (i) to the extent that such expenses are reimbursed in cash during such period pursuant to indemnification provisions of any agreement relating to such acquisition,

(ix) annual management fees paid by the Borrower and its Subsidiaries that are permitted to be paid to the Sponsor under Section 7.08(b)(ii),

(x) cash expenses incurred by the Borrower and its Subsidiaries during such period in connection with extraordinary casualty events to the extent such expenses are reimbursed in cash to the Borrower and its Subsidiaries by insurance during such period, and

(xi) the amount of any minority interest expense consisting of Subsidiary income attributable to minority Equity Interests of third parties in any Subsidiary that is not a Wholly-Owned Subsidiary to the extent (and not to exceed the amount of) Indebtedness owed by such Subsidiary is included in the Indebtedness of the Borrower; minus

(b) without duplication and, in the case of clause (ii) below, to the extent included in determining such Consolidated Net Income,

(i) any cash payments made by the Borrower and its Subsidiaries during such period in respect of Non-Cash Charges described in clause (a)(iv) taken in a prior period or taken in such period, and

(ii) any non-cash items of income of to the Borrower and its Subsidiaries for such period (other than the accrual of revenue or recording of receivables in the ordinary course of business);

provided that (I) in no event shall any charge, expense or loss relating to write-downs, write-offs or reserves with respect to current assets be added back to Net Income for purposes of calculating Consolidated EBITDA and (II) the aggregate amount added back to Net Income for purposes of calculating Consolidated EBITDA pursuant to clauses (a)(vi) and (vii) shall not exceed 8% of Consolidated EBITDA (calculated before giving effect to such clauses) for any period. Consolidated EBITDA shall be determined on a Pro Forma Basis.

“Consolidated Leverage Ratio” means as of any date (a) Consolidated Net Debt as of such date to (b) the Consolidated EBITDA for the four consecutive fiscal quarters of the Borrower ended on such date.

“Consolidated Net Debt” means, as of any date, (a) the aggregate principal amount of Indebtedness of the type specified in clauses (a), (b) and (g) of the definition thereof of the Borrower and its Subsidiaries outstanding as of such date determined on a consolidated basis, minus (b) the amount of unrestricted cash and Cash Equivalents held, on such date, by the Borrower and the Subsidiary Guarantors, minus (c) the amount of unrestricted cash and Cash Equivalents held, on such date, by any Subsidiary that is not a Subsidiary Guarantor, up to the greater of (x)

-8-

the aggregate principal amount of Indebtedness of such Subsidiary included in clause (a) of this definition and (y) the amount of such unrestricted cash and Cash Equivalents of such Subsidiary times the percentage of outstanding Equity Interests in such Subsidiary owned by the Borrower or a Subsidiary Guarantor.

“Consolidated Net Income” means, for any period, the aggregate of the Net Income of the Borrower and its Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that:

(1) the Net Income (and net loss) of any other Person (other than a Subsidiary of the Borrower) in which the Borrower or any of its Subsidiaries has an ownership interest will be excluded, except to the extent that any such Net Income is actually received in cash by the Borrower or a Qualified Subsidiary in the form of dividends or similar distributions in respect of such period;

(2) the cumulative effect of a change in accounting principles will be excluded;

(3) the amortization of any premiums, fees or expenses incurred in connection with the Transactions or any amounts required or permitted by Accounting Principles Board Opinions Nos. 16 (including non-cash write-ups and Non-Cash Charges relating to inventory and fixed assets, in each case arising in connection with the Transactions) and 17 (including Non-Cash Charges relating to intangibles and goodwill), in each case in connection with the Transactions, will be excluded;

(4) any gain or loss, together with any related provision for taxes on such gain or loss, realized in connection with: (a) any sales of assets out of the ordinary course of business (it being understood that a sale of assets comprising discontinued operations shall be deemed a sale of assets out of the ordinary course of business); or (b) the disposition of any securities by the Borrower or any of its Subsidiaries or the extinguishment of any Indebtedness of the Borrower or any of its Subsidiaries will be excluded;

(5) any extraordinary gain or loss, together with any related provision for taxes on such extraordinary gain or loss, will be excluded;

(6) income or losses attributable to discontinued operations (including without limitation, operations disposed during such period whether or not such operations were classified as discontinued) will be excluded;

(7) any Non-Cash Charges (i) attributable to applying the purchase method of accounting in accordance with GAAP, (ii) resulting from the application of FAS 142 or FAS 144, and (iii) relating to the amortization of intangibles resulting from the application of FAS 141 will be excluded;

(8) all Non-Cash Charges relating to employee benefit or other management or stock compensation plans of the Borrower or a Subsidiary (excluding any such Non-Cash Charge to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense incurred in a prior period) will be excluded to the extent that such Non-Cash Charges are deducted in computing such Consolidated Net Income; provided, further, that if the Borrower or any Subsidiary of the Borrower makes a cash payment in respect of such Non-Cash Charge in any period, such cash payment will (without duplication) be deducted from the Consolidated Net Income of the Borrower for such period;

(9) all unrealized gains and losses relating to hedging transactions and mark-to-market of Indebtedness denominated in foreign currencies resulting from the application of FAS 52 shall be excluded;

(10) the Net Income for such period of any Subsidiary (other than a Subsidiary Guarantor) shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of its Net Income is not at the date of determination permitted without any prior governmental approval (which has not been obtained) or, directly or indirectly, by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule, or governmental regulation applicable to that Subsidiary or its stockholders, except to the extent such restriction with respect to the payment of dividends or similar distributions has been legally waived; and

-9-

(11) Consolidated Net Income shall be reduced by the amount of any dividends or distributions made to Parent for ordinary course holding company operating expenses.

“Contractual Obligation” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

“Contribution Indebtedness” means Indebtedness of the Borrower in an aggregate principal amount not to exceed the aggregate net cash proceeds contributed to the Borrower after the Closing Date from the sale of the Equity Interests of Holdings (other than Disqualified Stock) or as a contribution to the Borrower’s common equity capital (in each case, other than to or from a Subsidiary of the Borrower); provided that such Indebtedness (a) is incurred within 180 days after the sale of such Equity Interests or the making of such capital contribution and (b) is designated as “Contribution Indebtedness” pursuant to a certificate of a Responsible Officer delivered to the Administrative Agent within one Business Day of the date of its incurrence. Any sale of Equity Interests or capital contribution that forms the basis for an incurrence of Contribution Indebtedness will not be considered to be a sale of Equity Interests or a capital contribution and will be disregarded for purposes of Sections 7.06(f) and (m).

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

“Credit Extension” means each of the following: (a) a Borrowing and (b) an L/C Credit Extension.

“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

“Declined Proceeds” has the meaning specified in Section 2.06(b).

“Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.

“Default Rate” means (a) when used with respect to Obligations other than Letter of Credit Fees, an interest rate equal to (i) the Base Rate plus (ii) the Applicable Rate, if any, applicable to Base Rate Loans under the Facility plus (iii) 2% per annum; provided, however, that with respect to a Eurodollar Rate Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Rate) otherwise applicable to such Loan plus 2% per annum and (b) when used with respect to Letter of Credit Fees, a rate equal to the Applicable Rate plus 2% per annum.

“Defaulting Lender” means, subject to Section 2.15(b), any Lender that, as determined by the Administrative Agent, (a) has failed to perform any of its funding obligations hereunder, including in respect of its Loans or participations in respect of Letters of Credit or Swing Line Loans, within three Business Days of the date required to be funded by it hereunder, (b) has notified the Borrower or the Administrative Agent that it does not intend to comply with its funding obligations or has made a public statement to that effect, in each case with respect to its funding obligations (x) hereunder or (y) under other agreements generally in which it commits to extend credit (unless in the case of this clause (y), such obligation is the subject of a good faith dispute), (c) has failed, within three Business Days after request by the Administrative Agent, to confirm that it will comply with its funding obligations, or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii) had a receiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or a custodian appointed for it, or (iii) taken any action in furtherance of, or indicated its consent to, approval of or acquiescence in any such

-10-

proceeding or appointment; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any Equity Interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority.

“Designated Noncash Consideration” means any non-cash consideration received by the Borrower or a Subsidiary in connection with a Material Disposition that is designated as Designated Noncash Consideration pursuant to a certificate of a Responsible Officer.

“Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (including any Sale and Leaseback Transaction) of any property by the Borrower or any Subsidiary (or the granting of any option or other right to do any of the foregoing), including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith or any sale, transfer or disposition of Equity Interests.

“Disqualified Stock” means any Equity Interest that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case, at the option of the holder of the Equity Interest), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder of the Equity Interest, in whole or in part, on or prior to the date that is 91 days after the Maturity Date. Notwithstanding the preceding sentence, (x) any Equity Interest that would constitute Disqualified Stock solely because the holders of such Equity Interest have the right to require the Borrower or the Subsidiary that issued such Equity Interest to repurchase such Equity Interest upon the occurrence of a change of control or an asset sale will not constitute Disqualified Stock if the terms of such Equity Interest provide that the Borrower may not repurchase such Equity Interest unless the Borrower would be permitted to do so in compliance with Section 7.06 (y) any Equity Interest that would constitute Disqualified Stock solely as a result of any redemption feature that is conditioned upon, and subject to, compliance with Section 7.06 will not constitute Disqualified Stock and (z) any Equity Interest issued to any plan for the benefit of employees will not constitute Disqualified Stock solely because it may be required to be repurchased by Holdings, the Borrower or the Subsidiary that issued such Equity Interest in order to satisfy applicable statutory or regulatory obligations. The amount of Disqualified Stock deemed to be outstanding at any time for purposes of this Agreement will be the maximum amount that Holdings, the Borrower and its Subsidiaries may become obligated to pay upon the maturity of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock, exclusive of accrued dividends.

“Dollar” and “$” mean lawful money of the United States.

“Eligible Assignee” means any Person that meets the requirements to be an assignee under Sections 11.07(b)(iii), (v) and (vi) (subject to such consents, if any, as may be required under Section 11.07(b)(iii)).

“Environmental Laws” means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses or governmental restrictions relating to pollution and the protection of the environment or the release of any harmful or deleterious materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.

“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower, any other Loan Party or any of their respective Subsidiaries directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

“Environmental Permit” means any permit, approval, identification number, license or other authorization required under any Environmental Law.

-11-

“Equity Interests” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

“ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with the Borrower and is treated as a single employer within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) with respect to any Pension Plan, the failure to satisfy the minimum funding standard under Section 412 of the Code and Section 302 of ERISA, whether or not waived, the failure to make by its due date a required installment under Section 430(j) of the Code with respect to any Pension Plan or the failure to make any required contribution to a Multiemployer Plan; (c) the withdrawal of the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (d) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in endangered or critical status within the meaning of Section 305 of ERISA; (e) the filing of a notice of intent to terminate, the treatment of a Multiemployer Plan amendment as a termination under Section 4041 or 4041A of ERISA; (f) the institution by the PBGC of proceedings to terminate a Pension Plan or Multiemployer Plan; (g) any event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; (h) the determination that any Pension Plan is, or is expected to be, in “at-risk” status, within the meaning of Section 303(i)(4)(A) of ERISA or Section 430(i)(4)(A) of the Code; or (i) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.

“Eurodollar Base Rate” has the meaning specified in the definition of “Eurodollar Rate.”

“Eurodollar Rate” means for any Interest Period with respect to a Eurodollar Rate Loan, a rate per annum determined by the Administrative Agent pursuant to the following formula:

Eurodollar Rate	=	Eurodollar Base Rate
		1.00 – Eurodollar Reserve Percentage

Where “Eurodollar Base Rate” means, for such Interest Period, the rate per annum equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, two London Banking Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period. If such rate is not available at such time for any reason, then the “Eurodollar Base Rate” for such Interest Period shall be the rate per annum determined by the Administrative Agent to be the rate at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Eurodollar Rate Loan being made, continued or converted by Bank of America and with a term equivalent to such Interest Period would be offered by Bank of America’s London Branch to major banks in the London interbank eurodollar market at their request at approximately 11:00 a.m. (London time) two London Banking Days prior to the commencement of such Interest Period; provided that the Eurodollar Rate shall never be deemed to be less than 2.0% per annum.

-12-

“Eurodollar Rate Loan” means a Revolving Credit Loan that bears interest at a rate based on the Eurodollar Rate.

“Eurodollar Reserve Percentage” means, for any day during any Interest Period, the reserve percentage (expressed as a decimal, carried out to five decimal places) in effect on such day, whether or not applicable to any Lender, under regulations issued from time to time by the FRB for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as “Eurocurrency liabilities”). The Eurodollar Rate for each outstanding Eurodollar Rate Loan and for each outstanding Base Rate Loan bearing interest at a rate based on the Eurodollar Rate shall be adjusted automatically as of the effective date of any change in the Eurodollar Reserve Percentage.

“Event of Default” has the meaning specified in Section 8.01.

“Excluded Contributions” means net cash proceeds, marketable securities or Qualified Proceeds received by Holdings (to the extent contributed to the Borrower) from (i) contributions to its equity capital (other than Disqualified Stock) or (ii) the sale (other than to the Borrower or a Subsidiary of the Borrower or to any management equity plan or stock option plan or any other management or employee benefit plan or agreement of the Borrower) of Equity Interests (other than Disqualified Stock) of Holdings, in each case designated as Excluded Contributions pursuant to a certificate of a Responsible Officer on the date such capital contributions are made or the date such Equity Interests are sold, as the case may be. Net cash proceeds, marketable securities or Qualified Proceeds resulting from Excluded Contributions shall not be considered net cash proceeds, marketable securities or Qualified Proceeds for purposes of Sections 7.06(f) and (m).

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender, or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder or any other Loan Document, (a) Taxes imposed on or measured by its net income (however denominated), and franchise Taxes imposed on it (in lieu of net income taxes), by any jurisdiction as a result of a present or former connection between the Administrative Agent, such Lender or such other recipient and the jurisdiction of the Governmental Authority imposing such Tax or any political subdivision or taxing authority thereof or therein other than a connection deemed to arise solely from such person having executed, delivered, become a party to, or performed its obligations or received a payment under, or enforced and/or engaged in any other transactions pursuant to, this Agreement or any other Loan Document), (b) any Tax similar to the branch profits tax under Section 884(a) of the Code imposed by any jurisdiction described in (a), (c) any withholding Tax that is attributable to such recipient’s failure to comply with Section 3.01(e), (d) in the case of a Foreign Lender (other than an assignee pursuant to a request by Borrower under Section 11.14), any United States federal withholding Tax imposed on any amounts payable to such Lender pursuant to the Laws in force at the time such Foreign Lender becomes a party hereto (or designates a new Lending Office), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new Lending Office (or assignment), to receive additional amounts from Borrower with respect to such withholding Tax pursuant to Section 3.01(a), (e) United States federal withholding taxes that would not have been imposed but for a failure by a Lender or such other recipient (or any financial institution through which any payment is made to such Lender) to comply with any procedures, certifications, information reporting, disclosure, or other related requirements of Sections 1471-1474 of the Code (and any applicable regulations or official interpretations thereof) that could establish an exemption from or reduction in withholding thereunder and (f) any United States federal backup withholding Taxes under Section 3406 of the Code,

“Facility” means, at any time, the aggregate amount of the Lenders’ Commitments at such time.

“Fair Market Value” means the value that would be paid by a willing buyer to an unaffiliated willing seller in a transaction not involving distress or necessity of either party, determined in good faith by the board of directors, chief executive officer or chief financial officer of the Borrower (unless otherwise provided in this Agreement).

“FASB ASC” means the Accounting Standards Codification of the Financial Accounting Standards Board.

“Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds

-13-

brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be such average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the Administrative Agent.

“Fee Letter” means the letter agreement, dated March 22, 2010, among Holdings, the Borrower, the Administrative Agent, Banc of America Securities LLC, Banc of America Bridge LLC, Barclays Bank PLC, Wells Fargo Bank, National Association, Wells Fargo Securities, LLC and WF Investment Holdings, LLC.

“Fixed Charge Coverage Ratio” means, as of any date, the ratio of (a) Consolidated EBITDA for the most recent period of four consecutive fiscal quarters of the Borrower ended on or prior to such date at the end of which financial statements have been or were required to be delivered under Section 6.01(a) or (b) to (b) the Fixed Charges of the Borrower and its Subsidiaries for such period.

“Fixed Charges” means, for any period, the sum, without duplication, of: (1) the consolidated interest expense of Borrower and its Subsidiaries for such period, net of interest income, whether paid or accrued, including, without limitation, original issue discount, non-cash interest payments, the interest component of all payments associated with Capitalized Leases, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings, and net of the effect of all cash payments made or received pursuant to hedging obligations in respect of interest rates, and excluding (v) amortization of deferred financing costs, (w) accretion or accrual of discounted liabilities not constituting Indebtedness, (x) any expense resulting from the discounting of any Indebtedness in connection with the application of purchase accounting in connection with any acquisition, (y) any expensing of bridge, commitment and other financing fees and (z) to the extent included in Fixed Charges, the portion of consolidated interest expenses of the Borrower and its Subsidiaries attributable to Indebtedness incurred in connection with the acquisition of discontinued operations; plus (2) any interest on Indebtedness of another Person (other than the Borrower or any of its Subsidiaries) that is Guaranteed by the Borrower or one of its Subsidiaries or secured by a Lien on assets of the Borrower or one of its Subsidiaries, but only to the extent such Guarantee or Lien is called upon; plus (3) the product of (A) all cash dividends paid on any series of preferred stock of the Borrower or any of its Subsidiaries (other than to the Borrower or any Qualified Subsidiary), in each case, determined on a consolidated basis in accordance with GAAP multiplied by (B) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of the Borrower and its Subsidiaries expressed as a decimal. Fixed Charges shall be determined on a Pro Forma Basis.

“Foreign Lender” means any Lender that is not a United States person within the meaning of section 7701(a)(3) of the Code.

“FRB” means the Board of Governors of the Federal Reserve System of the United States.

“Fronting Exposure” means, at any time there is a Defaulting Lender, (a) with respect to the L/C Issuer, such Defaulting Lender’s Applicable Percentage of the outstanding L/C Obligations other than L/C Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof, and (b) with respect to the Swing Line Lender, such Defaulting Lender’s Applicable Percentage of Swing Line Loans other than Swing Line Loans as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof.

“Fund” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.

“GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and

-14-

statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.

“Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

“Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party or applicant in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation, provided that the term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any Guarantee of any guarantor shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which the Guarantee is made and (b) the maximum amount for which such guarantor may be liable pursuant to the terms of the instrument.

“Guarantors” means, collectively, Holdings, the Subsidiaries of Holdings listed on Schedule 6.12 and each other Subsidiary of Holdings that shall be required to execute and deliver a Guaranty Supplement pursuant to Section 6.12 (such Subsidiaries, collectively, the “Subsidiary Guarantors”).

“Guaranty” means, collectively, the Guaranty made by Holdings under Article X in favor of the Secured Parties and the Guaranty made by the Subsidiary Guarantors in favor of the Secured Parties, substantially in the form of Exhibit F, together with each Guaranty Supplement delivered pursuant to Section 6.12 (the “Subsidiary Guaranty”).

“Guaranty Supplement” has the meaning specified in Section 11 of the Subsidiary Guaranty.

“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other harmful or deleterious substances or wastes of any nature regulated pursuant to any Environmental Law.

“Hedge Bank” means any Person that, at the time it enters into a Swap Contract permitted under Article VII, is a Lender or an Affiliate of a Lender, in its capacity as a party to such Swap Contract.

“Holdings” has the meaning specified in the introductory paragraph hereto.

“Honor Date” has the meaning specified in Section 2.03(c).

“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (d) all obligations of such Person in respect of the deferred purchase price of property or services (excluding trade accounts payable and accrued obligations incurred in the ordinary course of business), (e) all obligations of others secured by any Lien on property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, but limited, in the event such secured obligations are nonrecourse to

-15-

such Person, to the fair value of such property, (f) all Guarantees by such Person of the Indebtedness of any other Person, (g) all Capitalized Leases of such Person, (h) all reimbursement obligations of such Person as an account party or applicant in respect of letters of credit and letters of guaranty, (i) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances and (j) all obligations of such Person in respect of Disqualified Stock. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. For the avoidance of doubt, any right of Strategic Investors in an Qualified Subsidiary to require the Borrower or any Qualified Subsidiary to repurchase the Equity Interests in such Qualified Subsidiary held by such Strategic Investors does not constitute Indebtedness.

“Indemnified Taxes” means all Taxes other than Excluded Taxes.

“Indemnitee” has the meaning specified in Section 11.04(b).

“Information” has the meaning specified in Section 11.07.

“Intellectual Property Security Agreement” means an intellectual property security agreement, in substantially the form of Exhibit 4, 5 or 6 of the Security Agreement (together with each IP Security Agreement Supplement delivered pursuant to Section 6.12), in each case as amended.

“Intercompany Loan Refinancing” has the meaning specified in Section 7.02(d).

“Intercompany Notes” has the meaning specified in Section 1.1 of the Security Agreement.

“Intercreditor Agreement” means the intercreditor agreement, in the form attached hereto as Exhibit L, dated the Closing Date, between the Administrative Agent and the trustee for the Senior Secured Notes, and acknowledged by the Loan Parties, as amended, modified, or otherwise changed in accordance with the terms hereof and thereof.

“Interest Payment Date” means, (a) as to any Eurodollar Rate Loan, the last day of each Interest Period applicable to such Loan and the Maturity Date; provided, however, that if any Interest Period for a Eurodollar Rate Loan exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates; and (b) as to any Base Rate Loan or Swing Line Loan, the last Business Day of each March, June, September and December and the Maturity Date.

“Interest Period” means, as to each Eurodollar Rate Loan, the period commencing on the date such Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar Rate Loan and ending on the date one, two, three or six months (or, if consented to by all Lenders, nine or twelve months) thereafter, as selected by the Borrower in its Committed Loan Notice; provided that:

(a) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;

(b) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and

(c) no Interest Period shall extend beyond the Maturity Date.

“Investment” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of Equity Interests of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or purchase or other acquisition of any other debt or interest in, another Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of

-16-

assets of another Person that constitute a business unit or all or substantially all of the business of such Person. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.

“IP Rights” has the meaning specified in Section 5.16.

“IP Security Agreement Supplement” means a supplement to any Intellectual Property Security Agreement in a form reasonably satisfactory to the Administrative Agent and the Loan Party party thereto.

“IRS” means the United States Internal Revenue Service.

“ISP” means, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice, Inc. (or such later version thereof as may be in effect at the time of issuance).

“Issuer Documents” means with respect to any Letter of Credit, the Letter of Credit Application, and any other document, agreement and instrument entered into by the L/C Issuer and the Borrower (or any Subsidiary) or in favor of the L/C Issuer and relating to such Letter of Credit.

“Laws” means, collectively, all international, foreign, federal, state and local statutes, treaties, rules, ordinances, codes, regulations and ordinances of any Governmental Authority.

“L/C Advance” means, with respect to each Lender, such Lender’s funding of its participation in any L/C Borrowing in accordance with its Applicable Percentage.

“L/C Borrowing” means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the date when made or refinanced as a Revolving Credit Borrowing.

“L/C Credit Extension” means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof.

“L/C Issuer” means Bank of America in its capacity as an issuer of Letters of Credit hereunder, any other Lender designated by the Borrower (with the consent (not, in the case of the Administrative Agent, to be unreasonably withheld or delayed) of such Lender and the Administrative Agent), as an issuer of Letters of Credit hereunder and any Lender appointed by the Borrower (with the consent (not, in the case of the Administrative Agent, to be unreasonably withheld or delayed) of the Administrative Agent) as such by notice to the Lenders as a replacement for any L/C Issuer who is at the time of such appointment a Defaulting Lender. References herein and in the other Loan Documents to the L/C Issuer shall be deemed to refer to the L/C Issuer in respect of the applicable Letter of Credit or to all L/C Issuers, as the context requires.

“L/C Obligations” means, as at any date of determination, the aggregate amount available to be drawn under all outstanding Letters of Credit plus the aggregate of all Unreimbursed Amounts, including all L/C Borrowings. For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.06. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.

“Lead Arrangers” means Banc of America Securities LLC, Barclays Capital, the investment banking division of Barclays Bank PLC, and Wells Fargo Securities, LLC.

“Lender” has the meaning specified in the introductory paragraph hereto and, as the context requires, includes the Swing Line Lender, to the extent such Person has a Commitment hereunder.

-17-

“Lending Office” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Borrower and the Administrative Agent.

“Letter of Credit” means any letter of credit issued hereunder. A Letter of Credit may be a commercial letter of credit or a standby letter of credit.

“Letter of Credit Application” means an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by the L/C Issuer.

“Letter of Credit Expiration Date” means the day that is five Business Days prior to the Maturity Date (or, if such day is not a Business Day, the next preceding Business Day).

“Letter of Credit Fee” has the meaning specified in Section 2.03(h).

“Letter of Credit Sublimit” means an amount equal to $5,000,000. The Letter of Credit Sublimit is part of, and not in addition to, the Facility.

“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset and (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset.

“Loan” means an extension of credit by a Lender to the Borrower under Article II in the form of a Revolving Credit Loan or a Swing Line Loan.

“Loan Documents” means, collectively, (a) this Agreement, (b) the Notes, (c) any agreement creating or perfecting rights in cash collateral pursuant to the provisions of Section 2.14 of this Agreement, (d) the Guaranty, (e) the Collateral Documents, (f) the Fee Letter and (g) each Issuer Document.

“Loan Parties” means, collectively, the Borrower and the Guarantors.

“London Banking Day” means any day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.

“Material Acquisition” means the Merger and any other acquisition of property or series of related acquisitions of property that (a) constitute assets comprising all or substantially all of an operating unit of a business or constitutes all or substantially all of the Equity Interests of a Person and (b) involve the payment of Acquisition Consideration by the Borrower and its Subsidiaries in excess of $4,000,000.

“Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, liabilities or financial condition of the Borrower and its Subsidiaries taken as a whole; (b) a material impairment of the material rights and remedies of the Administrative Agent or any Lender under any Loan Document, or of the ability of any Loan Party to perform its material obligations under any Loan Document to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party.

“Material Contract” means, with respect to any Person, each contract to which such Person is a party that is material to the business, financial condition, operations or properties of the Borrower and its Subsidiaries, taken as a whole.

“Material Disposition” means any Disposition of a Subsidiary or line of business as a “going concern” that has a Fair Market Value in excess of $4,000,000.

-18-

“Material Real Property” means real properties owned by the Borrower or any Loan Party with a cost or book value (whichever is greater) in excess of $2,000,000.

“Maturity Date” means the fifth anniversary of the Closing Date; provided, however, that if such anniversary is not a Business Day, the Maturity Date shall be the next preceding Business Day.

“Maximum Rate” has the meaning specified in Section 11.09.

“Medicaid” means that government-sponsored entitlement program under Title XIX, P.L. 89-979,of the Social Security Act, which provides federal grants to states for medical assistance based on specific eligibility criteria, as set forth at Section 1396, et seq. of Title 42 of the United States Code, as amended, and any statute succeeding thereto.

“Medicare” means that government-sponsored insurance program under Title XVIII, P.L. 89-97, of the Social Security Act, which provides for a health insurance system for eligible elderly and disabled individuals, as set forth at Section 1395, et seq. of Title 42 of the United States Code, as amended, and any statute succeeding thereto.

“Merger” has the meaning specified in the Preliminary Statements.

“MergerCo” has the meaning specified in the introductory paragraph hereto.

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

“Mortgage” has the meaning specified in Section 6.12(b).

“Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

“Net Cash Proceeds” means, with respect to any Disposition or the issuance of any Indebtedness by Holdings or any of its Subsidiaries, the sum of the cash and Cash Equivalents received in connection with such transaction net of the direct costs relating to such Disposition or issuance, including without limitation, legal, accounting and investment banking fees, sales commissions, underwriting discounts and commissions, and other reasonable and customary out-of-pocket expenses, incurred by Holdings or such Subsidiary in connection therewith.

“Net Income” means, with respect to any specified Person, the net income (loss) attributable to such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends.

“Non-Cash Charges” means (a) losses on asset sales, disposals or abandonments, (b) any impairment charge or asset write-off or write-down related to intangible assets, goodwill, long- lived assets, and investments in debt and equity securities pursuant to GAAP, (c) all losses from investments recorded using the equity method, (d) stock-based awards compensation expense, and (e) other non-cash charges (provided that if any non-cash charges, expenses and write-downs referred to in this clause (e) represent an accrual or reserve for potential cash items in any future period, the cash payment in respect thereof in such future period shall be subtracted from Consolidated EBITDA to such extent, and excluding amortization of a prepaid cash item that was paid in a prior period).

“Non-Extension Notice Date” has the meaning specified in Section 2.03(b)(iii).

“Non-Reinstatement Deadline” has the meaning specified in Section 2.03(b)(iv).

“Note” means a promissory note made by the Borrower in favor of a Lender evidencing Revolving Credit Loans or Swing Line Loans, as the case may be, made by such Lender, substantially in the form of Exhibit C.

“NPL” means the National Priorities List under CERCLA.

-19-

“Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan, Letter of Credit, Secured Cash Management Agreement or Secured Hedge Agreement, in each case whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.

“Offer Notice” has the meaning specified in Section 2.06(b).

“Organization Documents” means (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

“Other Taxes” means all present or future stamp, documentary, recording, filing, property, excise or similar Taxes arising from any payment made hereunder or under any other Loan Document or from the execution, performance, registration, delivery or enforcement of, from the receipt or perfection of a security interest under, or otherwise with respect to, this Agreement or any other Loan Document.

“Outstanding Amount” means (a) with respect to Revolving Credit Loans and Swing Line Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Revolving Credit Loans and Swing Line Loans, as the case may be, occurring on such date; and (b) with respect to any L/C Obligations on any date, the amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements by the Borrower of Unreimbursed Amounts.

“Parent” has the meaning specified in the Preliminary Statements hereto.

“Participant” has the meaning specified in Section 11.06(d).

“PBGC” means the Pension Benefit Guaranty Corporation and any successor entity performing similar functions.

“Pension Plan” means any Plan (other than a Multiemployer Plan) that is maintained or is contributed to by the Borrower or any ERISA Affiliate and is either covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code.

“Permitted Business” means (i) any business engaged in by the Borrower or any of its Subsidiaries on the Closing Date, and (ii) any business or other activities that are reasonably similar, ancillary, complementary or related to, or a reasonable extension, development or expansion of, the businesses in which the Borrower and its Subsidiaries are engaged on the Closing Date.

“Permitted Collateral Liens” means (i) in the case of Collateral other than real property subject to a Mortgage and any pledged securities, Liens permitted under Section 7.01, (ii) in the case of real property subject to a Mortgage, “Permitted Collateral Liens” means the Liens described in Section 7.01(a), (c), (d), (g), (m), (o), (r) and (t) and (iii) in the case of Collateral consisting of pledged securities, means the Liens described in Section 7.01(a) and (o).

“Permitted Holders” means the Sponsor and its Affiliates (other than portfolio companies or holding companies of portfolio companies (other than a direct or indirect holding company of the Borrower)).

-20-

“Permitted Payment Restriction” means any restriction that (i) becomes effective only upon the occurrence of (x) specified events under its charter or (y) a default by such Subsidiary in the payment of principal of or interest, a bankruptcy default, a default on any financial covenant or any other material event of default, in each case on Indebtedness that was incurred by such Subsidiary in compliance with Section 7.02 and (ii) does not materially impair the Borrower’s ability to make scheduled payments of cash interest and fees and to make required principal payments on the Loans, as determined in good faith by the board of directors of the Borrower.

“Permitted Payments to Holdings” means

(1) payments, directly or indirectly, to Holdings or any other direct or indirect parent company of the Borrower (including Parent) to be used by Holdings (or any other direct or indirect parent company of the Borrower) to pay (x) consolidated, combined or similar federal, state and local taxes payable by Holdings (or such parent company) and directly attributable to (or arising as a result of) the operations of the Borrower and its Subsidiaries and (y) franchise or similar taxes and fees of Holdings (or such parent company) required to maintain Holdings’ (or such parent company’s) corporate or other existence and other taxes; provided that:

(a) the amount of such dividends, distributions or advances paid shall not exceed the amount (x) that would be due with respect to a consolidated, combined or similar federal, state or local tax return for the Borrower and its Subsidiaries if the Borrower were the parent of such group for federal, state and local tax purposes plus (y) the actual amount of such franchise or similar taxes and fees of Holdings (or such parent company) required to maintain Holdings’ (or such parent company’s) corporate or other existence and other taxes, each as applicable; and

(b) such payments are used by Holdings (or such parent company) for such purposes within 90 days of the receipt of such payments;

(2) payments, directly or indirectly, to Holdings or any other direct or indirect parent company of the Borrower if the proceeds thereof are used to pay general corporate and overhead expenses (including salaries and other compensation of employees) incurred in the ordinary course of its business or of the business of Holdings or such other parent company of the Borrower as a direct or indirect holding company for the Borrower or used to pay fees and expenses (other than to Affiliates) relating to any unsuccessful debt or equity financing, in each case, only to the extent directly attributable to the operations of Holdings, the Borrower and its Subsidiaries; and

(3) so long as no Default exists at the time of such payment or would result therefrom, payments, directly or indirectly, to Holdings or any other direct or indirect parent company of the Borrower if the proceeds thereof are used to pay amounts payable to the Permitted Holders pursuant to Section 7.08(b), solely to the extent such amounts are not paid directly by the Borrower or any of its Subsidiaries; provided that any accelerated payment of periodic management fees under the Sponsor Management Agreement (other than upon termination thereof upon an initial public offering of common stock, or Change of Control, of the Borrower or any direct or indirect parent company of the Borrower) shall constitute a Restricted Payment (whether or not such payment is made by the Borrower directly or through a dividend or distribution to Holdings) not permitted by this clause (3) and shall be permitted only if the Borrower would be permitted to make a Restricted Payment under another exception under Section 7.06.

“Permitted Refinancing Indebtedness” means any Indebtedness of the Borrower or any of its Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, renew, refund, refinance, replace, defease or discharge other Indebtedness of the Borrower or any of its Subsidiaries; provided that:

(a) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness extended, renewed, refunded, refinanced, replaced, defeased or discharged (plus all accrued interest on the Indebtedness and the amount of all fees, commissions, discounts and expenses, including premiums, incurred in connection therewith);

-21-

(b) either (x) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, renewed, refunded, refinanced, replaced, defeased or discharged or (y) all scheduled payments on or in respect of such Permitted Refinancing Indebtedness (other than interest payments) shall be at least 91 days following the Maturity Date;

(c) if the Indebtedness being extended, renewed, refunded, refinanced, replaced, defeased or discharged is subordinated in right of payment to the Obligations, such Permitted Refinancing Indebtedness is subordinated in right of payment to the Obligations on terms at least as favorable to the Lenders as those contained in the documentation governing the Indebtedness being extended, renewed, refunded, refinanced, replaced, defeased or discharged;

(d) such Indebtedness is incurred

(i) by the Borrower or by the Subsidiary who is the obligor on the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged;

(ii) by the Borrower or any Guarantor if the obligor on the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged is the Borrower or a Subsidiary Guarantor; or

(iii) by any Qualified Subsidiary if the obligor on the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged is a Qualified Subsidiary; and

(e) such Indebtedness is only secured if and to the extent and with the priority the Indebtedness being extended, renewed, refunded, refinanced, replaced, defeased or discharged is secured.

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, governmental authority or other entity.

“Plan” means any employee benefit plan within the meaning of Section 3(3) of ERISA, established, maintained or contributed to by the Borrower or any ERISA Affiliate.

“Platform” has the meaning specified in Section 6.02.

“Pledged Securities” has the meaning specified in Section 1.1 of the Security Agreement.

“Pro Forma Basis” means, with respect to any calculation for any period:

(a) Material Acquisitions and Material Dispositions that have been made by the Borrower or any of its Subsidiaries, or any Person or any of its Subsidiaries acquired by, merged or consolidated with the Borrower or any of its Subsidiaries, and including any related financing transactions and including increases in ownership of Subsidiaries, during such period or subsequent to the period and on or prior to the date for which the calculation is being made (the “Calculation Date”) will be given pro forma effect, including giving effect to Pro Forma Cost Savings, as if they had occurred on the first day of the period;

(b) for purposes of the Fixed Charge Coverage Ratio, the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date, will be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the Borrower or any of its Subsidiaries following the Calculation Date;

(c) any Person that is a Subsidiary on the Calculation Date will be deemed to have been a Subsidiary at all times during such period;

-22-

(d) any Person that is not a Subsidiary on the Calculation Date will be deemed not to have been a Subsidiary at any time during such period; and

(e) if any Indebtedness bears a floating rate of interest, the interest expense on such Indebtedness will be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire period (taking into account the effect on such interest rate of any Secured Hedge Agreement applicable to such Indebtedness).

The calculations above shall be made in good faith by a responsible financial or accounting officer of the Borrower. Interest on a Capitalized Lease shall be deemed to accrue at an interest rate reasonably determined by a responsible financial or accounting officer of the Borrower to be the rate of interest implicit in such Capitalized Lease in accordance with GAAP. For purposes of making the computation referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be deemed to have been based upon the rate actually chosen, or, if none, then based upon such optional rate chosen as the Borrower may designate. For the purposes of Sections 7.01(o), 7.02(d), 7.02(m) and 7.03(g), when calculating compliance with a financial ratio as of any date, Consolidated EBITDA and Fixed Charges shall be calculated as of the four quarter period ending on the most date in respect of which a recent balance sheet has been (or was required to be) delivered under Section 6.01(a) or (b).

“Pro Forma Cost Savings” means, with respect to any period, and without duplication of any amounts set forth in clauses (a)(vi) and (vii) of the definition of Consolidated EBITDA, the reduction in net costs and related adjustments that (i) were directly attributable to any Material Acquisition or Material Disposition that occurred during the four-quarter reference period or subsequent to the four-quarter reference period and on or prior to the date of determination and calculated on a basis that is consistent with Regulation S-X under the Securities Act of 1933 as in effect and applied as of the date of this Agreement, (ii) were actually implemented by the business that was the subject of any such Material Acquisition or Material Disposition within 12 months after the date of the acquisition, merger, consolidation or disposition and prior to the date of determination that are supportable and quantifiable by the underlying accounting records of such business or (iii) relate to the business that is the subject of any such acquisition, merger, consolidation or disposition and that the Borrower reasonably determines are probable based upon specifically identifiable actions to be taken within 12 months of the date of the acquisition, merger, consolidation or disposition and, in the case of each of (i), (ii) and (iii), are described, as provided below, in a certificate of a Responsible Officer, as if all such reductions in costs had been effected as of the beginning of such period. Pro Forma Cost Savings described above shall be accompanied by a certificate of a Responsible Officer delivered to the Administrative Agent from the chief financial officer of the Borrower that outlines the actions taken or to be taken, the net cost savings achieved or to be achieved from such actions and that, in the case of clause (iii) above, such savings have been determined to be probable.

“Public Lender” has the meaning specified in Section 6.02.

“Public Market” shall exist if (a) a Public Offering has been consummated and (b) any Equity Interests of Holdings have been distributed by means of an effective registration statement under the Securities Act of 1933.

“Public Offering” means a public offering of the Equity Interests of Holdings pursuant to an effective registration statement under the Securities Act of 1933.

“Purchase Agreement” has the meaning specified in the Preliminary Statements.

“Qualified Proceeds” means any of the following or any combination of the following:

(1) cash or Cash Equivalents;

(2) the Fair Market Value of assets that are used or useful in the Permitted Business; and

-23-

(3) the Fair Market Value of the Equity Interests of any Person engaged primarily in a Permitted Business if, in connection with the receipt by the Borrower or any of its Subsidiaries of such Equity Interests, such Person becomes a Subsidiary Guarantor or a Qualified Subsidiary or such Person is merged or consolidated into the Borrower or a Subsidiary Guarantor or a Qualified Subsidiary;

provided that the amount of Qualified Proceeds shall be reduced by the amount of payments made in respect of the applicable transaction which are permitted under Section 7.08(b)(i).

“Qualified Receivables Transaction” means any transaction or series of transactions entered into by the Borrower or any of its Subsidiaries pursuant to which the Borrower or any of its Subsidiaries sells, conveys or otherwise transfers, or grants a security interest, to:

(1) a Receivables Subsidiary (in the case of a transfer by the Borrower or any of its Subsidiaries, which transfer may be effected through the Borrower or one or more of its Subsidiaries); and

(2) if applicable, any other Person (in the case of a transfer by a Receivables Subsidiary),

in each case, in any accounts receivable (including health care insurance receivables), instruments, chattel paper, general intangibles and similar assets (whether now existing or arising in the future, the “Receivables”) of the Borrower or any of its Subsidiaries, and any assets related thereto, including, without limitation, all collateral securing such Receivables, all contracts, contract rights and all guarantees or other obligations in respect of such Receivables, proceeds of such Receivables and any other assets, which are customarily transferred or in respect of which security interests are customarily granted in connection with receivables financings and asset securitization transactions of such type, together with any related transactions customarily entered into in receivables financings and asset securitizations, including servicing arrangements. All determinations under this Agreement as to whether a particular provision in respect of a receivables transaction is customary shall be made by the Borrower in good faith (which determination shall be conclusive).

“Qualified Subsidiary” means a majority-owned Subsidiary or a Wholly Owned Subsidiary that satisfies each of the following requirements: (1) except for Permitted Payment Restrictions, there are no consensual encumbrances or restrictions, directly or indirectly, on the ability of such Subsidiary to (a) pay dividends or make any other distributions on its Equity Interests to the Borrower or a Subsidiary or pay any Indebtedness owed to the Borrower or a Subsidiary or (b) make any loans or advances to the Borrower or a Subsidiary; (2) the Equity Interests of such Subsidiary are owned by the Borrower and/or one or more of its Qualified Subsidiaries (without giving effect to the proviso in this definition) and, if it is not a Wholly Owned Subsidiary, one or more of (A) Strategic Investors, (B) directors of such Subsidiary (only to the extent holding directors’ qualifying shares) and (C) any other Person to the extent ownership by such other Person is required as a result of changes in law occurring after the Closing Date; and (3) the primary business of such Subsidiary is a Permitted Business; provided that, so long as the laws or regulations of the State of New York require that membership interests in limited liability companies that own dialysis clinics in the State of New York be owned by individuals, a Subsidiary that operates one or more clinics located only in the State of New York shall be deemed a Qualified Subsidiary if (i) the requirements of clause (1) and (3) of this definition are satisfied, (ii) a majority of its Equity Interests are owned by an officer of the Borrower who is party to a written contract with the Borrower or a Subsidiary Guarantor pursuant to which the Borrower or such Subsidiary Guarantor shall have the right to repurchase all of such Equity Interests owned by such officer for a nominal amount, (iii) the Borrower or a Subsidiary Guarantor receives dividends and distributions from such Subsidiary as if it owned all of the Equity Interests owned by such officer and (iv) such officer pledges such Equity Interests as part of the Collateral to the extent such Equity Interests would have been pledged if they were owned by the Borrower or a Guarantor.

“Receivables Fees” means distributions or payments made directly or by means of discounts with respect to any participation interest issued or sold in connection with, and other fees paid to a Person that is not a Subsidiary in connection with, any Qualified Receivables Transaction.

“Receivables Repurchase Obligation” means any obligation of a seller of receivables in a Qualified Receivables Transaction to repurchase receivables arising as a result of a breach of a representation, warranty or

-24-

covenant or otherwise, including as a result of a receivable or portion thereof becoming subject to any asserted defense, dispute, off-set or counterclaim of any kind as a result of any action taken by, any failure to take action by or any other event relating to the seller.

“Receivables Subsidiary” means a Subsidiary of the Borrower which engages in no activities other than in connection with the financing of accounts receivable and in businesses related or ancillary thereto and that is designated by the board of directors of the Borrower (as provided below) as a Receivables Subsidiary (A) no portion of the Indebtedness or any other Obligations (contingent or otherwise) of which:

(1) is guaranteed by the Borrower or any Subsidiary of the Borrower (excluding guarantees of Obligations (other than the principal of, and interest on, Indebtedness) pursuant to Standard Securitization Undertakings);

(2) is recourse to or obligates the Borrower or any Subsidiary of the Borrower in any way other than pursuant to Standard Securitization Undertakings; or

(3) subjects any property or asset of the Borrower or any Subsidiary of the Borrower (other than accounts receivable and related assets as provided in the definition of Qualified Receivables Transaction), directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings; and

(B) with which neither the Borrower nor any Subsidiary of the Borrower has any material contract, agreement, arrangement or understanding other than on terms no less favorable to the Borrower or such Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Borrower, other than as may be customary in a Qualified Receivables Transaction including for fees payable in the ordinary course of business in connection with servicing accounts receivable; and (C) with which neither the Borrower nor any Subsidiary of the Borrower has any obligation to maintain or preserve such Subsidiary’s financial condition or cause such Subsidiary to achieve certain levels of operating results other than pursuant to representations, warranties, covenants and indemnities entered into in connection with a Qualified Receivables Transaction. The Borrower shall deliver to the Administrative Agent a certified copy of the resolution of the board of directors of the Borrower giving effect to any such designation and a certificate of a Responsible Officer certifying that such designation complied with the foregoing conditions.

“Register” has the meaning specified in Section 11.06(c).

“Reinvestment” means, so long as no Default has occurred and is continuing, a reinvestment of any Net Cash Proceeds of a Disposition made pursuant to Section 7.05(l), within 365 days of receipt of such Net Cash Proceeds, in one or more of the following (w) an acquisition of the Equity Interests of a Person primarily engaged in a Permitted Business, if, after giving effect thereto, such Person is or becomes a Subsidiary Guarantor or a Qualified Subsidiary of the Borrower, (x) Investments pursuant to Section 7.03(i), (y) capital expenditures of the Borrower and its Subsidiaries or (z) an acquisition of assets (other than Indebtedness and Equity Interests) to be used by the Borrower or the applicable Subsidiary in a Permitted Business; provided that (a) in all cases, to the extent the assets that were the subject of such Disposition were Collateral, such Net Cash Proceeds shall be reinvested in Collateral and (b) Borrower shall deliver a notice to the Administrative Agent of its intention to so reinvest such Net Cash Proceeds within 10 Business Days of the receipt thereof (a “Reinvestment Notice”).

“Reinvestment Notice” has the meaning specified in the definition of “Reinvestment”.

“Related Documents” means the Purchase Agreement and the annexes, exhibits and disclosure schedules referenced therein.

“Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees and advisors of such Person and of such Person’s Affiliates.

-25-

“Replacement Preferred Stock” means any Disqualified Stock of the Borrower or any of its Subsidiaries issued in exchange for, or the net proceeds of which are used to redeem, refund, refinance, replace or discharge any Disqualified Stock of the Borrower or any of its Subsidiaries (other than Disqualified Stock issued by the Borrower or a Subsidiary to the Borrower or another Subsidiary); provided that such Replacement Preferred Stock (i) is issued by the Borrower or by the Subsidiary who is the issuer of the Disqualified Stock being redeemed, refunded, refinanced, replaced or discharged, (ii) does not have an initial liquidation preference in excess of the liquidation preference plus accrued and unpaid dividends on the Disqualified Stock being redeemed, refunded, refinanced, replaced or discharged and (iii) does not require redemption, repurchase or discharge at any time prior to the date on which the Disqualified Stock being redeemed, refunded, refinanced, replaced or discharged is required to be redeemed, repurchased or discharged.

“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived with respect to a Pension Plan (other than a Pension Plan maintained by an ERISA Affiliate that is considered an ERISA Affiliate only pursuant to subsection (m) or (o) of Section 414 of the Code).

“Request for Credit Extension” means (a) with respect to a Borrowing, conversion or continuation of Revolving Credit Loans, a Committed Loan Notice, (b) with respect to an L/C Credit Extension, a Letter of Credit Application, and (c) with respect to a Swing Line Loan, a Swing Line Loan Notice.

“Required Lenders” means, as of any date of determination, Lenders holding more than 50% of the sum of the (a) Total Outstandings (with the aggregate amount of each Lender’s risk participation and funded participation in L/C Obligations and Swing Line Loans being deemed “held” by such Lender for purposes of this definition) and (b) aggregate unused Commitments; provided that the unused Commitment of, and the portion of the Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.

“Responsible Officer” means the chief executive officer, president, chief financial officer, treasurer, assistant treasurer or controller of a Loan Party. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.

“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any capital stock or other Equity Interest of any Person or any of its Subsidiaries, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, defeasance, acquisition, cancellation or termination of any such capital stock or other Equity Interest, or on account of any return of capital to any Person’s stockholders, partners or members (or the equivalent of any thereof), or any option, warrant or other right to acquire any such dividend or other distribution or payment.

“Revolving Credit Borrowing” means a borrowing consisting of simultaneous Revolving Credit Loans of the same Type and, in the case of Eurodollar Rate Loans, having the same Interest Period made by each of the Lenders pursuant to Section 2.01.

“Revolving Credit Loan” has the meaning specified in Section 2.01.

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and any successor thereto.

“Sale and Leaseback Transaction” has the meaning specified in Section 7.11.

“SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

-26-

“Secured Cash Management Agreement” means any Cash Management Agreement that is entered into by and between the Borrower or any Subsidiary Guarantor, on the one hand, and any Cash Management Bank, on the other hand.

“Secured Hedge Agreement” means any Swap Contract permitted under Article VII that is entered into by and between Borrower or any Subsidiary Guarantor, on the one hand, and any Hedge Bank, on the other hand.

“Secured Intercompany Note” has the meaning specified in Section 7.03(c).

“Secured Parties” means, collectively, the Administrative Agent, the Lenders, the L/C Issuer, the Hedge Banks, the Cash Management Banks, each co-agent or sub-agent appointed by the Administrative Agent from time to time pursuant to Section 9.05, and the other Persons the Obligations owing to which are secured by the Collateral under the terms of the Collateral Documents.

“Security Agreement” means a security agreement, in substantially the form of Exhibit G (together with each Security Agreement Supplement delivered pursuant to Section 6.12, in each case as amended, the “Security Agreement”), duly executed by each Loan Party.

“Security Agreement Supplement” has the meaning specified in Section 1.1(c) of the Security Agreement.

“Senior Secured Notes” means the 8.375% senior secured notes of the Borrower due 2018 in an aggregate principal amount of $250,000,000 issued and sold on the Closing Date pursuant to the Senior Secured Notes Documents.

“Senior Secured Notes Documents” means the Senior Secured Notes Indenture and the Senior Secured Notes.

“Senior Secured Notes Indenture” means the indenture dated as of the Closing Date among the Borrower, the Guarantors and Wilmington Trust FSB, as trustee.

“Social Security Act” means the Social Security Act of 1965.

“Solvent” means, with respect to any Person on a particular date, that on such date (i) the fair value of the property of such Person is not less than the total amount of liabilities, including contingent liabilities, of such Person, (ii) the present fair salable value of the assets of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (iii) such Person will be able to pay its debts and other liabilities as such debts and other liabilities become absolute and matured and (iv) such Person is not left with property remaining in its hands constituting “unreasonably small capital” with which to conduct its business. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

“Sponsor” means Centerbridge Capital Partners, L.P.

“Sponsor Management Agreement” means the Management Agreement between the Borrower and Centerbridge Capital Partners, L.P. dated as of the Closing Date and as the same may be further amended, supplemented or otherwise modified from time to time.

“Spot Rate” has the meaning specified in Section 1.07.

“Standard Securitization Undertakings” means representations, warranties, covenants and indemnities entered into by the Borrower or any Subsidiary of the Borrower which the Borrower has determined in good faith to be customary in a Qualified Receivables Transaction including, without limitation, those relating to the servicing of the assets of a Receivables Subsidiary, it being understood that any Receivables Repurchase Obligation shall be deemed to be a Standard Securitization Undertaking.

-27-

“Strategic Investors” means physicians, hospitals, health systems, other healthcare providers, other healthcare companies and other similar strategic joint venture partners which joint venture partners are, directly or indirectly, actively involved in the day-to-day operations of providing dialysis-related services, or, in the case of physicians, that have retired therefrom, individuals who are former owners or employees of dialysis clinics purchased by the Borrower, any of its Subsidiaries, and consulting firms that receive common stock solely as consideration for consulting services performed.

“subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date.

“Subsidiary” means any subsidiary of the Borrower.

“Subsidiary Guarantor” means the Borrower and each Subsidiary that is party to the Guaranty.

“Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other similar master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.

“Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).

“Swing Line Borrowing” means a borrowing of a Swing Line Loan pursuant to Section 2.04.

“Swing Line Lender” means Bank of America in its capacity as provider of Swing Line Loans, or any successor swing line lender hereunder.

“Swing Line Loan” has the meaning specified in Section 2.04(a).

“Swing Line Loan Notice” means a notice of a Swing Line Borrowing pursuant to Section 2.04(b), which, if in writing, shall be substantially in the form of Exhibit B.

“Swing Line Sublimit” means an amount equal to the lesser of (a) $5,000,000 and (b) the Facility. The Swing Line Sublimit is part of, and not in addition to, the Facility.

“Synthetic Lease Obligation” means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property (including Sale and Leaseback Transactions), in each case, creating obligations that do not appear on the balance sheet of such Person but which, upon the application of any Debtor Relief Laws to such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).

-28-

“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

“Threshold Amount” means $10,000,000.

“Total Assets” means the total consolidated assets of the Borrower and its Subsidiaries as set forth on the most recent consolidated balance sheet of the Borrower and its Subsidiaries prepared in accordance with GAAP.

“Total Outstandings” means the aggregate Outstanding Amount of all Revolving Credit Loans, Swing Line Loans and L/C Obligations.

“Transaction” means, collectively, (a) the formation of Parent by the Permitted Holders and the issuance of all Equity Interests therein to the Permitted Holders and certain members of management of the Company, (b) the formation by Parent of Holdings and the formation by Holdings of MergerCo, (c) the consummation of the Merger, (d) the issuance and sale of the Senior Secured Notes, (e) the entering into by the Loan Parties and their applicable Subsidiaries of the Loan Documents, the Senior Secured Notes Documents and the Related Documents to which they are a party (and the acknowledgment by the Loan Parties of the Intercreditor Agreement), (f) the refinancing of all Indebtedness of the Company outstanding immediately prior to the Closing Date (other than up to $12,000,000 of Indebtedness at certain Subsidiaries of the Borrower that shall not be Guarantors) and the termination of all commitments with respect thereto and (g) the payment of the fees and expenses incurred in connection with the consummation of the foregoing.

“Type” means, with respect to a Loan, its character as a Base Rate Loan or a Eurodollar Rate Loan.

“UCC” means the Uniform Commercial Code as in effect in the State of New York; provided that, if perfection or the effect of perfection or non-perfection or the priority of any security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, “UCC” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection or priority.

“United States” and “U.S.” mean the United States of America.

“Unreimbursed Amount” has the meaning specified in Section 2.03(c)(i).

“U.S. Loan Party” means any Loan Party that is organized under the laws of one of the states of the United States and that is not a CFC.

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing:

(a) the sum of the product obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal, including payment at final maturity, in respect of such Indebtedness, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by

(b) the then outstanding principal amount of such Indebtedness.

“Wholly Owned Subsidiary” of any specified Person means a Subsidiary of such Person all of the outstanding Equity Interests or other ownership interest of which (other than directors’ qualifying shares) will at that time be owned by such Person or by one or more Wholly Owned Subsidiaries of such Person.

-29-

1.02. Other Interpretive Provisions. With reference to the Intercreditor Agreement, this Agreement and each other Loan Document, unless otherwise specified herein or in the Intercreditor Agreement or such other Loan Document:

(a) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document or the Intercreditor Agreement), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “hereto,” “herein,” “hereof” and “hereunder,” and words of similar import when used in any Loan Document or the Intercreditor Agreement, shall be construed to refer to such Loan Document or the Intercreditor Agreement in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document or the Intercreditor Agreement to Articles, Sections, Preliminary Statements, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Preliminary Statements, Exhibits and Schedules to, the Intercreditor Agreement or the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

(b) In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”; the words “to” and “until” each mean “to but excluding”; and the word “through” means “to and including.”

(c) Section headings herein and in the other Loan Documents and the Intercreditor Agreement are included for convenience of reference only and shall not affect the interpretation of this Agreement, any other Loan Document or the Intercreditor Agreement.

1.03. Accounting Terms.

(a) Generally. All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein. Notwithstanding the foregoing, for purposes of determining compliance with any covenant (including the computation of any financial covenant) contained herein, Indebtedness of the Borrower and its Subsidiaries shall be deemed to be carried at 100% of the outstanding principal amount thereof, and the effects of FASB ASC 825 and FASB ASC 470-20 on financial liabilities shall be disregarded. Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, without giving effect to any election under Statement of Financial Accounting Standards 159 (or any other Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of the Borrower or any of its Subsidiaries at “fair value”, as defined therein.

(b) Changes in GAAP. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be

-30-

computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.

1.04. Rounding. Any financial ratios required to be maintained by the Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

1.05. Times of Day. Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).

1.06. Letter of Credit Amounts. Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; provided, however, that with respect to any Letter of Credit that, by its terms or the terms of any Issuer Document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.

1.07. Currency Equivalents Generally. Any amount specified in this Agreement (other than in Article II) or any of the other Loan Documents to be in Dollars shall also include the equivalent of such amount in any currency other than Dollars, such equivalent amount thereof in the applicable currency to be determined by the Administrative Agent at such time on the basis of the Spot Rate (as defined below) for the purchase of such currency with Dollars. For purposes of this Section 1.07, the “Spot Rate” for a currency means the rate determined by the Administrative Agent to be the rate quoted by the Person acting in such capacity as the spot rate for the purchase by such Person of such currency with another currency through its principal foreign exchange trading office at approximately 11:00 a.m. on the date two Business Days prior to the date of such determination; provided that the Administrative Agent may obtain such spot rate from another financial institution designated by the Administrative Agent if the Person acting in such capacity does not have as of the date of determination a spot buying rate for any such currency.

ARTICLE II

THE COMMITMENTS AND CREDIT EXTENSIONS

2.01. The Loans.

Subject to the terms and conditions set forth herein, each Lender severally agrees to make loans (each such loan, a “Revolving Credit Loan”) to the Borrower from time to time, on any Business Day during the Availability Period, in an aggregate amount not to exceed at any time outstanding the amount of such Lender’s Commitment; provided, however, that after giving effect to any Revolving Credit Borrowing, (i) the Total Outstandings shall not exceed the Facility, and (ii) the aggregate Outstanding Amount of the Revolving Credit Loans of any Lender, plus such Lender’s Applicable Percentage of the Outstanding Amount of all L/C Obligations, plus such Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line Loans shall not exceed such Lender’s Commitment; provided, further, that not more than $5,000,000 of Revolving Credit Loans shall be made on the Closing Date. Within the limits of each Lender’s Commitment, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.01, prepay under Section 2.05, and reborrow under this Section 2.01. Revolving Credit Loans may be Base Rate Loans or Eurodollar Rate Loans, as further provided herein.

2.02. Borrowings, Conversions and Continuations of Loans.

(a) Each Revolving Credit Borrowing, each conversion of Revolving Credit Loans from one Type to the other, and each continuation of Eurodollar Rate Loans shall be made upon the Borrower’s irrevocable notice to the Administrative Agent, which may be given by telephone. Each such notice must be received by the Administrative Agent not later than 11:00 a.m. (i) three Business Days prior to the requested date of any Borrowing

-31-

of, conversion to or continuation of Eurodollar Rate Loans or of any conversion of Eurodollar Rate Loans to Base Rate Loans, and (ii) on the requested date of any Borrowing of Base Rate Loans; provided, however, that if the Borrower wishes to request Eurodollar Rate Loans having an Interest Period other than one, two, three or six months in duration as provided in the definition of “Interest Period,” the applicable notice must be received by the Administrative Agent not later than 11:00 a.m. four Business Days prior to the requested date of such Borrowing, conversion or continuation, whereupon the Administrative Agent shall give prompt notice to the Appropriate Lenders of such request and determine whether the requested Interest Period is acceptable to all of them. Not later than 11:00 a.m., three Business Days before the requested date of such Borrowing, conversion or continuation, the Administrative Agent shall notify the Borrower (which notice may be by telephone) whether or not the requested Interest Period has been consented to by all the Lenders. Each telephonic notice by the Borrower pursuant to this Section 2.02(a) must be confirmed promptly by delivery to the Administrative Agent of a written Committed Loan Notice, appropriately completed and signed by a Responsible Officer of the Borrower. Each Borrowing of, conversion to or continuation of Eurodollar Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof. Except as provided in Sections 2.03(c) and 2.04(c), each Borrowing of or conversion to Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof. Each Committed Loan Notice (whether telephonic or written) shall specify (i) whether the Borrower is requesting a Revolving Credit Borrowing, a conversion of Revolving Credit Loans from one Type to the other, or a continuation of Eurodollar Rate Loans, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Loans to be borrowed, converted or continued, (iv) the Type of Loans to be borrowed or to which existing Loans are to be converted, and (v) if applicable, the duration of the Interest Period with respect thereto. If the Borrower fails to specify a Type of Loan in a Committed Loan Notice or if the Borrower fails to give a timely notice requesting a conversion or continuation, then the applicable Revolving Credit Loans shall be made as, or converted to, Base Rate Loans. Any such automatic conversion to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Eurodollar Rate Loans. If the Borrower requests a Borrowing of, conversion to, or continuation of Eurodollar Rate Loans in any such Committed Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month. Notwithstanding anything to the contrary herein, a Swing Line Loan may not be converted to a Eurodollar Rate Loan.

(b) Following receipt of a Committed Loan Notice, the Administrative Agent shall promptly notify each Lender of the amount of its Applicable Percentage of the applicable Revolving Credit Loans, and if no timely notice of a conversion or continuation is provided by the Borrower, the Administrative Agent shall notify each Lender of the details of any automatic conversion to Base Rate Loans described in Section 2.02(a). In the case of a Revolving Credit Borrowing, each Lender shall make the amount of its Loan available to the Administrative Agent in immediately available funds at the Administrative Agent’s Office not later than 1:00 p.m. on the Business Day specified in the applicable Committed Loan Notice. Upon satisfaction of the applicable conditions set forth in Section 4.02 (and, if such Borrowing is the initial Credit Extension, Section 4.01), the Administrative Agent shall make all funds so received available to the Borrower in like funds as received by the Administrative Agent either by (i) crediting the account of the Borrower on the books of Bank of America with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by the Borrower; provided, however, that if, on the date a Committed Loan Notice with respect to a Revolving Credit Borrowing is given by the Borrower, there are L/C Borrowings outstanding, then the proceeds of such Revolving Credit Borrowing, first, shall be applied to the payment in full of any such L/C Borrowings, and second, shall be made available to the Borrower as provided above.

(c) Except as otherwise provided herein, a Eurodollar Rate Loan may be continued or converted only on the last day of an Interest Period for such Eurodollar Rate Loan. During the existence of a Default, upon notice from the Required Lenders, Loans will cease to be able to be requested as, converted to or continued as Eurodollar Rate Loans.

(d) The Administrative Agent shall promptly notify the Borrower and the Lenders of the interest rate applicable to any Interest Period for Eurodollar Rate Loans upon determination of such interest rate. At any time that Base Rate Loans are outstanding, the Administrative Agent shall notify the Borrower and the Lenders of any change in Bank of America’s prime rate used in determining the Base Rate promptly following the public announcement of such change.

-32-

(e) After giving effect to all Revolving Credit Borrowings, all conversions of Revolving Credit Loans from one Type to the other, and all continuations of Revolving Credit Loans as the same Type, there shall not be more than five (5) Interest Periods in effect.

2.03. Letters of Credit.

(a) The Letter of Credit Commitment. (i) Subject to the terms and conditions set forth herein, (A) the L/C Issuer agrees, in reliance upon the agreements of the Lenders set forth in this Section 2.03, (1) from time to time on any Business Day during the period from the Closing Date until the Letter of Credit Expiration Date, to issue Letters of Credit for the account of the Borrower or its Subsidiaries, and to amend or extend Letters of Credit previously issued by it, in accordance with Section 2.03(b), and (2) to honor drawings under the Letters of Credit; and (B) the Lenders severally agree to participate in Letters of Credit issued for the account of the Borrower or its Subsidiaries and any drawings thereunder; provided that after giving effect to any L/C Credit Extension with respect to any Letter of Credit, (x) the Total Outstandings shall not exceed the Facility, (y) the aggregate Outstanding Amount of the Revolving Credit Loans of any Lender, plus such Lender’s Applicable Percentage of the Outstanding Amount of all L/C Obligations, plus such Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line Loans shall not exceed such Lender’s Commitment, and (z) the Outstanding Amount of the L/C Obligations shall not exceed the Letter of Credit Sublimit. Each request by the Borrower for the issuance or amendment of a Letter of Credit shall be deemed to be a representation by the Borrower that the L/C Credit Extension so requested complies with the conditions set forth in the proviso to the preceding sentence. Within the foregoing limits, and subject to the terms and conditions hereof, the Borrower’s ability to obtain Letters of Credit shall be fully revolving, and accordingly the Borrower may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed.

(ii) The L/C Issuer shall not issue any Letter of Credit if:

(A) subject to Section 2.03(b)(iii), the expiry date of such requested Letter of Credit would occur more than twelve months after the date of issuance or last extension, unless the Required Lenders have approved such expiry date; or

(B) the expiry date of the requested Letter of Credit would occur after the Letter of Credit Expiration Date, unless all the Lenders and the L/C Issuer have approved such expiry date.

(iii) The L/C Issuer shall not be under any obligation to issue any Letter of Credit if:

(A) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the L/C Issuer from issuing the Letter of Credit, or any Law applicable to the L/C Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the L/C Issuer shall prohibit, or request that the L/C Issuer refrain from, the issuance of letters of credit generally or the Letter of Credit in particular or shall impose upon the L/C Issuer with respect to the Letter of Credit any restriction, reserve or capital requirement (for which the L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which the L/C Issuer in good faith deems material to it;

(B) the issuance of the Letter of Credit would violate one or more policies of the L/C Issuer applicable to letters of credit generally;

(C) except as otherwise agreed by the Administrative Agent and the L/C Issuer, the Letter of Credit is in an initial stated amount less than $100,000, in the case of a commercial Letter of Credit, or $500,000, in the case of a standby Letter of Credit;

(D) the Letter of Credit is to be denominated in a currency other than Dollars; or

-33-

(E) any Lender is at that time a Defaulting Lender, unless the L/C Issuer has entered into arrangements, including the delivery of Cash Collateral, reasonably satisfactory to the L/C Issuer (in its sole discretion) with the Borrower or such Lender to eliminate the L/C Issuer’s actual or potential Fronting Exposure (after giving effect to Section 2.15(a)(iv)) with respect to the Defaulting Lender arising from either the Letter of Credit then proposed to be issued or that Letter of Credit and all other L/C Obligations as to which the L/C Issuer has actual or potential Fronting Exposure, as it may elect in its sole discretion;

(iv) The L/C Issuer shall not amend any Letter of Credit if the L/C Issuer would not be permitted at such time to issue such Letter of Credit in its amended form under the terms hereof.

(v) The L/C Issuer shall be under no obligation to amend any Letter of Credit if (A) the L/C Issuer would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit.

(vi) The L/C Issuer shall act on behalf of the Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and the L/C Issuer shall have all of the benefits and immunities (A) provided to the Administrative Agent in Article IX with respect to any acts taken or omissions suffered by the L/C Issuer in connection with Letters of Credit issued by it or proposed to be issued by it and Issuer Documents pertaining to such Letters of Credit as fully as if the term “Administrative Agent” as used in Article IX included the L/C Issuer with respect to such acts or omissions, and (B) as additionally provided herein with respect to the L/C Issuer.

(b) Procedures for Issuance and Amendment of Letters of Credit; Auto-Extension Letters of Credit. (i) Each Letter of Credit shall be issued or amended, as the case may be, upon the request of the Borrower delivered to the L/C Issuer (with a copy to the Administrative Agent) in the form of a Letter of Credit Application, completed and signed by a Responsible Officer of the Borrower. Such Letter of Credit Application must be received by the L/C Issuer and the Administrative Agent not later than 11:00 a.m. at least two Business Days (or such later date and time as the Administrative Agent and the L/C Issuer may agree in a particular instance in their sole discretion) prior to the proposed issuance date or date of amendment, as the case may be. In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail reasonably satisfactory to the L/C Issuer: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; and (G) the purpose and nature of the requested Letter of Credit. In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify in form and detail reasonably satisfactory to the L/C Issuer (1) the Letter of Credit to be amended; (2) the proposed date of amendment thereof (which shall be a Business Day); and (3) the nature of the proposed amendment. Additionally, the Borrower shall furnish to the L/C Issuer and the Administrative Agent such other documents and information pertaining to such requested Letter of Credit issuance or amendment, including any Issuer Documents, as the L/C Issuer or the Administrative Agent may reasonably require in accordance with such L/C Issuer’s usual and customary business practices.

(ii) Promptly after receipt of any Letter of Credit Application, the L/C Issuer will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of such Letter of Credit Application from the Borrower and, if not, the L/C Issuer will provide the Administrative Agent with a copy thereof. Unless the L/C Issuer has received written notice from the Required Lenders, the Administrative Agent or any Loan Party, at least one Business Day prior to the requested date of issuance or amendment of the applicable Letter of Credit, that one or more applicable conditions contained in Article IV shall not then be satisfied, then, subject to the terms and conditions hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of the Borrower (or the applicable Subsidiary) or enter into the applicable amendment, as the case may be, in each case in accordance with the L/C Issuer’s usual and customary business practices. Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the L/C Issuer a risk participation in such Letter of Credit in an amount equal to the product of such Lender’s Applicable Percentage times the amount of such Letter of Credit.

-34-

(iii) If the Borrower so requests in any applicable Letter of Credit Application, the L/C Issuer may, in its sole discretion, agree to issue a Letter of Credit that has automatic extension provisions (each, an “Auto-Extension Letter of Credit”); provided that any such Auto-Extension Letter of Credit must permit the L/C Issuer to prevent any such extension at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “Non-Extension Notice Date”) in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the L/C Issuer, the Borrower shall not be required to make a specific request to the L/C Issuer for any such extension. Once an Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the L/C Issuer to permit the extension of such Letter of Credit at any time to an expiry date not later than the Letter of Credit Expiration Date; provided, however, that the L/C Issuer shall not permit any such extension if (A) the L/C Issuer has determined that it would not be permitted, or would have no obligation at such time to issue such Letter of Credit in its revised form (as extended) under the terms hereof (by reason of the provisions of clause (ii) or (iii) of Section 2.03(a)), or (B) it has received notice (which may be by telephone or in writing) on or before the day that is seven Business Days before the Non-Extension Notice Date (1) from the Administrative Agent that the Required Lenders have elected not to permit such extension or (2) from the Required Lenders or the Administrative Agent on their behalf or from the Borrower that one or more of the applicable conditions specified in Section 4.02 is not then satisfied, and in each such case directing the L/C Issuer not to permit such extension.

(iv) If the Borrower so requests in any applicable Letter of Credit Application, the L/C Issuer may, in its sole discretion, agree to issue a Letter of Credit that permits the automatic reinstatement of all or a portion of the stated amount thereof after any drawing thereunder (each, an “Auto-Reinstatement Letter of Credit”). Unless otherwise directed by the L/C Issuer, the Borrower shall not be required to make a specific request to the L/C Issuer to permit such reinstatement. Once an Auto-Reinstatement Letter of Credit has been issued, except as provided in the following sentence, the Lenders shall be deemed to have authorized (but may not require) the L/C Issuer to reinstate all or a portion of the stated amount thereof in accordance with the provisions of such Letter of Credit. Notwithstanding the foregoing, if such Auto-Reinstatement Letter of Credit permits the L/C Issuer to decline to reinstate all or any portion of the stated amount thereof after a drawing thereunder by giving notice of such non-reinstatement within a specified number of days after such drawing (the “Non-Reinstatement Deadline”), the L/C Issuer shall not permit such reinstatement if it has received a notice (which may be by telephone or in writing) on or before the day that is seven Business Days before the Non-Reinstatement Deadline (A) from the Administrative Agent that the Required Lenders have elected not to permit such reinstatement or (B) from the Required Lenders or the Administrative Agent on their behalf or from the Borrower that one or more of the applicable conditions specified in Section 4.02 is not then satisfied (treating such reinstatement as an L/C Credit Extension for purposes of this clause) and, in each case, directing the L/C Issuer not to permit such reinstatement.

(v) Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the L/C Issuer will also deliver to the Borrower and the Administrative Agent a true and complete copy of such Letter of Credit or amendment.

(c) Drawings and Reimbursements; Funding of Participations. (i) Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the L/C Issuer shall notify the Borrower and the Administrative Agent thereof. Not later than 3:00 p.m. on the date of any payment by the L/C Issuer under a Letter of Credit if the L/C Issuer delivers notice of such payment by 11:00 a.m. on such day or, if notice of such payment by the L/C Issuer is delivered after 11:00 a.m., not later than 10:00 a.m. on the next succeeding Business Day (each such date, an “Honor Date”), the Borrower shall reimburse the L/C Issuer through the Administrative Agent in an amount equal to the amount of such drawing. If the Borrower fails to so reimburse the L/C Issuer by the time set forth in the preceding sentence, such L/C Issuer shall promptly notify the Administrative Agent of such failure, and the Administrative Agent shall promptly notify each Lender of the Honor Date, the amount of the unreimbursed drawing (the “Unreimbursed Amount”), and the amount of such Lender’s Applicable Percentage thereof. In such event, the Borrower shall be deemed to have requested a Revolving Credit Borrowing of Base Rate Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed Amount, without regard to the minimum and multiples specified in Section 2.02 for the principal amount of Base Rate Loans, but subject to the amount of the unutilized portion of the Commitments and the conditions set forth in Section 4.02 (other than the delivery of a Committed Loan Notice). Any notice given by the L/C Issuer or the AdministrativeAgent pursuant to this Section 2.03(c)(i) may be given by telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.

-35-

(ii) Each Lender shall upon any notice pursuant to Section 2.03(c)(i) make funds available to the Administrative Agent (and the Administrative Agent may apply Cash Collateral provided for this purpose) for the account of the L/C Issuer at the Administrative Agent’s Office in an amount equal to its Applicable Percentage of the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in such notice by the Administrative Agent, whereupon, subject to the provisions of Section 2.03(c)(iii), each Lender that so makes funds available shall be deemed to have made a Base Rate Loan to the Borrower in such amount. The Administrative Agent shall remit the funds so received to the L/C Issuer.

(iii) With respect to any Unreimbursed Amount that is not fully refinanced by a Revolving Credit Borrowing of Base Rate Loans because the conditions set forth in Section 4.02 cannot be satisfied or for any other reason, the Borrower shall be deemed to have incurred from the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest (A) at the rate applicable to Base Rate Loans to the date reimbursement is required pursuant to Section 2.03(c)(i) and (B) thereafter at the Default Rate. In such event, each Lender’s payment to the Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(ii) shall be deemed payment in respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its participation obligation under this Section 2.03.

(iv) Until each Lender funds its Loan or L/C Advance pursuant to this Section 2.03(c) to reimburse the L/C Issuer for any amount drawn under any Letter of Credit, interest in respect of such Lender’s Applicable Percentage of such amount shall be solely for the account of the L/C Issuer.

(v) Each Lender’s obligation to make Loans or L/C Advances to reimburse the L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this Section 2.03(c), shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against the L/C Issuer, the Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided, however, that each Lender’s obligation to make Loans (but not to fund L/C Advances or L/C Borrowings) pursuant to this Section 2.03(c) is subject to the conditions set forth in Section 4.02 (other than delivery by the Borrower of a Committed Loan Notice ). No such making of an L/C Advance shall relieve or otherwise impair the obligation of the Borrower to reimburse the L/C Issuer for the amount of any payment made by the L/C Issuer under any Letter of Credit, together with interest as provided herein.

(vi) If any Lender fails to make available to the Administrative Agent for the account of the L/C Issuer any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.03(c) by the time specified in Section 2.03(c)(ii), then, without limiting the other provisions of this Agreement, the L/C Issuer shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the L/C Issuer at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by the L/C Issuer in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the L/C Issuer in connection with the foregoing. If such Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such Lender’s Loan included in the relevant Borrowing or L/C Advance in respect of the relevant L/C Borrowing, as the case may be. A certificate of the L/C Issuer submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this Section 2.03(c)(vi) shall be conclusive absent manifest error.

(d) Repayment of Participations. (i) At any time after the L/C Issuer has made a payment under any Letter of Credit and has received from any Lender such Lender’s L/C Advance in respect of such payment in accordance with Section 2.03(c), if the Administrative Agent receives for the account of the L/C Issuer any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from the Borrower or otherwise, including proceeds of Cash Collateral applied thereto by the Administrative Agent), the Administrative Agent will distribute to such Lender its Applicable Percentage thereof in the same funds as those received by the Administrative Agent.

-36-

(ii) If any payment received by the Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(i) is required to be returned under any of the circumstances described in Section 11.05 (including pursuant to any settlement entered into by the L/C Issuer in its discretion), each Lender shall pay to the Administrative Agent for the account of the L/C Issuer its Applicable Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned by such Lender, at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.

(e) Obligations Absolute. The obligation of the Borrower to reimburse the L/C Issuer for each drawing under each Letter of Credit and to repay each L/C Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:

(i) any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other Loan Document;

(ii) the existence of any claim, counterclaim, setoff, defense (other than payment in full of such L/C Borrowing) or other right that the Borrower or any Subsidiary may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the L/C Issuer or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;

(iii) any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;

(iv) any payment by the L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by the L/C Issuer under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law; or

(v) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense (other than payment in full of such L/C Borrowing) available to, or a discharge of, the Borrower or any of its Subsidiaries.

The Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with the Borrower’s instructions or other irregularity, the Borrower will immediately notify the L/C Issuer. The Borrower shall be conclusively deemed to have waived any such claim against the L/C Issuer and its correspondents unless such notice is given as aforesaid.

(f) Role of L/C Issuer. Each Lender and the Borrower agree that, in paying any drawing under a Letter of Credit, the L/C Issuer shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. None of the L/C Issuer, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the Lenders or the Required Lenders, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or

-37-

enforceability of any document or instrument related to any Letter of Credit or Issuer Document. The Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided, however, that this assumption is not intended to, and shall not, preclude the Borrower’s pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of the L/C Issuer, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer shall be liable or responsible for any of the matters described in clauses (i) through (v) of Section 2.03(e); provided, however, that anything in such clauses to the contrary notwithstanding, the Borrower may have a claim against the L/C Issuer, and the L/C Issuer may be liable to the Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Borrower which the Borrower proves were caused by the L/C Issuer’s willful misconduct or gross negligence or the L/C Issuer’s willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, the L/C Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and the L/C Issuer shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason.

(g) Applicability of ISP and UCP. Unless otherwise expressly agreed by the L/C Issuer and the Borrower when a Letter of Credit is issued, (i) the rules of the ISP shall apply to each standby Letter of Credit, and (ii) the rules of the Uniform Customs and Practice for Documentary Credits, as most recently published by the International Chamber of Commerce at the time of issuance shall apply to each commercial Letter of Credit.

(h) Letter of Credit Fees. The Borrower shall pay to the Administrative Agent for the account of each Lender in accordance with its Applicable Percentage a Letter of Credit fee (the “Letter of Credit Fee”) for each Letter of Credit equal to the Applicable Rate for Eurodollar Rate Loans times the daily amount available to be drawn under such Letter of Credit; provided, however, any Letter of Credit Fees otherwise payable for the account of a Defaulting Lender with respect to any Letter of Credit as to which such Defaulting Lender has not provided Cash Collateral satisfactory to the L/C Issuer pursuant to this Section 2.03 shall be payable, to the maximum extent permitted by applicable Law, to the other Lenders in accordance with the upward adjustments in their respective Applicable Percentages allocable to such Letter of Credit pursuant to Section 2.15(a)(iv), with the balance of such fee, if any, payable to the L/C Issuer for its own account. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.06. Letter of Credit Fees shall be (i) due and payable on the first Business Day after the end of each March, June, September and December, commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand and (ii) computed on a quarterly basis in arrears. Notwithstanding anything to the contrary contained herein, upon the request of the Required Lenders, while any Event of Default exists, all Letter of Credit Fees shall accrue at the Default Rate.

(i) Fronting Fee and Documentary and Processing Charges Payable to L/C Issuer. The Borrower shall pay directly to the L/C Issuer for its own account a fronting fee with respect to each Letter of Credit, at a rate of 0.25% per annum, computed on the daily amount available to be drawn under such Letter of Credit on a quarterly basis in arrears. Such fronting fee shall be due and payable on the tenth Business Day after the end of each March, June, September and December in respect of the most recently-ended quarterly period (or portion thereof, in the case of the first payment), commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.06. In addition, the Borrower shall pay directly to the L/C Issuer for its own account the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of the L/C Issuer relating to letters of credit as from time to time in effect. Such customary fees and standard costs and charges are due and payable on demand and are nonrefundable.

(j) Conflict with Issuer Documents. In the event of any conflict between the terms hereof and the terms of any Issuer Document, the terms hereof shall control.

-38-

(k) Letters of Credit Issued for Subsidiaries. Notwithstanding that a Letter of Credit issued or outstanding hereunder is in support of any obligations of, or is for the account of, a Subsidiary, the Borrower shall be obligated to reimburse the L/C Issuer hereunder for any and all drawings under such Letter of Credit. The Borrower hereby acknowledges that the issuance of Letters of Credit for the account of Subsidiaries inures to the benefit of the Borrower, and that the Borrower’s business derives substantial benefits from the businesses of such Subsidiaries.

2.04. Swing Line Loans.

(a) The Swing Line Loans. Subject to the terms and conditions set forth herein, the Swing Line Lender, in reliance upon the agreements of the other Lenders set forth in this Section 2.04, may, in its sole discretion, make loans (each such loan, a “Swing Line Loan”) to the Borrower from time to time on any Business Day during the Availability Period in an aggregate amount not to exceed at any time outstanding the amount of the Swing Line Sublimit, notwithstanding the fact that such Swing Line Loans, when aggregated with the Applicable Percentage of the Outstanding Amount of Loans and L/C Obligations of the Lender acting as Swing Line Lender, may exceed the amount of such Lender’s Commitment; provided, however, that after giving effect to any Swing Line Loan, (i) the Total Outstandings shall not exceed the Facility at such time, and (ii) the aggregate Outstanding Amount of the Revolving Credit Loans of any Lender at such time, plus such Lender’s Applicable Percentage of the Outstanding Amount of all L/C Obligations at such time, plus such Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line Loans at such time shall not exceed such Lender’s Commitment; and provided further that the Borrower shall not use the proceeds of any Swing Line Loan to refinance any outstanding Swing Line Loan. Within the foregoing limits, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.04, prepay under Section 2.05, and reborrow under this Section 2.04. Each Swing Line Loan shall bear interest only at a rate based on the Base Rate. Immediately upon the making of a Swing Line Loan, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Swing Line Lender a risk participation in such Swing Line Loan in an amount equal to the product of such Lender’s Applicable Percentage times the amount of such Swing Line Loan.

(b) Borrowing Procedures. Each Swing Line Borrowing shall be made upon the Borrower’s irrevocable notice to the Swing Line Lender and the Administrative Agent, which may be given by telephone. Each such notice must be received by the Swing Line Lender and the Administrative Agent not later than 1:00 p.m. on the requested borrowing date, and shall specify (i) the amount to be borrowed, which shall be a minimum of $100,000, and (ii) the requested borrowing date, which shall be a Business Day. Each such telephonic notice must be confirmed promptly by delivery to the Swing Line Lender and the Administrative Agent of a written Swing Line Loan Notice, completed and signed by a Responsible Officer of the Borrower. Promptly after receipt by the Swing Line Lender of any telephonic Swing Line Loan Notice, the Swing Line Lender will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has also received such Swing Line Loan Notice and, if not, the Swing Line Lender will notify the Administrative Agent (by telephone or in writing) of the contents thereof. Unless the Swing Line Lender has received notice (by telephone or in writing) from the Administrative Agent (including at the request of the Required Lenders) prior to 2:00 p.m. on the date of the proposed Swing Line Borrowing (A) directing the Swing Line Lender not to make such Swing Line Loan as a result of the limitations set forth in the first proviso to the first sentence of Section 2.04(a), or (B) that one or more of the applicable conditions specified in Article IV is not then satisfied, then, subject to the terms and conditions hereof, the Swing Line Lender will, not later than 3:00 p.m. on the borrowing date specified in such Swing Line Loan Notice, make the amount of its Swing Line Loan available to the Borrower at its office by crediting the account of the Borrower on the books of the Swing Line Lender in immediately available funds.

(c) Refinancing of Swing Line Loans. (i) The Swing Line Lender at any time in its sole and absolute discretion may request, on behalf of the Borrower (which hereby irrevocably authorizes the Swing Line Lender to so request on its behalf), that each Lender make a Base Rate Loan in an amount equal to such Lender’s Applicable Percentage of the amount of Swing Line Loans then outstanding. Such request shall be made in writing (which written request shall be deemed to be a Committed Loan Notice for purposes hereof) and in accordance with the requirements of Section 2.02, without regard to the minimum and multiples specified therein for the principal amount of Base Rate Loans, but subject to the unutilized portion of the Facility and the conditions set forth in Section 4.02. The Swing Line Lender shall furnish the Borrower with a copy of the applicable Committed Loan

-39-

Notice promptly after delivering such notice to the Administrative Agent. Each Lender shall make an amount equal to its Applicable Percentage of the amount specified in such Committed Loan Notice available to the Administrative Agent in immediately available funds (and the Administrative Agent may apply Cash Collateral available with respect to the applicable Swing Line Loan) for the account of the Swing Line Lender at the Administrative Agent’s Office not later than 1:00 p.m. on the day specified in such Committed Loan Notice, whereupon, subject to Section 2.04(c)(ii), each Lender that so makes funds available shall be deemed to have made a Base Rate Loan to the Borrower in such amount. The Administrative Agent shall remit the funds so received to the Swing Line Lender.

(ii) If for any reason any Swing Line Loan cannot be refinanced by such a Revolving Credit Borrowing in accordance with Section 2.04(c)(i), the request for Base Rate Loans submitted by the Swing Line Lender as set forth herein shall be deemed to be a request by the Swing Line Lender that each of the Lenders fund its risk participation in the relevant Swing Line Loan and each Lender’s payment to the Administrative Agent for the account of the Swing Line Lender pursuant to Section 2.04(c)(i) shall be deemed payment in respect of such participation.

(iii) If any Lender fails to make available to the Administrative Agent for the account of the Swing Line Lender any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.04(c) by the time specified in Section 2.04(c)(i), the Swing Line Lender shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the Swing Line Lender at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by the Swing Line Lender in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the Swing Line Lender in connection with the foregoing. If such Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such Lender’s Loan included in the relevant Borrowing or funded participation in the relevant Swing Line Loan, as the case may be. A certificate of the Swing Line Lender submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (iii) shall be conclusive absent manifest error.

(iv) Each Lender’s obligation to make Revolving Credit Loans or to purchase and fund risk participations in Swing Line Loans pursuant to this Section 2.04(c) shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against the Swing Line Lender, the Borrower or any other Person for any reason whatsoever, (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided, however, that each Lender’s obligation to make Revolving Credit Loans pursuant to this Section 2.04(c) is subject to the conditions set forth in Section 4.02. No such funding of risk participations shall relieve or otherwise impair the obligation of the Borrower to repay Swing Line Loans, together with interest as provided herein.

(d) Repayment of Participations. (i) At any time after any Lender has purchased and funded a risk participation in a Swing Line Loan, if the Swing Line Lender receives any payment on account of such Swing Line Loan, the Swing Line Lender will distribute to such Lender its Applicable Percentage thereof in the same funds as those received by the Swing Line Lender.

(ii) If any payment received by the Swing Line Lender in respect of principal or interest on any Swing Line Loan is required to be returned by the Swing Line Lender under any of the circumstances described in Section 11.05 (including pursuant to any settlement entered into by the Swing Line Lender in its discretion), each Lender shall pay to the Swing Line Lender its Applicable Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned, at a rate per annum equal to the Federal Funds Rate. The Administrative Agent will make such demand upon the request of the Swing Line Lender. The obligations of the Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.

(e) Interest for Account of Swing Line Lender. The Swing Line Lender shall be responsible for invoicing the Borrower for interest on the Swing Line Loans. Until each Lender funds its Base Rate Loan or risk participation pursuant to this Section 2.04 to refinance such Lender’s Applicable Percentage of any Swing Line Loan, interest in respect of such Applicable Percentage shall be solely for the account of the Swing Line Lender.

-40-

(f) Payments Directly to Swing Line Lender. The Borrower shall make all payments of principal and interest in respect of the Swing Line Loans directly to the Swing Line Lender.

2.05. Prepayments.

(a) Optional. (i) Subject to the last sentence of this Section 2.05(a)(i), the Borrower may, upon notice to the Administrative Agent, at any time or from time to time voluntarily prepay Revolving Credit Loans in whole or in part without premium or penalty; provided that (A) such notice must be received by the Administrative Agent not later than 11:00 a.m. (1) three Business Days prior to any date of prepayment of Eurodollar Rate Loans and (2) one Business Day prior to any date of prepayment of Base Rate Loans; (B) any prepayment of Eurodollar Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof; and (C) any prepayment of Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding. Each such notice shall specify the date and amount of such prepayment and the Type(s) of Loans to be prepaid and, if Eurodollar Rate Loans are to be prepaid, the Interest Period(s) of such Loans. The Administrative Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s ratable portion of such prepayment (based on such Lender’s Applicable Percentage). If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of a Eurodollar Rate Loan shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to Section 3.05. Each prepayment of the outstanding Revolving Credit Loans shall be paid to the Lenders in accordance with their respective Applicable Percentages.

(ii) The Borrower may, upon notice to the Swing Line Lender (with a copy to the Administrative Agent), at any time or from time to time, voluntarily prepay Swing Line Loans in whole or in part without premium or penalty; provided that (A) such notice must be received by the Swing Line Lender and the Administrative Agent not later than 1:00 p.m. on the date of the prepayment, and (B) any such prepayment shall be in a minimum principal amount of $100,000. Each such notice shall specify the date and amount of such prepayment. If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein.

(b) Mandatory. (i) If for any reason the Total Outstandings at any time exceed the Facility, the Borrower shall immediately prepay Revolving Credit Loans, Swing Line Loans and L/C Borrowings and/or Cash Collateralize the L/C Obligations (other than the L/C Borrowings) in an aggregate amount equal to such excess; provided, however, that the Borrower shall not be required to Cash Collateralize the L/C Obligations pursuant to this Section 2.05(b)(i) unless after the prepayment in full of the Revolving Loans and Swing Line Loans the Total Outstandings exceed the Facility then in effect.

(ii) Prepayments made pursuant to Section 2.05(b)(i), first, shall be applied ratably to the L/C Borrowings and the Swing Line Loans, second, shall be applied ratably to the outstanding Revolving Credit Loans, and, third, shall be used to Cash Collateralize the remaining L/C Obligations. Upon the drawing of any Letter of Credit that has been Cash Collateralized, the funds held as Cash Collateral shall be applied (without any further action by or notice to or from the Borrower or any other Loan Party) to reimburse the L/C Issuer or the Lenders, as applicable.

2.06. Termination or Reduction of Commitments.

(a) Optional. The Borrower may, upon notice to the Administrative Agent, terminate the Facility, the Letter of Credit Sublimit or the Swing Line Sublimit, or from time to time permanently reduce the Facility, the Letter of Credit Sublimit or the Swing Line Sublimit; provided that (i) any such notice shall be received by the Administrative Agent not later than 11:00 a.m. three Business Days prior to the date of termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of $2,500,000 or any whole multiple of $500,000 in

-41-

excess thereof and (iii) the Borrower shall not terminate or reduce (A) the Facility if, after giving effect thereto and to any concurrent prepayments hereunder, the Total Outstandings would exceed the Facility, (B) the Letter of Credit Sublimit if, after giving effect thereto, the Outstanding Amount of L/C Obligations not fully Cash Collateralized hereunder would exceed the Letter of Credit Sublimit, or (C) the Swing Line Sublimit if, after giving effect thereto and to any concurrent prepayments hereunder, the Outstanding Amount of Swing Line Loans would exceed the Letter of Credit Sublimit.

(b) Mandatory. (i) If after giving effect to any reduction or termination of Commitments under this Section 2.06, the Letter of Credit Sublimit or the Swing Line Sublimit exceeds the Facility at such time, the Letter of Credit Sublimit or the Swing Line Sublimit, as the case may be, shall be automatically reduced by the amount of such excess.

(ii) The Borrower shall notify the Administrative Agent in writing within one Business Day of the receipt of any Net Cash Proceeds of any Intercompany Loan Refinancings by Holdings or any Subsidiary of Holdings. Within five Business Days of such receipt of such Net Cash Proceeds, Borrower shall (in a written notice (the “Offer Notice”) delivered to the Administrative Agent for further delivery to each Lender) offer to each Lender to reduce its Commitments in an amount equal to the product of (x) such Lender’s Applicable Percentage times (y) the amount of such Net Cash Proceeds. Each Lender may accept or decline (such declined Net Cash Proceeds (“Declined Proceeds”) such offer (in whole or in part, but if in part, in increments not less than $100,000) in its sole discretion in writing within five Business Days of the delivery of such Offer Notice, and upon any acceptance of any Offer Notice, the Commitment of such Lender shall be reduced by the amount indicated in such acceptance upon such fifth Business Day (and the aggregate Commitments of all Lenders shall be reduced by the aggregate amount indicated in all such acceptances by all Lenders of all such Offer Notices on such fifth Business Day); provided that the Borrower shall not be required to reduce commitments or make offers to reduce commitments until the aggregate amount of Net Cash Proceeds received from one or more Intercompany Loan Refinancings exceeds $4,000,000. Upon each such reduction, risk participations of the Lenders in Swing Line Loans, Letters of Credit and L/C Borrowings shall be re-allocated based upon the Lenders’ Applicable Percentages after giving effect to such reduction. After giving effect thereto and to Section 2.06(b)(i), to the extent that (A) the aggregate Outstanding Amount of the Revolving Credit Loans of any Lender, plus such Lender’s Applicable Percentage of the Outstanding Amount of all L/C Obligations, plus such Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line Loans exceed such Lender’s Commitment, (B) Letter of Credit Sublimit or the Swing Line Sublimit exceeds the Facility or (C) the Total Outstandings exceed the Facility, the Borrower, immediately upon such reduction, shall first ratably repay Swing Line Loans, L/C Borrowings and Cash Collateralize L/C Obligations and second, if such excess still exists after giving effect to clause (A), repay the Revolving Credit Loans of such Lender. All parties hereto explicitly agree and acknowledge that the operation of this Section 2.06(b)(ii) may result in a reduction of the Commitments or the repayment of Revolving Credit Loans that is not in accordance with the Applicable Percentages of the Lenders, and agree, notwithstanding anything to the contrary contained in the Loan Documents, to any such reduction and repayment.

(iii) Within five Business Days after receipt of Net Cash Proceeds from any Disposition under Section 7.05(l) (whether in a single transaction or series of related transactions) that involve assets having a Fair Market Value of $2,000,000 or more and as to which no Reinvestment Notice shall have been delivered in the time frame specified in clause (b) of the definition of Reinvestment or, as to which a Reinvestment Notice has been so delivered but the Reinvestment referred to therein has not been made by the 366th day after receipt of such Net Cash Proceeds, the Borrower shall (in an Offer Notice delivered to the Administrative Agent for further delivery to each Lender) offer to each Lender to reduce its Commitments in an amount equal to the product of (x) such Lender’s Applicable Percentage times (y) the amount of such Net Cash Proceeds. Each Lender may accept or decline such offer (in whole or in part, but if in part, in increments not less than $100,000) in its sole discretion in writing within five Business Days of the delivery of such Offer Notice, and upon any acceptance of any Offer Notice, the Commitment of such Lender shall be reduced by the amount indicated in such acceptance upon such fifth Business Day (and the aggregate Commitments of all Lenders shall be reduced by the aggregate amount indicated in all such acceptances by all Lenders of all such Offer Notices on such fifth Business Day). Upon each such reduction, risk participations of the Lenders in Swing Line Loans, Letters of Credit and L/C Borrowings shall be re-allocated based upon the Lenders’ Applicable Percentages after giving effect to such reduction. After giving effect thereto and to Section 2.06(b)(i), to the extent that (A) the aggregate Outstanding Amount of the Revolving Credit Loans of any

-42-

Lender, plus such Lender’s Applicable Percentage of the Outstanding Amount of all L/C Obligations, plus such Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line Loans exceed such Lender’s Commitment, (B) Letter of Credit Sublimit or the Swing Line Sublimit exceeds the Facility or (C) the Total Outstandings exceed the Facility, the Borrower, immediately upon such reduction, shall first ratably repay Swing Line Loans, L/C Borrowings and Cash Collateralize L/C Obligations and second, if such excess still exists after giving effect to clause (A), repay the Revolving Credit Loans of such Lender. All parties hereto explicitly agree and acknowledge that the operation of this Section 2.06(b)(ii) may result in a reduction of the Commitments or the repayment of Revolving Credit Loans that is not in accordance with the Applicable Percentages of the Lenders, and agree, notwithstanding anything to the contrary contained in the Loan Documents, to any such reduction and repayment.

(c) Payment of Fees. The Administrative Agent will promptly notify the Lenders of any termination or reduction of the Letter of Credit Sublimit, Swing Line Sublimit or the Commitment under Section 2.06(a) or (b)(i). Upon any reduction of the Commitments under Section 2.06(a), the Commitment of each Lender shall be reduced by such Lender’s Applicable Percentage of such reduction amount. All fees in respect of this Agreement accrued until the effective date of any reduction or termination of Commitments under this Agreement shall be paid on the effective date of such reduction or termination.

2.07. Repayment of Loans.

(a) Revolving Credit Loans. The Borrower shall repay to the Lenders on the Maturity Date the aggregate principal amount of all Revolving Credit Loans outstanding on such date.

(b) Swing Line Loans. The Borrower shall repay each Swing Line Loan on the earlier to occur of (i) the date ten Business Days after such Loan is made and (ii) the Maturity Date.

2.08. Interest.

(a) Subject to the provisions of Section 2.08(b), (i) each Eurodollar Rate Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Eurodollar Rate for such Interest Period plus the Applicable Rate; (ii) each Base Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate; and (iii) each Swing Line Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate.

(b) (i) If any amount of principal of any Loan is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

(ii) If any amount (other than principal of any Loan) payable by the Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then upon the request of the Required Lenders such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

(iii) Upon the request of the Required Lenders, while any Event of Default exists, the Borrower shall pay interest on the principal amount of all outstanding Obligations hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

(iv) Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.

(c) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.

-43-

2.09. Fees. In addition to certain fees described in Sections 2.03(h) and (i):

(a) Commitment Fee. The Borrower shall pay to the Administrative Agent for the account of each Lender in accordance with its Applicable Percentage, a commitment fee equal to the Applicable Fee Rate times the actual daily amount by which the Facility exceeds the sum of (i) the Outstanding Amount of Revolving Credit Loans and (ii) the Outstanding Amount of L/C Obligations, subject to adjustment as provided in Section 2.15. The commitment fee shall accrue at all times during the Availability Period, including at any time during which one or more of the conditions in Article IV are not met, and shall be due and payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing with the first such date to occur after the Closing Date, and on the last day of the Availability Period. The commitment fee shall be calculated quarterly in arrears.

(b) Other Fees. (i) The Borrower shall pay to the Lead Arrangers and the Administrative Agent for their own respective accounts fees in the amounts and at the times specified in the Fee Letter. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

(ii) The Borrower shall pay to the Lenders such fees (if any) as shall have been separately agreed upon in writing in the amounts and at the times so specified. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

2.10. Computation of Interest and Fees. All computations of interest for Base Rate Loans determined by reference to clause (b) of the definition of Base Rate shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year). Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.12(a), bear interest for one day. Each determination by the Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.

2.11. Evidence of Debt.

(a) The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Credit Extensions made by the Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. Upon the request of any Lender made through the Administrative Agent, the Borrower shall execute and deliver to such Lender (through the Administrative Agent) a Note, which shall evidence such Lender’s Loans in addition to such accounts or records. Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with respect thereto.

(b) In addition to the accounts and records referred to in Section 2.11(a), each Lender and the Administrative Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit and Swing Line Loans. In the event of any conflict between the accounts and records maintained by the Administrative Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.

-44-

2.12. Payments Generally; Administrative Agent’s Clawback.

(a) General. All payments to be made by the Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent’s Office in Dollars and in immediately available funds not later than 2:00 p.m. on the date specified herein. The Administrative Agent will promptly distribute to each Lender its Applicable Percentage (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office. All payments received by the Administrative Agent after 2:00 p.m. shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. If any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected on computing interest or fees, as the case may be.

(b) (i) Funding by Lenders; Presumption by Administrative Agent. Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing of Eurodollar Rate Loans (or, in the case of any Borrowing of Base Rate Loans, prior to 12:00 noon on the date of such Borrowing) that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.02 (or, in the case of a Borrowing of Base Rate Loans, that such Lender has made such share available in accordance with and at the time required by Section 2.02) and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount in immediately available funds with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (A) in the case of a payment to be made by such Lender, the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the Administrative Agent in connection with the foregoing, and (B) in the case of a payment to be made by the Borrower, the interest rate applicable to Base Rate Loans. If the Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period. If such Lender pays its share of the applicable Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Loan included in such Borrowing. Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.

(ii) Payments by Borrower; Presumptions by Administrative Agent. Unless the Administrative Agent shall have received notice from the Borrower prior to the time at which any payment is due to the Administrative Agent for the account of the Lenders or the L/C Issuer hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Appropriate Lenders or the L/C Issuer, as the case may be, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Appropriate Lenders or the L/C Issuer, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or the L/C Issuer, in immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

A notice of the Administrative Agent to any Lender or the Borrower with respect to any amount owing under this subsection (b) shall be conclusive, absent manifest error.

(c) Failure to Satisfy Conditions Precedent. If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article II, and such funds are not made available to the Borrower by the Administrative Agent because the conditions to the applicable Credit Extension set forth in Article IV are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.

-45-

(d) Obligations of Lenders Several. The obligations of the Lenders hereunder to make Revolving Credit Loans, to fund participations in Letters of Credit and Swing Line Loans and to make payments pursuant to Section 11.04(c) are several and not joint. The failure of any Lender to make any Loan, to fund any such participation or to make any payment under Section 11.04(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan, to purchase its participation or to make its payment under Section 11.04(c).

(e) Funding Source. Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.

(f) Insufficient Funds. If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, L/C Borrowings, interest and fees then due hereunder, such funds shall be applied (i) first, toward payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, toward payment of principal and L/C Borrowings then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and L/C Borrowings then due to such parties.

2.13. Sharing of Payments by Lenders. If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of (a) Obligations due and payable to such Lender hereunder and under the other Loan Documents at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations due and payable to such Lender hereunder and under the other Loan Documents at such time to (ii) the aggregate amount of the Obligations due and payable to all Lenders hereunder and under the other Loan Documents at such time) of payments on account of the Obligations due and payable to all Lenders hereunder and under the other Loan Documents at such time obtained by all the Lenders at such time or (b) Obligations owing (but not due and payable) to such Lender hereunder and under the other Loan Documents at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations owing (but not due and payable) to such Lender hereunder and under the other Loan Documents at such time to (ii) the aggregate amount of the Obligations owing (but not due and payable) to all Lenders hereunder and under the other Loan Parties at such time) of payment on account of the Obligations owing (but not due and payable) to all Lenders hereunder and under the other Loan Documents at such time obtained by all of the Lenders at such time then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Loans and subparticipations in L/C Obligations and Swing Line Loans of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of Obligations then due and payable to the Lenders or owing (but not due and payable) to the Lenders, as the case may be, provided that:

(i) if any such participations or subparticipations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations or subparticipations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and

(ii) the provisions of this Section shall not be construed to apply to (x) any payment made by or on behalf of the Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender), (y) the application of Cash Collateral provided for in Section 2.14, or (z) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or subparticipations in L/C Obligations or Swing Line Loans to any assignee or participant, other than an assignment to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this Section shall apply).

Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Loan Party in the amount of such participation.

-46-

2.14. Cash Collateral.

(a) Certain Credit Support Events. Upon the request of the Administrative Agent or the L/C Issuer (i) if the L/C Issuer has honored any full or partial drawing request under any Letter of Credit and such drawing has resulted in an L/C Borrowing, or (ii) if, as of the Letter of Credit Expiration Date, any L/C Obligation for any reason remains outstanding, the Borrower shall, in each case, immediately Cash Collateralize the then Outstanding Amount of all L/C Obligations. At any time that there shall exist a Defaulting Lender, immediately upon the request of the Administrative Agent, the L/C Issuer or the Swing Line Lender, the Borrower shall deliver to the Administrative Agent Cash Collateral in an amount sufficient to cover all Fronting Exposure (after giving effect to Section 2.15(a)(iv) and any Cash Collateral provided by the Defaulting Lender). If at any time the Administrative Agent determines that any funds held as Cash Collateral are subject to any right or claim of any Person other than the Administrative Agent or that the total amount of such funds is less than the aggregate Outstanding Amount of all L/C Obligations, the Borrower will, forthwith upon demand by the Administrative Agent, pay to the Administrative Agent, as additional funds to be deposited as Cash Collateral, an amount equal to the excess of (x) such aggregate Outstanding Amount over (y) the total amount of funds, if any, then held as Cash Collateral that the Administrative Agent determines to be free and clear of any such right and claim. Upon the drawing of any Letter of Credit for which funds are on deposit as Cash Collateral, such funds shall be applied, to the extent permitted under applicable Laws, to reimburse the L/C Issuer in respect of the foregoing.

(b) Grant of Security Interest. All Cash Collateral (other than credit support not constituting funds subject to deposit) shall be maintained in blocked, non-interest bearing deposit accounts at Bank of America. The Borrower, and to the extent provided by any Lender, such Lender, hereby grants to (and subjects to the control of) the Administrative Agent, for the benefit of the Administrative Agent, the L/C Issuer and the Lenders (including the Swing Line Lender), and agrees to maintain, a first priority security interest in all such cash, deposit accounts and all balances therein, and all other property so provided as collateral pursuant hereto, and in all proceeds of the foregoing, all as security for the obligations to which such Cash Collateral may be applied pursuant to Section 2.14(c). If at any time the Administrative Agent determines that Cash Collateral is subject to any right or claim of any Person other than the Administrative Agent as herein provided, or that the total amount of such Cash Collateral is less than the applicable Fronting Exposure and other obligations secured thereby, the Borrower or the relevant Defaulting Lender will, promptly upon demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency.

(c) Application. Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under any of this Section 2.14 or Section 2.04, 2.05, 2.06, 2.15 or 8.02 in respect of Letters of Credit or Swing Line Loans shall be held and applied to the satisfaction of the specific L/C Obligations, Swing Line Loans, obligations to fund participations therein (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) and other obligations for which the Cash Collateral was so provided, prior to any other application of such property as may be provided for herein.

(d) Release. Cash Collateral (or the appropriate portion thereof) provided to reduce Fronting Exposure or other obligations shall be released promptly following (i) the elimination of the applicable Fronting Exposure or other obligations giving rise thereto (including by the termination of Defaulting Lender status of the applicable Lender (or, as appropriate, its assignee following compliance with Section 11.07(b)(vi))) or (ii) the Administrative Agent’s good faith determination that there exists excess Cash Collateral; provided, however, (x) that Cash Collateral furnished by or on behalf of a Loan Party shall not be released during the continuance of a Default or Event of Default (and, in such case, following application as provided in this Section 2.14 may be otherwise applied in accordance with Section 8.03), and (y) the Person providing Cash Collateral and the L/C Issuer or Swing Line Lender, as applicable, may agree that Cash Collateral shall not be released but instead held to support future anticipated Fronting Exposure or other obligations.

-47-

2.15. Defaulting Lenders.

(a) Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable Law:

(i) Waivers and Amendments. That Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in Section 11.01.

(ii) Reallocation of Payments. Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of that Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VIII or otherwise, and including any amounts made available to the Administrative Agent by that Defaulting Lender pursuant to Section 11.08), shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by that Defaulting Lender to the Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by that Defaulting Lender to the L/C Issuer or Swing Line Lender hereunder; third, if so determined by the Administrative Agent or requested by the L/C Issuer or Swing Line Lender, to be held as Cash Collateral for future funding obligations of that Defaulting Lender of any participation in any Swing Line Loan or Letter of Credit; fourth, as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which that Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fifth, if so determined by the Administrative Agent and the Borrower, to be held in a non-interest bearing deposit account and released in order to satisfy obligations of that Defaulting Lender to fund Loans under this Agreement; sixth, to the payment of any amounts owing to the Lenders, the L/C Issuer or Swing Line Lender as a result of any judgment of a court of competent jurisdiction obtained by any Lender, the L/C Issuer or Swing Line Lender against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; seventh, so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; and eighth, to that Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans or L/C Borrowings in respect of which that Defaulting Lender has not fully funded its appropriate share and (y) such Loans or L/C Borrowings were made at a time when the conditions set forth in Section 4.02 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and L/C Borrowings owed to, all non-Defaulting Lenders on a pro rata basis based on the percentage that the amount of such Loans or L/C Borrowings of such Lender is of the aggregate amount of all such Loans or L/C Borrowings of all Non-Defaulting Lenders) prior to being applied to the payment of any Loans of, or L/C Borrowings owed to, that Defaulting Lender. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 2.15(a)(ii) shall be deemed paid to and redirected by that Defaulting Lender, and each Lender irrevocably consents hereto.

(iii) Certain Fees. That Defaulting Lender (x) shall not be entitled to receive any commitment fee pursuant to Section 2.09(a) for any period during which that Lender is a Defaulting Lender (and the Borrower shall (A) be required to pay to each Lender to which the Defaulting Lender’s Commitment to acquire, refinance or fund a participation in Letters of Credit or Swing Line Loans has been re-allocated pursuant to Section 2.15(a)(iv) the amount of such fee based on its revised “Applicable Percentage” calculated in accordance with that Section allocable to its Fronting Exposure arising from that Defaulting Lender or, to the extent not so reallocated, to the L/C Issuer or Swing Line Lender, as the case may be, and (B) not be required to pay the remaining amount of such fee that otherwise would have been required to have been paid to that Defaulting Lender) and (y) shall be limited in its right to receive Letter of Credit Fees as provided in Section 2.03(h).

-48-

(iv) Reallocation of Applicable Percentages to Reduce Fronting Exposure. During any period in which there is a Defaulting Lender, for purposes of computing the amount of the obligation of each non-Defaulting Lender to acquire, refinance or fund participations in Letters of Credit or Swing Line Loans pursuant to Sections 2.03 and 2.04, the “Applicable Percentage” of each non-Defaulting Lender shall be computed without giving effect to the Commitment of that Defaulting Lender; provided that (i) each such reallocation shall be given effect only if, at the date the applicable Lender becomes a Defaulting Lender, no Default or Event of Default exists; and (ii) the aggregate obligation of each non-Defaulting Lender to acquire, refinance or fund participations in Letters of Credit and Swing Line Loans shall not exceed the positive difference, if any, of (1) the Commitment of that non-Defaulting Lender minus (2) the aggregate Outstanding Amount of the Loans of that Lender.

(b) Defaulting Lender Cure. If the Borrower, the Administrative Agent, Swing Line Lender and the L/C Issuer agree in writing in their sole discretion that a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Loans and funded and unfunded participations in Letters of Credit and Swing Line Loans to be held on a pro rata basis by the Lenders in accordance with their Applicable Percentages (without giving effect to Section 2.15(a)(iv)), whereupon that Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

ARTICLE III

TAXES, YIELD PROTECTION AND ILLEGALITY

3.01. Taxes.

(a) Payments Free of Taxes; Obligation to Withhold Payments on Account of Taxes. (i) Any and all payments by or on account of any obligation of any Loan Party hereunder or under any other Loan Document shall, to the extent permitted by applicable Laws, be made free and clear of and without deduction or withholding of any Taxes. If, however, applicable Laws require the applicable withholding agent to withhold or deduct any Tax (as determined in the good faith discretion of the applicable withholding agent), such Tax shall be withheld or deducted in accordance with such Laws.

(ii) If the applicable withholding agent shall be required to withhold or deduct any Taxes from any payment, then (A) the applicable withholding agent shall withhold or make such deductions as are required, (B) the applicable withholding agent shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with applicable Laws and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes or Other Taxes, the sum payable by the applicable Loan Party shall be increased as necessary so that after any required withholding and deductions on account of Indemnified Taxes or Other Taxes have been made (including withholding and deductions applicable to additional sums payable under this Section 3.01), the applicable Lender, as the case may be, receives an amount equal to the sum it would have received had no such withholding or deduction been made.

(b) Payment of Other Taxes by the Borrower and Holdings. Without limiting the provisions of subsection (a) above, the Borrower and Holdings shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable Laws.

(c) Indemnification. Without limiting the provisions of subsection (a) or (b) above, the Borrower and Holdings shall, jointly and severally, indemnify the Administrative Agent and each Lender, and shall make payment in respect thereof within 10 days after a written demand therefor, for the full amount of any Indemnified Taxes or

-49-

Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 3.01) payable by the Administrative Agent or such Lender, as the case may be, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate setting forth the calculation of the amount of any such payment or liability and the reasons for such payment or liability in reasonable detail delivered to the Borrower and Holdings by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

(d) Evidence of Payments. As soon as practicable after any payment of any Indemnified Taxes or Other Taxes by any Loan Party to a Governmental Authority as provided in this Section 3.01, such Loan Party shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of any return required by applicable Laws to report such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(e) Status of Lenders; Tax Documentation.

(i) Each Lender shall deliver to the Borrower, Holdings and to the Administrative Agent, whenever reasonably requested by the Borrower, Holdings or the Administrative Agent, such properly completed and executed documentation prescribed by applicable Laws and such other reasonably requested information as will permit the Borrower, Holdings or the Administrative Agent, as the case may be, (A) to determine whether or not payments made hereunder or under any other Loan Document are subject to Taxes, (B) to determine, if applicable, the required rate of withholding or deduction and (C) to establish such Lender’s entitlement to any available exemption from, or reduction of, applicable Taxes in respect of any payments to be made to such Lender by any Loan Party pursuant to any Loan Document or otherwise to establish such Lender’s status for withholding tax purposes in an applicable jurisdiction (including, in the case of a Lender seeking exemption from, or reduction of, U.S. federal withholding tax under Sections 1471-1474 of the Code, any documentation necessary to prevent withholding under Sections 1471-1474 of the Code (and any applicable regulations or official interpretations thereof) and to permit the Borrower to determine that such Lender has complied with any requirements under such provisions to avoid or reduce withholding tax).

(ii) Without limiting the generality of the foregoing,

(A) any Lender that is a “United States person” within the meaning of Section 7701(a)(30) of the Code shall deliver to the Borrower and the Administrative Agent executed originals of IRS Form W-9 or such other documentation or information prescribed by applicable Laws or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower, Holdings or the Administrative Agent, as the case may be, to determine whether or not such Lender is subject to backup withholding or information reporting requirements; and

(B) each Foreign Lender that is entitled under the Code or any applicable treaty to an exemption from or reduction of U.S. federal withholding tax with respect to any payments hereunder or under any other Loan Document shall deliver to the Borrower, Holdings and the Administrative Agent (in such number of signed originals as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter (1) if any documentation previously delivered has expired or become obsolete or invalid or (2) upon the request of the Borrower, Holdings or the Administrative Agent), whichever of the following is applicable:

(I) IRS Form W-8BEN (or any successor thereto) claiming eligibility for benefits of an income tax treaty to which the United States is a party,

(II) IRS Form W-8ECI (or any successor thereto),

(III) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Sections 881(c) or 871(h) of the Code (the “Portfolio Interest Exemption”), (x) a certificate, substantially in the form of Exhibit H-1, H-2, H-3 or H-4, as

-50-

applicable (a “Tax Status Certificate”), to the effect that such Foreign Lender is not (A) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Borrower or Holdings within the meaning of Section 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code, and that no interest to be received is effectively connected with a U.S. trade or business and (y) duly completed and executed original copies of IRS Form W-8BEN (or any successor thereto),

(IV) where such Lender is a partnership (for U.S. federal income tax purposes) or otherwise not a beneficial owner (e.g., where such Lender has sold a typical participation), IRS Form W-8IMY (or any successor thereto) and all required supporting documentation (including, where one or more of the underlying beneficial owner(s) is claiming the benefits of the Portfolio Interest Exemption, a Tax Status Certificate of such beneficial owner(s) (provided that, if the Foreign Lender is a partnership and not a participating Lender, the Tax Status Certificate from the beneficial owner(s) may be provided by the Foreign Lender on the beneficial owner(s) behalf)), or

(V) any other form prescribed by applicable Laws as a basis for claiming exemption from or a reduction in United States federal withholding tax together with such supplementary documentation as may be prescribed by applicable Laws to permit the Borrower, Holdings or the Administrative Agent to determine the withholding or deduction required to be made.

Each Lender shall promptly notify the Borrower, Holdings and the Administrative Agent of any change in circumstances which would modify or render invalid any documentation previously provided.

Notwithstanding anything to the contrary in this subsection 3.01(e), no Lender shall be required to deliver any documentation that it is not legally eligible to deliver.

(f) Treatment of Certain Refunds. If the Administrative Agent or any Lender determines, in its good faith sole discretion, that it has received a refund of any Indemnified Taxes or Other Taxes as to which it has been indemnified by any Loan Party or with respect to which any Loan Party has paid additional amounts pursuant to this Section 3.01, it shall pay to the Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by such Loan Party under this Section 3.01 with respect to the Indemnified Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) incurred by the Administrative Agent or such Lender, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided that the Borrower, upon the request of the Administrative Agent or such Lender agrees to repay the amount paid over to any Loan Party (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent, or such Lender, in the event the Administrative Agent or such Lender is required to repay such amount to such Governmental Authority. This subsection shall not be construed to require the Administrative Agent or any Lender to make available its tax returns (or any other information relating to its taxes that it deems confidential) to the Borrower or any other Person. Notwithstanding anything to the contrary, in no event will any Lender be required to pay any amount to any Loan Party the payment of which would place such Lender in a less favorable net after Tax position than such Lender would have been in if the indemnification payments or additional amounts giving rise to such refund of any Indemnified Taxes or Other Taxes had never been paid.

(g) Payment by Administrative Agent. For purposes of this Section 3.01, any payment made by the Administrative Agent to a Lender shall be deemed to be a payment made by the Borrower to such Lender.

3.02. Illegality. If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Loans whose interest is determined by reference to the Eurodollar Rate, or to determine or charge interest rates based upon the Eurodollar Rate, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London interbank market, then, on notice thereof by such Lender to the Borrower through the Administrative Agent, (i) any obligation of such Lender to make or continue Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate Loans shall be suspended, and (ii) if such notice asserts the illegality of such Lender making or maintaining Base Rate Loans the interest rate on

-51-

which is determined by reference to the Eurodollar Rate component of the Base Rate, the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Eurodollar Rate component of the Base Rate, in each case until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, (x) the Borrower shall, upon demand from such Lender (with a copy to the Administrative Agent), convert all Eurodollar Rate Loans of such Lender to Base Rate Loans (the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Eurodollar Rate component of the Base Rate), either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurodollar Rate Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurodollar Rate Loans and (y) if such notice asserts the illegality of such Lender determining or charging interest rates based upon the Eurodollar Rate, the Administrative Agent shall during the period of such suspension compute the Base Rate applicable to such Lender without reference to the Eurodollar Rate component thereof until the Administrative Agent is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon the Eurodollar Rate. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted.

3.03. Inability to Determine Rates. If the Required Lenders determine that for any reason in connection with any request for a Eurodollar Rate Loan or a conversion to or continuation thereof that (a) Dollar deposits are not being offered to banks in the London interbank eurodollar market for the applicable amount and Interest Period of such Eurodollar Rate Loan, (b) adequate and reasonable means do not exist for determining the Eurodollar Base Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan or in connection with an existing or proposed Base Rate Loan, or (c) the Eurodollar Base Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan does not adequately and fairly reflect the cost to such Lenders of funding such Loan, the Administrative Agent will promptly so notify the Borrower and each Lender. Thereafter, (x) the obligation of the Lenders to make or maintain Eurodollar Rate Loans shall be suspended, and (y) in the event of a determination described in the preceding sentence with respect to the Eurodollar Rate component of the Base Rate, the utilization of the Eurodollar Rate component in determining the Base Rate shall be suspended, in each case until the Administrative Agent (upon the instruction of the Required Lenders) revokes such notice. Upon receipt of such notice, the Borrower may revoke any pending request for a Borrowing of, conversion to or continuation of Eurodollar Rate Loans or, failing that, will be deemed to have converted such request into a request for a Borrowing of Base Rate Loans in the amount specified therein.

3.04. Increased Costs.

(a) Increased Costs Generally. If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected in the Eurodollar Rate) or the L/C Issuer;

(ii) subject any Lender or the L/C Issuer to any tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, any participation in a Letter of Credit or any Eurodollar Rate Loan made by it, or change the basis of taxation of payments to such Lender or the L/C Issuer in respect thereof (except, in each case, for Indemnified Taxes or Other Taxes covered by Section 3.01 and the imposition of, or any change in the rate of, any Excluded Tax payable by such Lender or the L/C Issuer); or

(iii) impose on any Lender or the L/C Issuer or the London interbank market any other condition, cost or expense affecting this Agreement or Eurodollar Rate Loans made by such Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Loan the interest on which is determined by reference to the Eurodollar Rate (or of maintaining its obligation to make any such Loan), or to increase the cost to such Lender or the L/C Issuer of participating in, issuing or maintaining any

-52-

Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender or the L/C Issuer hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or the L/C Issuer, the Borrower will pay to such Lender or the L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or the L/C Issuer, as the case may be, for such additional costs incurred or reduction suffered.

(b) Capital Requirements. If any Lender or the L/C Issuer determines that any Change in Law affecting such Lender or the L/C Issuer or any Lending Office of such Lender or such Lender’s or the L/C Issuer’s holding company, if any, regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s or the L/C Issuer’s capital or on the capital of such Lender’s or the L/C Issuer’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the L/C Issuer, to a level below that which such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or the L/C Issuer’s policies and the policies of such Lender’s or the L/C Issuer’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender or the L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s holding company for any such reduction suffered.

(c) Certificates for Reimbursement. A certificate of a Lender or the L/C Issuer setting forth the amount or amounts necessary to compensate such Lender or the L/C Issuer or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to the Borrower shall be conclusive absent manifest error. The Borrower shall pay such Lender or the L/C Issuer, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.

(d) Delay in Requests. Failure or delay on the part of any Lender or the L/C Issuer to demand compensation pursuant to the foregoing provisions of this Section shall not constitute a waiver of such Lender’s or the L/C Issuer’s right to demand such compensation, provided that the Borrower shall not be required to compensate a Lender or the L/C Issuer pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than six months prior to the date that such Lender or the L/C Issuer, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the L/C Issuer’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the six-month period referred to above shall be extended to include the period of retroactive effect thereof).

3.05. Compensation for Losses. Upon demand of any Lender (with a copy to the Administrative Agent) from time to time, the Borrower shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:

(a) any continuation, conversion, payment or prepayment of any Loan other than a Base Rate Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);

(b) any failure by the Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on the date or in the amount notified by the Borrower; or

(c) any assignment of a Eurodollar Rate Loan on a day other than the last day of the Interest Period therefor as a result of a request by the Borrower pursuant to Section 11.13;

excluding any loss of anticipated profits but including any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained. The Borrower shall also pay any customary and reasonable administrative fees charged by such Lender in connection with the foregoing.

-53-

For purposes of calculating amounts payable by the Borrower to the Lenders under this Section 3.05, each Lender shall be deemed to have funded each Eurodollar Rate Loan made by it at the Eurodollar Base Rate used in determining the Eurodollar Rate for such Loan by a matching deposit or other borrowing in the London interbank eurodollar market for a comparable amount and for a comparable period, whether or not such Eurodollar Rate Loan was in fact so funded.

3.06. Mitigation Obligations; Replacement of Lenders.

(a) Designation of Different Lending Office. If any Lender requests compensation under Section 3.05, or the Borrower is required to pay any additional amount to any Lender, the L/C Issuer, or any Governmental Authority for the account of any Lender or the L/C Issuer pursuant to Section 3.01, or if any Lender gives a notice pursuant to Section 3.02, then such Lender or the L/C Issuer shall, as applicable, use reasonable efforts to designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender or the L/C Issuer, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04, as the case may be, in the future, or eliminate the need for the notice pursuant to Section 3.02, as applicable, and (ii) in each case, would not subject such Lender or the L/C Issuer, as the case may be, to any unreimbursed cost or expense and would not otherwise be materially disadvantageous to such Lender or the L/C Issuer, as the case may be. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender or the L/C Issuer in connection with any such designation or assignment.

(b) Replacement of Lenders. If any Lender requests compensation under Section 3.04, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01 (other than pursuant to Section 3.01(b)) or if a Lender gives notice pursuant to Section 3.02, the Borrower may replace such Lender in accordance with Section 11.14.

3.07. Survival. All of the Borrower’s obligations under this Article III shall survive termination of the Facility, repayment of all other Obligations hereunder, and resignation of the Administrative Agent.

ARTICLE IV

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

4.01. Conditions of Initial Credit Extension. (a) The obligation of the L/C Issuer and each Lender to make its initial Credit Extension hereunder is subject to satisfaction of the following conditions precedent:

(i) The Administrative Agent’s receipt of the following, each executed by a Responsible Officer of the signing Loan Party (and, in the case of this Agreement, by each Lender), each dated the Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date):

(ii) executed counterparts of this Agreement and the Guaranty;

(iii) a Note executed by the Borrower in favor of each Lender requesting a Note, with such requests provided to the Company at least two Business Days prior to the Closing Date;

(iv) the Security Agreement, together with:

(A) certificates representing the Pledged Securities (if any) referred to therein accompanied by undated stock powers executed in blank and instruments evidencing the Intercompany Notes indorsed in blank,

(B) proper Financing Statements in form appropriate for filing under the Uniform Commercial Code of all jurisdictions that are necessary in order to perfect the Liens created under the Security Agreement, covering the Collateral described in the Security Agreement,

-54-

(C) certified copies of UCC, tax and judgment lien searches, bankruptcy and pending lawsuit searches or equivalent reports or searches, each of a recent date listing all effective financing statements, lien notices or comparable documents that name any Loan Party or Qualified Subsidiary as debtor and that are filed in those state and county jurisdictions in which any Loan Party or Qualified Subsidiary is organized or maintains its principal place of business, none of which encumber the Collateral covered or intended to be covered by the Collateral Documents (other than Liens permitted by Section 7.01 or any other Liens acceptable to the Administrative Agent), and

(D) a fully executed Perfection Certificate substantially in the form of Exhibit I

(v) a Solvency Certificate in the form of Exhibit K shall have been executed and delivered by the chief financial officer of the Borrower;

(vi) such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of each Loan Party as the Administrative Agent may reasonably require evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents to which such Loan Party is a party or is to be a party;

(vii) such documents and certifications as the Administrative Agent may reasonably require to evidence that each Loan Party is duly organized or formed, and that each of the Borrower and its Subsidiaries is validly existing, in good standing and qualified to engage in business in the jurisdiction of its organization;

(viii) a favorable opinion of Simpson, Thacher & Bartlett LLP counsel to the Loan Parties, addressed to the Administrative Agent and each Lender;

(ix) a favorable opinion of McDermott Will & Emery LLP, local counsel to the Loan Parties in Texas, addressed to the Administrative Agent and each Lender;

(x) the financial statements referenced in Section 5.05(a) and (d);

(xi) the Intercreditor Agreement, fully executed by the trustee for the Senior Secured Notes, the Administrative Agent, and acknowledged by the Loan Parties; and

(xii) a certificate of a Responsible Officer of Borrower as to the satisfaction of the conditions set forth in Sections 4.01(e), (f), (g) and (j).

(b) (i) All fees required to be paid to the Administrative Agent and the Lead Arrangers on or before the Closing Date shall have been paid to the extent then invoiced, with such invoices provided to the Company at least two Business Days prior to the Closing Date and (ii) all fees required to be paid to the Lenders on or before the Closing Date shall have been paid.

(c) Unless waived by the Administrative Agent, the Borrower shall have paid all applicable expenses (including the reasonable and invoiced fees and disbursements of counsel (with such invoices provided to the Company at least two Business Days prior to the Closing Date)) that are due pursuant to Section 11.04(a).

(d) The Merger shall have been, or shall simultaneously be, consummated pursuant to the Purchase Agreement, and the purchase price thereof shall not be changed without the Lead Arrangers’ prior consent and no other provision thereof shall have been amended or waived or consented to in any manner which is materially adverse to the Lenders without the prior written consent of the Lead Arrangers.

-55-

(e) Since December 31, 2009, there shall have been no change, development or event that, individually or in the aggregate, has had or would reasonably be expected to have a Closing Date Material Adverse Change.

(f) The Consolidated Leverage Ratio as of the last day of the most recent fiscal quarter of the Borrower ended not less than 45 days prior to the Closing Date shall not be greater than 5.1:1.0 after giving effect to the consummation of the Transaction.

(g) Immediately after giving effect to the Transaction, neither Holdings nor any of its Subsidiaries has any Indebtedness for borrowed money or preferred stock other than (i) the Senior Secured Notes, (ii) up to $12,000,000 aggregate principal amount of Indebtedness of Qualified Subsidiaries and (iii) Indebtedness in respect of the Revolving Credit Loans not in excess of $5,000,000.

(h) The Borrower shall have received $250,000,000 in gross proceeds from the sale of the Senior Secured Notes; Holdings shall have received cash proceeds equal to at least 40% of the total pro forma consolidated debt (based on the principal amount thereof in the case of debt issued at a discount to its initial principal amount) and equity capitalization of the Borrower and its Subsidiaries on the Closing Date after giving effect to the Transaction from a capital contribution to its equity and Holdings shall have contributed such cash proceeds to the capital of the Borrower.

(i) The Lenders and the Administrative Agent shall have received the information required under Section 11.18 not less than five (5) Business Days prior to the Closing Date.

(j) (i) The representations made by Borrower in the Purchase Agreement as are material to the interests of the Lenders, but only to the extent that Holdings or MergerCo has the right to terminate its obligations under the Purchase Agreement as a result of a breach of such representations in the Purchase Agreement shall be true and correct and (ii) the representations contained in Sections 5.01, 5.02, 5.03, 5.04, 5.13, 5.15(a) (with respect to the Act) 5.17, 5.19 and 5.21 (with the representations under Section 5.01(b)(ii), 5.02, 5.03 and 5.04 limited to representations in such sections with respect to the Loan Documents) shall be true and correct in all material respects on and as of the Closing Date with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date.

(i) The Administrative Agent shall have received a customary “pay-off” letter and UCC-3 termination statements with respect to all Liens to be terminated upon the Closing Date, and such other customary releases with respect to Liens to be terminated at the Closing Date as the Administrative Agent may reasonably request.

Without limiting the generality of the provisions of the last paragraph of Section 9.03, for purposes of determining compliance with the conditions specified in this Section 4.01, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.

4.02. Conditions to All Credit Extensions. The obligation of each Lender to honor any Request for Credit Extension (other than a Committed Loan Notice requesting only a conversion of Loans to the other Type, or a continuation of Eurodollar Rate Loans) is subject to the following conditions precedent:

(a) Other than with respect to the initial Credit Extension to be made on the Closing Date, the representations and warranties of the Borrower and each other Loan Party contained in Article V or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct in all material respects (except that any representation and warranty that is qualified as to “materiality” or “Material Adverse Effect” shall be true

-56-

and correct in all respects) on and as of the date of such Credit Extension, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects (except that any representation and warranty that is qualified as to “materiality” or “Material Adverse Effect” shall be true and correct in all respects) as of such earlier date.

(b) Other than with respect to the initial Credit Extension to be made on the Closing Date, no Default shall exist, or would result from such proposed Credit Extension or from the application of the proceeds thereof.

(c) The Administrative Agent and, if applicable, the L/C Issuer or the Swing Line Lender shall have received a Request for Credit Extension in accordance with the requirements hereof.

Each Request for Credit Extension (other than a Committed Loan Notice requesting only a conversion of Loans to the other Type or a continuation of Eurodollar Rate Loans) submitted by the Borrower shall be deemed to be a representation and warranty that the conditions specified in Sections 4.02(a) and (b) have been satisfied on and as of the date of the applicable Credit Extension.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

Each of Holdings and the Borrower represents and warrants to the Administrative Agent and the Lenders that:

5.01. Existence, Qualification and Power. Each Loan Party and each of its Subsidiaries (a) is duly organized or formed, validly existing and, as applicable, in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Intercreditor Agreement, the Loan Documents and Related Documents to which it is a party and consummate the Transaction, and (c) is duly qualified and is licensed and, as applicable, in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license; except in each case referred to in clause (b)(i) or (c), to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.

5.02. Authorization; No Contravention. The execution, delivery and performance by each Loan Party of the Intercreditor Agreement, each Loan Document and Related Document to which such Person is or is to be a party have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of any of such Person’s Organization Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, or require any payment to be made under (i) any Contractual Obligation to which such Person is a party or affecting such Person or the properties of such Person or any of its Subsidiaries or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (c) violate any Law, except in each case referred to in clause (b) or (c), to the extent that such conflict, breach, contravention or violation could not reasonably be expected to have a Material Adverse Effect.

5.03. Governmental Authorization; Other Consents. No material approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with (a) the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document, Related Document or the Intercreditor Agreement, or for the consummation of the Transaction, (b) the grant by any Loan Party of the Liens granted by it pursuant to the Collateral Documents or (c) the perfection of the Liens created under the Collateral Documents (including the first priority nature thereof), except for the authorizations, approvals, actions, notices and filings listed on Schedule 5.03, all of which have been duly obtained, taken, given or made and are in full force and effect.

5.04. Binding Effect. This Agreement has been, each other Loan Document and the Intercreditor Agreement, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party

-57-

thereto. This Agreement constitutes, and each other Loan Document and the Intercreditor Agreement when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms, subject to (i) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to affecting creditors’ rights generally and (ii) general equitable principles (whether considered in a proceeding in equity or at law).

5.05. Financial Statements; No Material Adverse Effect.

(a) The Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present in all material respects the financial condition of the Company and its Subsidiaries as of the dates thereof and their results of operations for the periods covered thereby in accordance with GAAP, except as otherwise expressly noted therein; and (iii) show all material indebtedness and other liabilities, direct or contingent, of the Company and its Subsidiaries as of the dates thereof, including liabilities for taxes, material commitments and Indebtedness.

(b) [Reserved].

(c) Since December 31, 2009, there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect.

(d) The consolidated pro forma balance sheet of the Borrower and its Subsidiaries as at December 31, 2009 and the related consolidated pro forma statements of income and cash flows of the Borrower and its Subsidiaries for the twelve months then ended, certified by the chief financial officer or treasurer of the Borrower, copies of which have been furnished to the Administrative Agent, fairly present the consolidated pro forma financial condition of the Borrower and its Subsidiaries as at such date and the consolidated pro forma results of operations of the Borrower and its Subsidiaries for the period ended on such date, in each case giving effect to the Transaction.

(e) The financial projections concerning Holdings and its Subsidiaries delivered to the Lenders, the Lead Arrangers or the Administrative Agent by or on behalf of Holdings or any of its Subsidiaries prior to the date hereof have been prepared in good faith based upon assumptions believed by the Borrower to be reasonable at the time made and at the time made available to such Lenders, Joint Lead Arrangers and the Administrative Agent.

5.06. Litigation. Other than as set forth on Schedule 5.06, there are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the Borrower, threatened at law, in equity, in arbitration or before any Governmental Authority, by or against the Borrower or any of its Subsidiaries or against any of their properties or revenues that (a) purport to affect or pertain to this Agreement, any other Loan Document, any Related Document, the Intercreditor Agreement or the consummation of the Transaction, or (b) either individually or in the aggregate could reasonably be expected to have a Material Adverse Effect.

5.07. Ownership of Property; Liens; Investments.

(a) Each Loan Party and each of its Subsidiaries has good record and marketable title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its business, except for such defects in title as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(b) Schedule 5.07(b) sets forth a complete and accurate list of all Liens on the property or assets of each Loan Party and each of its Subsidiaries, showing as of the date hereof the lienholder thereof, the principal amount of the obligations secured thereby and the property or assets of such Loan Party or such Subsidiary subject thereto. The property of each Loan Party and each of its Subsidiaries is subject to no Liens, other than Liens set forth on Schedule 5.07(b), and as otherwise permitted by Section 7.01.

(c) As of the Closing Date, no Loan Party owns any Material Real Property. Schedule 5.07(c) lists, as of the Closing Date, each parcel of Material Real Property owned by any Subsidiary of a Loan Party, showing as of the date hereof the street address, county or other relevant jurisdiction, state, record owner and book and Fair Market

-58-

Value thereof. Each Loan Party and each of its Subsidiaries has good, marketable and insurable fee simple title to the Material Real Property owned by such Loan Party or such Subsidiary, free and clear of all Liens, other than Liens created or permitted by the Loan Documents.

5.08. Environmental Compliance.

(a) (i) None of the properties currently or formerly owned or operated by any Loan Party or any of its Subsidiaries is listed or, to the knowledge of the Borrower, proposed for listing on the NPL or on the CERCLIS or any analogous foreign, state or local list or, to the knowledge of the Borrower, is adjacent to any such property; (ii) none of the Loan Parties has used any Hazardous Materials and, to the knowledge of the Borrower, there are no, and never have been any, underground or above-ground storage tanks or any surface impoundments, septic tanks, pits, sumps or lagoons in which Hazardous Materials are being or have been treated, stored or disposed on any property currently owned or operated by any Loan Party or any of its Subsidiaries or, to the knowledge of the Loan Parties, on any property formerly owned or operated by any Loan Party or any of its Subsidiaries; (iii) none of the Loan Parties has used, and to the knowledge of the Borrower, there is no asbestos or asbestos-containing material on any property currently owned or operated by any Loan Party or any of its Subsidiaries; and (iv) none of the Loan Parties has released, discharged or disposed of Hazardous Materials and, to the knowledge of the Borrower, Hazardous Materials have not otherwise been released, discharged or disposed of on any property currently or formerly owned or operated by any Loan Party or any of its Subsidiaries, other than any exceptions to any of the foregoing clauses (i) through (iv) that would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.

(b) Neither any Loan Party nor any of its Subsidiaries (i) is undertaking, and has not completed, either individually or together with other potentially responsible parties, any investigation or assessment or remedial or response action relating to any actual or threatened release, discharge or disposal of Hazardous Materials at any site, location or operation, either voluntarily or pursuant to the order of any Governmental Authority or the requirements of any Environmental Law or (ii) has generated, used, treated, handled or stored any Hazardous Materials at, or has transported any Hazardous Materials to or from, any property currently or formerly owned or operated by any Loan Party or any of its Subsidiaries, other than exceptions to any of the foregoing clauses (i) or (ii) that would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.

5.09. Insurance. The properties of the Borrower and its Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of the Borrower, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Borrower or the applicable Subsidiary operates.

5.10. Taxes. Except as would not be reasonably expected, individually or in the aggregate, to result in a Material Adverse Effect, each Loan Party and each of its respective Subsidiaries has timely filed all Tax returns and reports required to be filed, and has timely paid all Taxes levied or imposed upon it or its property, income or assets or otherwise due and payable (whether or not shown on any Tax return), including in its capacity as a withholding agent, except such of those Taxes which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP (provided such contest suspends enforcement or collection of the Tax in question). Each Loan Party and its respective Subsidiaries has made adequate provisions in accordance with GAAP for all material Taxes not yet due and payable. There is no current, proposed or pending audit, assessment, deficiency or other claim relating to Taxes against any Loan Party or any of its Subsidiaries that would reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect. None of the Loan Parties nor any of their respective Subsidiaries has “participated” in a “listed transaction” within the meaning of Treas. Reg. Section 1.6011-4, except as would not be reasonably expected, individually or in the aggregate, to have a Material Adverse Effect.

5.11. ERISA Compliance.

(a) Except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, each Plan is in compliance with the applicable provisions of ERISA, the Code and other Federal or state laws.

-59-

(b) There are no pending or, to the best knowledge of the Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in a Material Adverse Effect.

(c) Except as would not be reasonably expected, individually or in the aggregate, to have a Material Adverse Effect, (i) no ERISA Event has occurred; (ii) neither the Borrower nor any ERISA Affiliate has incurred any liability under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; (iii) neither the Borrower nor any ERISA Affiliate has incurred any liability under Title IV of ERISA with respect to a Pension Plan (other than for the payment of premiums due and not delinquent under Section 4007 of ERISA); (iv) neither the Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or Section 4212(c) of ERISA; and (v) no Pension Plan has been terminated by the plan administrator thereof nor by the PBGC, and no event or circumstance has occurred or exists that could reasonably be expected to cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Pension Plan.

5.12. Subsidiaries; Equity Interests; Loan Parties. As of the Closing Date, no Loan Party has any Subsidiaries other than those specifically disclosed in Part (a) of Schedule 5.12, and all of the outstanding Equity Interests in such Subsidiaries have been validly issued, are fully paid and non-assessable and are owned by a Loan Party as specified on Part (a) of Schedule 5.12 free and clear of all Liens except those created or permitted under the Collateral Documents. No Loan Party has any equity investments in any other corporation or entity other than those specifically disclosed in Part (b) of Schedule 5.12. All of the outstanding Equity Interests in the Borrower have been validly issued, are fully paid and non-assessable and are owned by Holdings free and clear of all Liens except those created or permitted under the Collateral Documents.

5.13. Margin Regulations; Investment Company Act.

(a) The Borrower is not engaged and will not engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock.

(b) None of the Borrower, any Person Controlling the Borrower, or any Subsidiary is or is required to be registered as an “investment company” under the Investment Company Act of 1940, as amended.

5.14. Disclosure. No report, financial statement, certificate or other information furnished (in writing) by or on behalf of any Loan Party to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder, under any other Loan Document or the Intercreditor Agreement (in each case as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not materially misleading; provided that, with respect to projected financial information, the Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.

5.15. Compliance with Laws.

(a) Each Loan Party and each Subsidiary thereof is in compliance in all material respects with the requirements of all Laws (including the Act and the United States Foreign Corrupt Practices Act of 1977, as amended) and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (i) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (ii) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

(b) Each of the Borrower and each of its Subsidiaries which maintains health care facilities or provides health care services has procured and maintains (i) all required licenses and permits for all of its (if any) health care facilities and (ii) eligibility for reimbursement or payment under the Medicare, Medicaid and comparable

-60-

programs, including successor programs, except where a failure to procure or maintain such license, permit or eligibility for reimbursement or payment, as applicable, could not reasonably be expected to result in a Material Adverse Effect.

5.16. Intellectual Property; Licenses, Etc. Except as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) each Loan Party and each of its Subsidiaries own, or possess the right to use, all of the trademarks, service marks, trade names, copyrights, patents, patent rights, licenses and other intellectual property rights (collectively, “IP Rights”) that are reasonably necessary for the operation of their respective businesses, and Schedule 5.16 sets forth a complete and accurate list as of the date hereof of registered and applied for IP Rights owned by each Loan Party; and (ii) no written claim or litigation regarding any of the foregoing is pending or, to the best knowledge of the Borrower, threatened.

5.17. Solvency. The Borrower, together with its Subsidiaries on a consolidated basis, is Solvent.

5.18. Labor Matters. There are no collective bargaining agreements or Multiemployer Plans covering the employees of the Borrower or any of its Subsidiaries as of the Closing Date and neither the Borrower nor any Subsidiary has suffered any strikes, walkouts, work stoppages or other labor difficulty within the last five years that could reasonably be expected to have a Material Adverse Effect.

5.19. Collateral Documents. The provisions of the Collateral Documents are effective to create in favor of the Administrative Agent for the benefit of the Secured Parties a legal, valid and enforceable first priority Lien (subject to Liens permitted by Section 7.01) on all right, title and interest of the respective Loan Parties in the Collateral described therein. Except for filings described on Schedule 5.19, no filing or other action will be necessary to perfect or protect such Liens.

5.20. Use of Proceeds. The Borrower will use the proceeds of the Revolving Credit Loans and Swing Line Loans (i) after the Closing Date, to finance the working capital needs of the Borrower and its Subsidiaries, (ii) after the Closing Date, for general corporate purposes and (iii) on and after the Closing Date, to pay costs and expenses in connection with the Transaction.

5.21. Status as Senior Debt. The Obligations are “Priority Payment Lien Obligations,” within the meaning of the Senior Secured Notes Documents.

ARTICLE VI

AFFIRMATIVE COVENANTS

So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, each of Holdings and the Borrower shall, and shall (except in the case of the covenants set forth in Sections 6.01, 6.02, 6.03 and 6.11) cause each Subsidiary to:

6.01. Financial Statements. Deliver to the Administrative Agent:

(a) as soon as available, but in any event within 90 days after the end of each fiscal year of the Borrower (commencing with the fiscal year ended December 31, 2010), a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year, and the related consolidated statements of income or operations, changes in shareholders’ equity, and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, audited and accompanied by a report and opinion of Grant Thornton LLP or another independent certified public accountant of nationally recognized standing reasonably acceptable to the Administrative Agent, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit;

-61-

(b) as soon as available, but in any event within 45 days (or, in the case of financial statements for the fiscal quarter ended March 31, 2010, on or before June 15, 2010) after the end of each of the first three fiscal quarters of each fiscal year of the Borrower (commencing with the fiscal quarter ended March 31, 2010), a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal quarter, and the related consolidated statements of income or operations, changes in shareholders’ equity, and cash flows for such fiscal quarter and for the portion of the Borrower’s fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail, certified by the chief executive officer, chief financial officer, treasurer or controller of the Borrower as fairly presenting the financial condition, results of operations, shareholders’ equity and cash flows of the Borrower and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes; and

(c) as soon as available, but in any event at least 60 days after the end of each fiscal year of the Borrower, an annual business plan and budget of the Borrower and its Subsidiaries on a consolidated basis, in form reasonably satisfactory to the Administrative Agent for such fiscal year.

As to any information contained in materials furnished pursuant to Section 6.02(d), the Borrower shall not be separately required to furnish such information under Section 6.01(a) or (b) above, but the foregoing shall not be in derogation of the obligation of the Borrower to furnish the information and materials described in Sections 6.01(a) and (b) above at the times specified therein.

6.02. Certificates; Other Information. Deliver to the Administrative Agent, in form and detail reasonably satisfactory to the Administrative Agent:

(a) concurrently with the delivery of the financial statements referred to in Section 6.01(a) (commencing with the delivery of the financial statements for the fiscal year ended December 31, 2010), a certificate of its independent certified public accountants certifying such financial statements and stating that in making the examination necessary therefor no knowledge was obtained of any Default under Section 7.10 or, if any such Default shall exist, stating the nature and status of such event;

(b) concurrently with the delivery of the financial statements referred to in Sections 6.01(a) and (b) (commencing with the delivery of the financial statements for the fiscal quarter ended September 30, 2010, (i) a duly completed Compliance Certificate signed by the chief executive officer, chief financial officer, treasurer or controller of the Borrower (which delivery may be by electronic communication including fax or email and shall be deemed to be an original authentic counterpart thereof for all purposes); and (ii) a copy of management’s discussion and analysis with respect to such financial statements;

(c) promptly after any request by the Administrative Agent, copies of any detailed audit reports, management letters or recommendations submitted to the board of directors (or the audit committee of the board of directors) of any Loan Party by independent accountants in connection with the accounts or books of any Loan Party or any Subsidiary thereof, or any audit of any of them;

(d) promptly after the same are available, copies of all annual, regular, periodic and special reports and registration statements which the Borrower may file with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934, or with any national securities exchange, and in any case not otherwise required to be delivered to the Administrative Agent pursuant hereto;

(e) promptly after the furnishing thereof, copies of any notice of default, acceleration or material breach with respect to (a) any Indebtedness of Holdings and its Subsidiaries, to the extent such Indebtedness is in an aggregate principal amount in excess of the Threshold Amount or (b) any Related Document;

(f) promptly, and in any event within five Business Days after receipt thereof by any Loan Party or any Subsidiary thereof, copies of each notice or other correspondence received from the SEC concerning any investigation or possible investigation or other inquiry by such agency regarding financial or other operational results of any Loan Party or any Subsidiary thereof;

-62-

(g) provide not less than 30 days’ prior written notice (in the form of a certificate of a Responsible Officer), or such lesser notice period agreed to by the Administrative Agent, of its intention so to do, describing such change and providing such other information in connection therewith as the Administrative Agent may reasonably request, before effecting any change (i) in any Loan Party’s legal name, (ii) in the location of any Loan Party’s chief executive office, (iii) in any Loan Party’s identity or organizational structure, (iv) in any Loan Party’s Federal Taxpayer Identification Number or organizational identification number, if any, or (v) in any Loan Party’s jurisdiction of organization (in each case, including by merging with or into any other entity, reorganizing, dissolving, liquidating, reorganizing or organizing in any other jurisdiction), it being understood that the Borrower shall take, and the Borrower shall cause each applicable Loan Party to take, all action reasonably satisfactory to the Administrative Agent to maintain the perfection and priority of the security interest of the Administrative Agent for the benefit of the Secured Parties in the Collateral, if applicable. The Borrower agrees to promptly provide the Administrative Agent with certified Organizational Documents reflecting any of the changes described in the preceding sentence. The Borrower also agrees to promptly notify the Administrative Agent of any change in the location of any office in which it maintains books or records relating to Collateral owned by it;

(h) promptly, such additional information regarding the business, financial, legal or corporate affairs of any Loan Party or any Subsidiary thereof, or compliance with the terms of the Loan Documents, as the Administrative Agent may from time to time reasonably request;

(i) promptly after learning of the assertion or occurrence thereof, notice of any action or proceeding against or of any noncompliance by any Loan Party or any of its Subsidiaries with any applicable Environmental Law or Environmental Permit that could (i) reasonably be expected to have a Material Adverse Effect or (ii) reasonably be expected to cause any material property described in any Mortgage to be subject to any material restrictions on ownership, occupancy, use or transferability under any applicable Environmental Law.

Documents required to be delivered pursuant to Section 6.01(a) or (b) or Section 6.02(d) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on the Borrower’s website on the Internet at the website address listed on Schedule 11.02; or (ii) on which such documents are posted on the Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that: (i) upon request, the Borrower shall deliver paper or electronic (which may be by facsimile or electronic mail) copies of such documents to the Administrative Agent for further distribution to each Lender until a written request to cease delivering paper copies is given by the Administrative Agent and (ii) the Borrower shall notify the Administrative Agent and each Lender (by telecopier or electronic mail) of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents. The Administrative Agent shall have no obligation to request the delivery of or to maintain paper copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request by a Lender for delivery, and each Lender shall be solely responsible for maintaining its copies of such documents.

The Borrower hereby acknowledges that (a) the Administrative Agent and/or the Lead Arrangers will make available to the Lenders and the L/C Issuer materials and/or information provided by or on behalf of the Borrower hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on IntraLinks or another similar electronic system (the “Platform”) and (b) certain of the Lenders (each, a “Public Lender”) may have personnel who do not wish to receive material non-public information with respect to the Borrower or its Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons’ securities. The Borrower hereby agrees that it will use commercially reasonable efforts to identify that portion of the Borrower Materials that may be distributed to the Public Lenders

-63-

and that (w) all such Borrower Materials shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent, the Lead Arrangers, the L/C Issuer and the Lenders to treat such Borrower Materials as not containing any material non-public information (although it may be sensitive and proprietary) with respect to the Borrower or its securities for purposes of United States Federal and state securities laws (provided, however, that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 11.07); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information”; and (z) the Administrative Agent and the Lead Arrangers shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information.”

6.03. Notices. Promptly notify the Administrative Agent and each Lender:

(a) of the occurrence of any Default;

(b) of any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect; and

(c) of the occurrence of any ERISA Event.

Each notice pursuant to this Section 6.03 shall be accompanied by a statement of a Responsible Officer of the Borrower setting forth details of the occurrence referred to therein and stating what action the Borrower has taken and proposes to take with respect thereto. Each notice pursuant to Section 6.03(a) shall describe with particularity any and all provisions of this Agreement and any other Loan Document that have been breached.

6.04. Payment of Taxes. Pay and discharge as the same shall become due and payable all material Taxes upon it or its property, income or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by the Borrower or such Subsidiary.

6.05. Preservation of Existence, Etc. (a) Preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization except in a transaction permitted by Section 7.04 or 7.05; provided, however, that the Borrower and its Subsidiaries may consummate the Merger and any other merger or consolidation permitted under Section 7.04 or 7.05; (b) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary in the normal conduct of its business, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) preserve or renew all of its IP Rights, the non-preservation of which could reasonably be expected to have a Material Adverse Effect.

6.06. Maintenance of Properties. (a) Maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect; and (b) make all necessary repairs thereto and renewals and replacements thereof except where the failure to do so could not reasonably be expected to have a Material Adverse Effect.

6.07. Maintenance of Insurance. Maintain with financially sound and reputable insurance companies not Affiliates of the Borrower, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons and providing for not less than 30 days’ prior notice to the Administrative Agent of termination, lapse or cancellation of such insurance.

6.08. Compliance with Laws. Comply in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (b) the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.

-64-

6.09. Books and Records. Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and material matters involving the assets and business of the Borrower or such Subsidiary, as the case may be.

6.10. Inspection Rights. Permit representatives of the Administrative Agent and each Lender to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants, all at the expense of the Borrower (subject to clause (i) of the following proviso) and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Borrower; provided, however, that (i) if no Event of Default has occurred and is continuing, the Borrower shall be obligated to reimburse the Administrative Agent for only one such visit and inspection in each fiscal year by the Administrative Agent (any additional visits and inspections shall be at the expense of the applicable Lender), (ii) all visits or inspections by a Lender shall be coordinated by the Administrative Agent and (iii) when an Event of Default exists the Administrative Agent or any Lender (or any of their respective representatives) may do any of the foregoing at the expense of the Borrower at any time during normal business hours and without advance notice.

6.11. ERISA Compliance.

Furnish to the Administrative Agent as soon as practicable after request by the Administrative Agent, (x) copies of (i) each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed by the Borrower, its Subsidiaries or any ERISA Affiliate with the Internal Revenue Service with respect to each Plan; (ii) the most recent actuarial valuation report for each Plan; (iii) such other documents or governmental reports or filings relating to any Plan as the Administrative Agent shall reasonably request and (y) with respect to any Multiemployer Plan, (i) any documents described in Section 101(k) of ERISA that the Borrower, any of its Subsidiaries or any ERISA Affiliate may request and (ii) any notices described in Section 101(1) of ERISA that the Borrower, its Subsidiaries or any ERISA Affiliate may request; provided that if the Borrower, its Subsidiaries or any ERISA Affiliate has not requested such documents or notices from the administrator or sponsor of the applicable Multiemployer Plan, the Borrower, Subsidiary or ERISA Affiliate shall promptly make a request for such documents or notices from such administrator or sponsor and shall provide copies of such documents and notices promptly after receipt thereof.

6.12. Covenant to Guarantee Obligations and Give Security.

(a) Upon the formation or acquisition of any new direct or indirect Wholly Owned Subsidiary or at any time that a Subsidiary that was not a Wholly Owned Subsidiary shall become a Wholly Owned Subsidiary (other than any CFC or a Subsidiary that is held directly or indirectly by a CFC) by any Loan Party or any property by any Loan Party not otherwise subject to the Lien of the Collateral Documents, then the Borrower shall, at the Borrower’s expense:

(i) within 30 days (or such longer notice period agreed to by the Administrative Agent, in its sole discretion, in writing) after such formation or acquisition, (i) cause such Wholly Owned Subsidiary to duly execute and deliver to the Administrative Agent a Guaranty Supplement, guaranteeing the other Loan Parties’ obligations under the Loan Documents, a Security Agreement Supplement, an IP Security Agreement Supplement and other security and pledge agreements required under the Loan Documents securing payment of the Obligations of such Subsidiary, and (ii) cause each parent of such Subsidiary which is a Loan Party to take all action necessary to cause the Equity Interests in such Subsidiary to be pledged to the Administrative Agent pursuant to such Loan Party’s Security Agreement,

(ii) within 60 days (or such longer notice period agreed to by the Administrative Agent, in its sole discretion, in writing) after the formation or acquisition of any Wholly Owned Subsidiary or after acquisition by any Loan Party of any Material Real Property, cause the Loan Party which owns such Material Real Property to duly execute and deliver to the Administrative Agent a deed of trust or mortgage thereon, in form and substance reasonably satisfactory to the Administrative Agent, securing payment of all the Obligations of such Loan Party (each, a “Mortgage”),

-65-

(iii) within 30 days with respect to Liens created pursuant to clause (i) of this Section 6.12 and 60 days after such formation or acquisition with respect to Liens created pursuant to clause (ii) of this Section 6.12 (or, in either case, such longer notice period agreed to by the Administrative Agent, in its sole discretion, in writing), cause such Wholly Owned Subsidiary and each direct and indirect parent of such Wholly Owned Subsidiary (if it has not already done so) to take whatever action (including without limitation the recording of Mortgages and the filing of Uniform Commercial Code financing statements,) may be necessary to perfect the Liens created pursuant to clauses (i) and (ii) of this Section 6.12 and to vest in the Administrative Agent (or in any representative of the Administrative Agent designated by it) valid and perfected Liens on such property, enforceable against all third parties, subject to the Liens permitted by Section 7.01,

(iv) within 60 days (or such longer notice period agreed to by the Administrative Agent, in its sole discretion, in writing) after such formation or acquisition, deliver to the Administrative Agent, upon the request of the Administrative Agent in its sole discretion, a signed copy of a favorable opinion, addressed to the Administrative Agent and the other Secured Parties, of counsel for the Loan Parties reasonably acceptable to the Administrative Agent as to the matters contained in clauses (i), (ii) and (iii) above,

(v) upon the request of the Administrative Agent in its reasonable discretion, deliver to the Administrative Agent with respect to each Material Real Property, title reports, surveys, engineering, soils and other reports, and environmental assessment reports, each in scope, form and substance reasonably satisfactory to the Administrative Agent, provided, however, that to the extent that any Loan Party shall have otherwise received any of the foregoing items with respect to such Material Real Property, such items shall, promptly after the receipt thereof, be delivered to the Administrative Agent, and

(vi) upon the request of the Administrative Agent in its reasonable discretion, with respect to each Material Real Property, obtain flood insurance in such total amount as the Administrative Agent or the Required Lenders may from time to time require, if at any time the area in which any improvements located on any Material Property is designated a “flood hazard area” in any Flood Insurance Rate Map published by the Federal Emergency Management Agency (or any successor agency), and otherwise comply with the National Flood Insurance Program as set forth in the Flood Disaster Protection Act of 1973, as amended from time to time.

(b) Upon the acquisition of any property by any Loan Party that is intended to be subject to the Lien created by the Collateral Documents but that is not already subject to a perfected first priority security interest in favor of the Administrative Agent for the benefit of the Secured Parties, then the Borrower shall, at the Borrower’s expense, within 30 days (or such longer period agreed to by the Administrative Agent, in its sole discretion, in writing) after such acquisition cause the applicable Loan Party to duly execute and deliver to the Administrative Agent deeds of trust, trust deeds, deeds to secure debt, mortgages, leasehold mortgages, leasehold deeds of trust, security Agreement Supplements, IP Security Agreement Supplements and other security and pledge agreements, as specified by and in form and substance reasonably satisfactory to the Administrative Agent, securing payment of all the Obligations of the applicable Loan Party under the Loan Documents and constituting Liens on all such properties.

(c) At any time upon the request of the Administrative Agent, promptly execute and deliver any and all further instruments and documents and take all other actions as the Administrative Agent may deem necessary or desirable in obtaining the full benefits of, or (as applicable) in perfecting and preserving the Liens on, the Collateral.

(d) Upon request by the Administrative Agent, if an Event of Default occurs and is continuing, the Borrower and the Subsidiary Guarantors will exercise their rights and remedies under any and all Secured Intercompany Notes.

-66-

6.13. Compliance with Environmental Laws. Comply, and take commercially reasonable steps to cause all lessees and other Persons operating or occupying its properties to comply, in all material respects, with all applicable Environmental Laws and Environmental Permits; obtain and renew all Environmental Permits necessary for its operations and properties; and conduct any investigation, study, sampling and testing, and undertake any cleanup, removal, remedial or other action necessary to remove and clean up all Hazardous Materials from any of its properties, as required by any applicable Environmental Laws; provided, however, that neither the Borrower nor any of its Subsidiaries shall be required to undertake any of the obligations above to the extent that its obligation to do so is being contested in good faith and by proper proceedings and appropriate reserves are being maintained with respect to such circumstances in accordance with GAAP, or where the failure to undertake such obligation would not reasonably be expect to result in a Material Adverse Effect.

6.14. Further Assurances. Promptly upon request by the Administrative Agent, or any Lender through the Administrative Agent, (a) correct any material defect or error that may be discovered in any Loan Document or in the execution, acknowledgment, filing or recordation thereof, and (b) do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register any and all such further acts, deeds, certificates, assurances and other instruments as the Administrative Agent, or any Lender through the Administrative Agent, may reasonably require from time to time in order to (i) carry out more effectively the purposes of the Loan Documents, (ii) to the fullest extent permitted by applicable law, subject any Loan Party’s or any of its Subsidiaries’ properties, assets, rights or interests to the Liens now or hereafter intended to be covered by any of the Collateral Documents, (iii) perfect and maintain the validity, effectiveness and priority of any of the Collateral Documents and any of the Liens intended to be created thereunder and (iv) assure, convey, grant, assign, transfer, preserve, protect and confirm more effectively unto the Secured Parties the rights granted or now or hereafter intended to be granted to the Secured Parties under any Loan Document or under any other instrument executed in connection with any Loan Document to which any Loan Party or any of its Subsidiaries is or is to be a party, and cause each of its Subsidiaries to do so.

6.15. Material Contracts. Perform and observe all the terms and provisions of each Material Contract to be performed or observed by it, maintain each such Material Contract in full force and effect (including, without limitation, any lease constituting a Material Contract), except, in any case, where the failure to do so, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

6.16. Qualified Subsidiaries.

(a) Except to the extent restricted pursuant to any Permitted Payment Restrictions, the Borrower shall, and shall cause each Subsidiary to, cause each Qualified Subsidiary to declare and pay regular monthly, quarterly, semiannual or annual dividends or distributions to the holders of its Equity Interests in an amount equal to substantially all of the available cash flow of such Subsidiary for such period as determined in good faith by the board of directors, board of governors or such other individuals performing similar functions, subject to fiduciary duties applicable to such board or individual and such ordinary and customary reserves and other amounts as, in the good faith judgment of such individuals, may be necessary so that the business of such Subsidiary may be properly and advantageously conducted at all times, including amounts necessary for operations, capital expenditures, debt service and other needs.

(b) If, at any time, any Subsidiary would fail to meet the requirements set forth in the definition of “Qualified Subsidiary,” it will thereafter cease to be a Qualified Subsidiary for purposes of this Agreement and any Indebtedness of such Subsidiary will be deemed to be incurred by a Subsidiary that is not a Qualified Subsidiary as of such date and, if such Indebtedness is not permitted to exist as of such date under Section 7.02, the existence of such Indebtedness shall constitute a Default under Section 7.02. The board of directors of the Borrower may at any time designate any Subsidiary not to be a Qualified Subsidiary; provided that such designation will be deemed to be an incurrence of Indebtedness by such Subsidiary of any outstanding Indebtedness of such Subsidiary, and such designation will only be permitted if (A) such Indebtedness is permitted under Section 7.02 and (B) no Default would be in existence following such designation. In the event (x) a Subsidiary fails to meet the requirements to be a Qualified Subsidiary or (y) the board of directors of the Borrower designates a Qualified Subsidiary not to be a Qualified Subsidiary, then all Investments in such Subsidiary since the Closing Date shall be deemed to have been acquired and consequently reduce the amount available for Investments under Section 7.03(i).

-67-

6.17. Post-Closing Deliverables. Deliver each item set forth on Schedule 6.17 to the Administrative Agent on or before the date set forth in such Schedule opposite such item.

ARTICLE VII

NEGATIVE COVENANTS

So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, the Borrower shall not, nor shall it permit any Subsidiary to, directly or indirectly, and solely in the case of Section 7.15, Holdings shall not:

7.01. Liens. Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, other than the following:

(a) Liens pursuant to any Loan Document;

(b) Liens existing on the date hereof (other than Liens permitted by Section 7.01(m)) and listed on Schedule 5.07(b) and any renewals or extensions thereof, provided that (i) the property covered thereby is not changed, (ii) the amount secured or benefited thereby is not increased except as contemplated by Section 7.02(g), (iii) the direct or any contingent obligor with respect thereto is not changed, and (iv) any renewal or extension of the obligations secured or benefited thereby is permitted by Section 7.02(g);

(c) inchoate Liens for ad valorem property taxes not yet due or Liens for Taxes which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP;

(d) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business;

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

(f) deposits to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

(g) survey exceptions, title defects, easements, rights-of-way, restrictions, encumbrances, or reservations of, or rights of others for, licenses, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real property or minor irregularities of title, in each case, which do not materially interfere with the ordinary conduct of the business of the Borrower and its Subsidiaries, taken as a whole.

(h) Liens securing judgments for the payment of money not constituting an Event of Default under Section 8.01(h);

(i) Liens securing Indebtedness incurred pursuant to Section 7.02(i); provided that (i) such Liens do not at any time encumber any property other than the property financed by such Indebtedness and (ii) the Indebtedness secured thereby does not exceed the cost of the property being acquired on the date of acquisition;

(j) Liens on property of a Person existing at the time (x) of acquisition of the property by the Borrower or the any Subsidiary of the Borrower or (y) such Person is merged into or consolidated with the Borrower or any Subsidiary of the Borrower or becomes a Subsidiary of the Borrower; provided that such Liens were not created in contemplation of such acquisition, merger, consolidation or Investment and do not extend to any assets other than those of the property acquired or Person merged into or consolidated with the Borrower or such Subsidiary or acquired by the Borrower or such Subsidiary or such Person’s Subsidiaries, and the applicable Indebtedness secured by such Lien is permitted under Section 7.02(j);

-68-

(k) other Liens securing Indebtedness outstanding in an aggregate principal amount not to exceed $2,500,000;

(l) Liens created or deemed to exist by the establishment of trusts for the purpose of satisfying government reimbursement program costs and other actions or claims pertaining to the same or related matters or other medical reimbursement programs;

(m) Liens on Collateral securing Indebtedness incurred pursuant to Section 7.02(b), so long as all such Liens are subject to the terms of the Intercreditor Agreement and the obligations secured by such Collateral constitute First Lien Obligations (other than Priority Payment Lien Obligations (each as defined in the Intercreditor Agreement)) or are subject to an intercreditor agreement that is as favorable to the Secured Parties as the Intercreditor Agreement;

(n) Liens on assets of any Qualified Subsidiary securing Indebtedness of such Qualified Subsidiary incurred pursuant to Section 7.02(c) or (d);

(o) Liens on Collateral securing Indebtedness incurred pursuant to Section 7.02 (including Liens securing any Obligations in respect thereof); provided that (i) after giving effect to such Lien and the incurrence of Indebtedness, if any, secured by such Lien, the Consolidated Adjusted Secured Debt Ratio on a Pro Forma Basis shall not be greater than 4.25:1.00 and (ii) such Liens are subject to the terms of the Intercreditor Agreement and the obligations secured by such Collateral constitute First Lien Obligations (other than Priority Payment Lien Obligations (each as defined in the Intercreditor Agreement)) or are subject to an intercreditor agreement that is as favorable to the Secured Parties as the Intercreditor Agreement;

(p) Liens (i) of a collection bank arising under Section 4-210 of the Uniform Commercial Code on items in the course of collection and (ii) in favor of a banking institution encumbering deposits (including the right of set-off) and which are within the general parameters customary in the banking industry;

(q) Liens in favor of the L/C Issuer or the Swing Line Lender on Cash Collateral securing the obligations of a Defaulting Lender to fund risk participations hereunder;

(r) Leases, subleases, licenses or sublicenses granted to third parties entered into in the ordinary course of business and any Liens arising from the precautionary filing of Uniform Commercial Code financing statements regarding leases;

(s) Liens incurred in connection with a Qualified Receivables Transaction (which, in the case of the Borrower and its Subsidiaries (other than Receivables Subsidiaries), shall be limited to receivables and related assets referred to in the definition of “Qualified Receivables Transaction”);

(t) Liens on Collateral pursuant to the Collateral Documents securing Obligations under any Secured Cash Management Agreement or Secured Hedge Agreement; provided that the Hedge Banks and the Cash Management Banks party to such agreement, and such Liens, are subject to the Intercreditor Agreement;

(u) Liens encumbering reasonable customary initial deposits and margin deposits and similar Liens attaching to brokerage accounts incurred in the ordinary course of business and not for speculative purposes; and

(v) Liens solely on any cash earned money deposits made by the Borrower or any Subsidiary with any letter of intent or purchase agreement permitted hereunder;

-69-

provided that, in addition to the foregoing, the Borrower will not, and will not permit any of its Subsidiaries to, directly or indirectly, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind, on or with respect to the Collateral except Permitted Collateral Liens.

7.02. Indebtedness. Create, incur, assume or suffer to exist any Indebtedness, except:

(a) obligations (contingent or otherwise) existing or arising under any Swap Contract, provided that such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with fluctuations in interest rates or foreign exchange rates and not for speculative purposes;

(b) Indebtedness of the Borrower or any Guarantor evidenced by the Senior Secured Notes, and Permitted Refinancing Indebtedness in respect thereof;

(c) Indebtedness or Disqualified Stock, in each case issued by Qualified Subsidiaries, in an aggregate amount not to exceed (net of unrestricted cash and Cash Equivalents held by any Qualified Subsidiary not included in the calculation under Section 7.02(d), up to the amount of Indebtedness of such Qualified Subsidiary under this Section 7.02(c)) at the time outstanding under this Section 7.02(c), the greater of (i) $25,000,000 and (ii) an amount equal to 50% of Consolidated EBITDA on a Pro Forma Basis for the most recently ended four full fiscal quarters for which financial statements have been delivered pursuant to Section 6.01;

(d) if the Consolidated Leverage Ratio of the Borrower and its Subsidiaries would not be greater than 4.25 to 1.00, (x) the incurrence of Permitted Refinancing Indebtedness or Replacement Preferred Stock, in each case, by Qualified Subsidiaries incurred to refinance Indebtedness owed, or Disqualified Stock issued, to the Borrower or a Subsidiary Guarantor in accordance with Section 7.02(e), or (y) the sale to any Person that is not Holdings or any of its Subsidiaries of any Indebtedness owed, or Disqualified Stock issued, by a Qualified Subsidiary to the Borrower or a Subsidiary Guarantor in accordance with Section 7.02(e) (either clause (x) or (y), an “Intercompany Loan Refinancing”), in an aggregate principal amount under this Section 7.02(d) not to exceed (net of unrestricted cash and Cash Equivalents held by any Qualified Subsidiary not included in the calculation under Section 7.02(c), up to the amount of Indebtedness of such Qualified Subsidiary under this Section 7.02(d)) at any time outstanding, the greater of (i) $25,000,000 and (ii) an amount equal to 50% of Consolidated EBITDA on a Pro Forma Basis for the most recently ended four full fiscal quarters for which financial statements have been delivered pursuant to Section 6.01 immediately preceding the date of any incurrence under this clause (d);

(e) Indebtedness of the Borrower, any Subsidiary Guarantor, any Qualified Subsidiary or any Subsidiary that meets the requirements of clauses (1), (2) and (3) of the definition of Qualified Subsidiary owing to the Borrower, any Subsidiary Guarantor and any Qualified Subsidiary or any Subsidiary that meets the definition of (1), (2) and (3) of Qualified Subsidiaries; provided, however, that:

(i) if the Borrower or any Subsidiary Guarantor is the obligor on such Indebtedness and the payee is not the Borrower or a Subsidiary Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations in respect of the Loans and L/C Obligations, except to the extent such subordination would violate any applicable law, rule or regulation ; and

(ii) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being owed to a Person other than the Borrower, a Subsidiary Guarantor or a Qualified Subsidiary of the Borrower and any sale or other transfer of any such Indebtedness to a Person that is not either the Borrower, a Subsidiary Guarantor or a Qualified Subsidiary of the Borrower, will be deemed, in each case, to constitute a new incurrence of such Indebtedness by the Borrower or such Subsidiary, as the case may be, which new incurrence is not permitted by this clause (e);

-70-

(f) Indebtedness under the Loan Documents;

(g) Indebtedness outstanding on the date hereof and listed on Schedule 7.02 and any Permitted Refinancing Indebtedness in respect thereof;

(h) the Guarantee:

(i) by the Borrower or any Subsidiary Guarantor of Indebtedness of the Borrower or a Subsidiary Guarantor that was permitted to be incurred by another clause of this Section 7.02; provided that if the Indebtedness being Guaranteed is subordinated to the Loans or any other Obligations, then such Guarantee shall be subordinated to the same extent as the Indebtedness so Guaranteed;

(ii) (x) by any Qualified Subsidiary of Indebtedness of another Qualified Subsidiary and (y) by any Subsidiary that is not a Loan Party or Qualified Subsidiary of Indebtedness of any other Subsidiary that is not a Loan Party or a Qualified Subsidiary; and

(iii) by the Borrower or any Subsidiary Guarantor of Indebtedness of any Qualified Subsidiary incurred pursuant to Section 7.02(c) or (d) (up to the indirect or indirect proportionate ownership interest in such Qualified Subsidiary by the Borrower);

(i) Indebtedness in respect of Capitalized Leases, Synthetic Lease Obligations and purchase money obligations for fixed or capital assets within the limitations set forth in Section 7.01(i); provided, however, that the aggregate amount of all such Indebtedness at any one time outstanding shall not exceed $15,000,000;

(j) (x) Acquired Debt or Disqualified Stock or preferred stock of any Person that is acquired by the Borrower or a Subsidiary or that consolidates or merges with or into a Subsidiary in accordance with the terms of the Loan Documents; provided, however, that (i) such Acquired Debt, Disqualified Stock or preferred stock existed prior to such acquisition, consolidation or merger and was not incurred or issued in connection therewith, or in contemplation thereof; and (ii) after giving effect thereto, the Fixed Charge Coverage Ratio on a Pro Forma Basis shall not be less than 2.0:1.0; or

(y) Acquired Debt or Disqualified Stock or preferred stock of any Person that consolidates or merges into the Borrower or any Guarantor in accordance with the terms of the Loan Documents; provided, however, that (i) such Acquired Debt, Disqualified Stock or preferred stock existed prior to such consolidation or merger and was not incurred or issued in connection therewith, or in contemplation thereof; and (ii) after giving effect thereto, the Fixed Charge Coverage Ratio of the Borrower is equal to or greater than immediately prior to the incurrence of such Acquired Debt, Disqualified Stock or preferred stock;

(k) Indebtedness of the Borrower in respect of promissory notes issued to Strategic Investors in connection with repurchases of Equity Interests permitted under Section 7.06(d);

(l) Indebtedness in an aggregate principal amount not to exceed $15,000,000 at any time outstanding;

(m) (i) other Indebtedness of Loan Parties so long as (x) no Default or Event of Default shall have occurred and be continuing or would result therefrom and (y) after giving effect to the issuance, incurrence or assumption of such Indebtedness, the Fixed Charge Coverage Ratio on a Pro Forma Basis shall not be less than 2.0:1.00 and (ii) Permitted Refinancing Indebtedness in respect thereof;

-71-

(n) Indebtedness owed by the Borrower or any Subsidiary Guarantor to future, current or former officers, directors, employees or consultants thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of the Borrower or any direct or indirect parent company of the Borrower to the extent described in Section 7.06(f);

(o) Standard Securitization Undertakings incurred in a Qualified Receivables Transaction permitted under this Agreement;

(p) Contribution Indebtedness of the Borrower or its Subsidiaries;

(q) the incurrence by the Borrower or any of its Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, letters of credit, performance bonds, surety bonds, appeal bonds or other similar bonds in the ordinary course of business;

(r) the incurrence by the Borrower or any of its Subsidiaries of 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, so long as such Indebtedness is extinguished within five Business Days;

(s) the incurrence of Indebtedness arising from agreements of the Borrower or a Subsidiary providing for indemnification, adjustment of purchase price, holdback, contingency payment obligations or similar obligations, in each case, incurred or assumed in connection with the disposition or acquisition of any business, assets or Equity Interests of the Borrower or any Subsidiary;

(t) Indebtedness of the Borrower or any of its Subsidiaries supported by a Letter of Credit, in a principal amount not in excess of the stated amount of such Letter of Credit;

(u) the incurrence of Indebtedness resulting from endorsements of negotiable instruments for collection in the ordinary course of business;

(v) Indebtedness of the Borrower or a Subsidiary in respect of netting services, overdraft protection and otherwise in connection with deposit accounts; provided that such Indebtedness remains outstanding for ten Business Days or less;

(w) Indebtedness representing deferred compensation to employees of the Borrower and the Subsidiaries incurred in the ordinary course of business;

(x) Indebtedness of the Borrower or any Subsidiary consisting of (i) the financing of insurance premiums or (ii) take-or-pay obligations contained in supply arrangements, in each case, in the ordinary course of business;

(y) Indebtedness incurred by the Borrower or any Subsidiary constituting reimbursement obligations with respect to letters of credit (other than Letters of Credit) issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, health, disability or other employee benefits, or property, casualty or liability insurance, or other Indebtedness with respect to reimbursement-type obligations regarding workers’ compensation claims; provided that upon the drawing of such letters of credit or the incurrence of such Indebtedness, such obligations are reimbursed within 45 days following such drawing or incurrence;

(z) Indebtedness of the Borrower or any Subsidiary to the extent the proceeds of such Indebtedness are substantially concurrently with the incurrence thereof deposited and used to defease the Senior Secured Notes pursuant to the Senior Secured Notes Documents;

(aa) Indebtedness in respect of bid, performance or surety bonds or obligations of a similar nature issued for the account of the Borrower or any Subsidiary in the ordinary course of business;

-72-

including guarantees or obligations of the Borrower or any Subsidiary with respect to letters of credit supporting such bid, performance or surety obligations (in each case other than for an obligation for money borrowed); and

(bb) Indebtedness in the form of earn-outs, contingent payments, seller notes, indemnification, incentive, non-compete, consulting or similar arrangements in connection with Investments permitted by Section 7.03 or in connection with the acquisition or disposition of any business or assets of the Borrower or any Subsidiary or Equity Interests of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Equity Interests for the purpose of financing or in contemplation of any such acquisition; provided that (a) any amount of such obligations included on the face of the balance sheet of the Borrower or any Subsidiary shall not be permitted under this Section 7.02(bb) and (b) in the case of a disposition, the maximum aggregate liability in respect of all such obligations outstanding under this Section 7.02(bb) shall at no time exceed the gross proceeds actually received by the Borrower and the Subsidiaries in connection with such disposition.

7.03. Investments. Make or hold any Investments, except:

(a) Investments held by the Borrower and its Subsidiaries in the form of Cash Equivalents;

(b) advances to officers, directors and employees of the Borrower and Subsidiaries in an aggregate amount not to exceed $2,000,000 at any time outstanding;

(c) (i) Investments by the Borrower and its Subsidiaries in their respective Subsidiaries outstanding on the date hereof, (ii) additional Investments by the Borrower and its Subsidiaries in Loan Parties (other than Holdings); provided, that notwithstanding this clause (ii), intercompany loans to Holdings will be permitted to the extent Restricted Payments to Holdings would be permitted under Section 7.06 (so long as such intercompany loan is counted as a Restricted Payment for purposes of Section 7.06), (iii) additional Investments by Subsidiaries of the Borrower that are not Loan Parties or Qualified Subsidiaries in other Subsidiaries that are not Loan Parties or Qualified Subsidiaries, (iv) Investments by the Borrower and its Subsidiaries in Qualified Subsidiaries and (v) any loans or advances to any Subsidiary that meets the requirements of clauses (1), (2) and (3) of the definition of Qualified Subsidiary; provided that to the extent such Investment referred to in clause (iv) or (v) constitutes Indebtedness or advances of or to any Qualified Subsidiary or a Subsidiary meeting the requirements of clauses (1), (2) and (3) of the definition of Qualified Subsidiary from the Borrower or any Subsidiary Guarantor, such Indebtedness shall be evidenced by a promissory note to the Borrower or such Subsidiary Guarantor, as the case may be, secured by substantially all assets of such Qualified Subsidiary or such Subsidiary meeting the requirements of clauses (1), (2) and (3) of the definition of Qualified Subsidiary (such note as so secured, a “Secured Intercompany Note”), which Secured Intercompany Note shall be pledged to the Administrative Agent for the benefit of the Secured Parties in accordance with the terms of the Security Agreement; provided that the Administrative Agent shall be entitled to reasonably request that the payee on such intercompany note take such actions or request such items (similar to those set forth in Section 6.12) as the Administrative Agent reasonably believes is necessary to perfect the security interest of the payee in any such Secured Intercompany Note.

(d) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss;

(e) Guarantees permitted by Section 7.02(h) and guarantees of obligations incurred by Qualified Subsidiaries not constituting Indebtedness entered into in the ordinary course of business of the Borrower and its Subsidiaries;

(f) Investments existing on the date hereof (other than those referred to in Section 7.03(c)(i)) and set forth on Schedule 7.03 or an Investment consisting of any extension, modification or renewal of any

-73-

Investment existing as of the date hereof and set forth on Schedule 7.03 (excluding any such extension, modification or renewal involving additional advances, contributions or other investments of cash or property or other increases thereof unless it is a result of the accrual or accretion of interest or original issue discount or payment-in-kind pursuant to the terms, as of the date hereof, of the original Investment so extended, modified or renewed) and pursuant to any binding commitment outstanding as of the date hereof and set forth on Schedule 7.03;

(g) the purchase or other acquisition of Equity Interests in any Person (which, upon such acquisition, shall become a Qualified Subsidiary), or all or substantially all of the property of, any Person the assets of which, upon the consummation thereof, will be owned by the Borrower, one or more Subsidiary Guarantors or one or more Qualified Subsidiaries; provided that, with respect to each purchase or other acquisition made pursuant to this Section 7.03(g):

(i) no Default shall have occurred or be continuing either before or after such purchase or acquisition;

(ii) Section 6.12 shall be complied with with respect to such newly acquired Subsidiary and property;

(iii) the lines of business of the Person to be (or the property of which is to be) so purchased or otherwise acquired shall be substantially the same lines of business as one or more of the principal businesses of the Borrower and its Subsidiaries;

(iv) with respect to any transaction involving Acquisition Consideration of more than $10,000,000, unless the Administrative Agent shall otherwise agree, the Borrower shall have provided the Administrative Agent with (A) historical financial statements for the last three fiscal years (or, if less, the number of years since formation) of the person or business to be acquired (audited if available without undue cost or delay) and unaudited financial statements thereof for the most recent interim period which are available, and (B) any such other information and data relating to such transaction or the Person or assets to be acquired as may be reasonably requested by the Administrative Agent;

(v) immediately after giving effect to any such purchase or other acquisition on a Pro Forma Basis, the Borrower and its Subsidiaries shall be in compliance on a Pro Forma Basis with all of the covenants set forth in Section 7.10 as of the most recent quarter end date (it being understood that if such most recent quarter end date is prior to September 30, 2010, the covenant levels set forth in Section 7.10 for September 30, 2010 shall apply for such purpose); and

(vi) the Borrower shall have delivered to the Administrative Agent and each Lender, at least five Business Days prior to the date on which any such purchase or other acquisition is to be consummated, a certificate of a Responsible Officer, in form and substance reasonably satisfactory to the Administrative Agent and the Required Lenders, certifying that all of the requirements set forth in this clause (g) have been satisfied or will be satisfied on or prior to the consummation of such purchase or other acquisition; and

(h) obligations of one or more officers or other employees of the Borrower or any of its Subsidiaries in connection with such officer’s or employee’s acquisition of Equity Interests of the Borrower or Holdings (or any other direct or indirect parent company of the Borrower) so long as no cash or other assets are paid by the Borrower or any of its Subsidiaries to such officers or employees in connection with the acquisition of any such obligations;

(i) other Investments not exceeding, in the aggregate at any time outstanding, the greater of (i) $35,000,000 and (ii) 6.0% of Total Assets at the time of any Investment pursuant to this clause;

-74-

(j) payroll, travel and similar advances to cover business-related travel expenses, moving expenses or other similar expenses, in each case incurred in the ordinary course of business;

(k) any Investment in a Receivables Subsidiary or any Investment by a Receivables Subsidiary in any other Person in connection with a Qualified Receivables Transaction, including, without limitation, Investments of funds held in accounts permitted or required by the arrangements governing such Qualified Receivables Transaction or any related indebtedness;

(l) the acquisition by a Receivables Subsidiary in connection with a Qualified Receivables Transaction of Equity Interests of a trust or other Person established by such Receivables Subsidiary to effect such Qualified Receivables Transaction; and any other Investment by the Borrower or a Subsidiary of the Borrower in a Receivables Subsidiary or any Investment by a Receivables Subsidiary in any other Person in connection with a Qualified Receivables Transaction customary for such transactions;

(m) any Investment received in connection with a disposition of assets not constituting a Material Disposition;

(n) any Investment solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of Holdings or any parent of Holdings;

(o) any Investments received in compromise, settlement or resolution of (A) obligations of trade debtors or customers that were incurred in the ordinary course of business of the Borrower or any of its Subsidiaries, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade debtor or customer, (B) litigation, arbitration or other disputes with Persons who are not Affiliates or (C) as a result of a foreclosure by the Borrower or any Subsidiary with respect to any secured Investment or other transfer of title with respect to any secured Investment in default;

(p) Investments represented by Obligations under any Secured Hedge Agreement entered into to protect against fluctuations in interest rates, exchange rates and commodity prices;

(q) Investments in prepaid expenses, negotiable instruments held for collection and lease, utility and workers compensation, performance and similar deposits entered into as a result of the operations of the business in the ordinary course of business;

(r) repurchases of the Senior Secured Notes to the extent permitted by Section 7.14;

(s) Investments consisting of amounts potentially due from a seller of property in an acquisition that (i) relate to customary post-closing adjustments with respect to accounts receivable, accounts payable and similar items typically subject to post-closing adjustments in similar transactions and (ii) are outstanding for a period of one hundred twenty (120) days or less following the closing of such acquisition;

(t) good faith deposits in connection with any acquisition, joint venture or acquisition of assets and escrowed money in connection with Material Dispositions, acquisitions or joint ventures;

(u) Investments of a Subsidiary of the Borrower acquired after the Closing Date or of a Person merged into, amalgamated with or consolidated with a Subsidiary of the Borrower in a transaction that is not prohibited by Section 7.04 after the Closing Date to the extent that such Investments were not made in contemplation of such acquisition, merger, amalgamation or consolidation and were in existence on the date of such merger, acquisition, amalgamation or consolidation;

(v) Investments that are made with Excluded Contributions; and

-75-

(w) Investments in receivables owing to the Borrower or any Subsidiary 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 Borrower or any such Subsidiary deems reasonable under the circumstances.

7.04. Fundamental Changes. Merge, dissolve, liquidate, consolidate with or into another Person, or Dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person, except that, so long as no Default exists or would result therefrom:

(a) any Subsidiary may merge with (i) the Borrower, provided that the Borrower shall be the continuing or surviving Person, or (ii) any one or more other Subsidiaries; provided that when any Loan Party (other than Holdings) is merging with another Subsidiary that is not a Qualified Subsidiary, a Loan Party shall be the continuing or surviving Person; provided further, that when any Subsidiary Guarantor is merging with a Qualified Subsidiary, such Subsidiary Guarantor shall be the continuing or surviving Person, unless such Subsidiary Guarantor holds no assets other than de minimis assets or Equity Interests of a Qualified Subsidiary, in which event either such Subsidiary Guarantor or Qualified Subsidiary shall be the continuing or surviving Person; provided further, that when any Qualified Subsidiary is merging with another Subsidiary that is not a Loan Party, a Qualified Subsidiary shall be the continuing or surviving Person;

(b) any Loan Party may Dispose of all or substantially all of its assets (upon voluntary liquidation or otherwise) to the Borrower, to another Loan Party (other than Holdings) or to a Qualified Subsidiary;

(c) any Subsidiary that is not a Loan Party may dispose of all or substantially all its assets (including any Disposition that is in the nature of a liquidation) to (i) another Subsidiary that is not a Loan Party or (ii) to a Loan Party;

(d) the Borrower may consummate the Merger; and

(e) in connection with any acquisition permitted under Section 7.03, any Subsidiary of the Borrower may merge into or consolidate with any other Person or permit any other Person to merge into or consolidate with it; provided that (i) the Person surviving such merger shall be the Borrower, a Subsidiary Guarantor or a Qualified Subsidiary, as the case may be, and (ii) in the case of any such merger to which any Loan Party (other than the Borrower) or Qualified Subsidiary is a party, such Loan Party or Qualified Subsidiary is the surviving Person.

7.05. Dispositions. Make any Disposition or enter into any agreement to make any Disposition, except:

(a) Dispositions of damaged, negligible, surplus, obsolete or worn out property, whether now owned or hereafter acquired, in the ordinary course of business;

(b) Disposition of accounts receivable in connection with the collection or compromise thereof;

(c) leases or subleases to third persons in the ordinary course of business that do not interfere in any material respect with the business of the Borrower and its Subsidiaries;

(d) the sale or other Disposition of Cash Equivalents;

(e) Dispositions of accounts receivable and related assets of the type specified in the definition of Qualified Receivables Transaction (or a fractional undivided interest therein) by a Receivables Subsidiary in a Qualified Receivables Transaction;

-76-

(f) Dispositions of products, services or accounts receivables (including at a discount) in the ordinary course of business;

(g) Dispositions of equipment or real property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property or (ii) the proceeds of such Disposition are reasonably promptly applied to the purchase price of such replacement property;

(h) Dispositions of property by the Borrower or any Subsidiary to the Borrower, a Subsidiary Guarantor or Qualified Subsidiary;

(i) Dispositions permitted by Section 7.04;

(j) licensing of IP Rights in the ordinary course of business or in accordance with industry practice;

(k) Dispositions of assets as a result of a foreclosure by the Borrower or any Subsidiary on any secured Investment or other transfer of title with respect to any secured Investment in default; and

(l) Dispositions by the Borrower and its Subsidiaries not otherwise permitted under this Section 7.05; provided that at the time of such Disposition, (i) no Default shall have occurred and be continuing, (ii) not less than 75% of the purchase price for such asset shall be paid to the Borrower or such Subsidiary in cash, (ii) the aggregate Fair Market Value of all property Disposed of in reliance on this Section 7.05(l) in any fiscal year of the Borrower shall not exceed $10,000,000 (provided that any amount so unused in any such fiscal year may be carried forward to any succeeding fiscal year so long as the aggregate Fair Market Value of any assets so Disposed in any such fiscal year pursuant to this Section 7.05(l) after giving effect to such carryover shall not exceed $20,000,000) and (iii) the Net Cash Proceeds thereof are applied in accordance with Section 2.06(b)(iii); provided that each of the following shall be deemed to be cash for the purposes of clause (ii) above:

(i) Cash Equivalents;

(ii) any liabilities (as shown on the Issuer’s most recent consolidated balance sheet) of the Borrower or any Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to any of the Obligations) that are assumed by the transferee of any such assets pursuant to an agreement that releases the Borrower or such Subsidiary from further liability;

(iii) any securities, notes or other obligations received by the Borrower or any Subsidiary from such transferee that are converted by the Borrower or such Subsidiary into cash within 180 days of receipt, to the extent of the cash received in that conversion; and

(iv) any Designated Noncash Consideration received by the Borrower or a Subsidiary, and (ii) any Designated Noncash Consideration the Fair Market Value of which, when taken together with all other Designated Noncash Consideration received pursuant to this clause (ii) does not exceed the greater of $10,000,000 and 2% of Total Assets at the time of receipt since the Closing Date, with the Fair Market Value of each item of Designated Noncash Consideration being measured at the time received and without giving effect to subsequent changes in value;

(m) Dispositions of Equity Interests of a Subsidiary of the Borrower to the Borrower or to a Subsidiary of the Borrower or of a Qualified Subsidiary to Strategic Investors in connection with the start-up of such Qualified Subsidiary;

(n) so long as no Default shall have occurred and be continuing, any Disposition of Equity Interests held by Borrower or a Subsidiary in a Qualified Subsidiary in exchange for cash, Cash Equivalents or Equity Interests in another Qualified Subsidiary, so long as any such cash or Cash Equivalents received in such exchange are used within 365 days of such Disposition to acquire Equity Interests in a Qualified Subsidiary; provided that the requirement to so acquire such Equity Interests of a Qualified Subsidiary shall be deemed to be satisfied with respect to any Net Cash Proceeds from the sale or issuance of Equity Interests of a Qualified Subsidiary to the extent an amount equal to such Net Cash Proceeds was used to purchase Equity Interests in a Qualified Subsidiary within 365 days prior to the receipt of such Net Cash Proceeds;

-77-

(o) any Intercompany Loan Refinancing if and to the extent the proceeds thereof are applied in accordance with Section 2.06(b)(ii);

(p) surrender or waiver of contract rights or the settlement, release or surrender of contract, tort or other claims of any kind; and

(q) any sale or Disposition deemed to occur in connection with creating or granting any Lien pursuant to Section 7.01 (but not the sale or other Disposition of the property subject to such Lien).

7.06. Restricted Payments. Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except that, so long as no Default shall have occurred and be continuing at the time of any action described below or would result therefrom:

(a) each Subsidiary may make Restricted Payments to the Borrower, any Subsidiaries of the Borrower that are Guarantors or Qualified Subsidiaries and any other Person that owns a direct Equity Interest in such Subsidiary, ratably according to their respective holdings of the type of Equity Interest in respect of which such Restricted Payment is being made;

(b) the making of any Restricted Payment in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Subsidiary of the Borrower) of, Equity Interests of the Borrower (other than Disqualified Stock) or from the substantially concurrent contribution of equity capital to the Borrower (other than Disqualified Stock);

(c) Borrower may declare and make dividend payments or other distributions payable solely in Equity Interests of the Borrower (other than Disqualified Stock) to Holdings;

(d) the purchase, redemption or other acquisition or retirement for value of shares of Equity Interests of a Qualified Subsidiary owned by a Strategic Investor if such purchase, redemption or other acquisition or retirement for value is made for consideration not in excess of the Fair Market Value of such Equity Interests (a) pursuant to any repurchase obligation to such Strategic Investor or (b) if no Default exists or would result therefrom;

(e) the Borrower and each Subsidiary may make Permitted Payments to Holdings;

(f) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Borrower or any Subsidiary of the Borrower held by any current or former officer, director, employee or consultant of the Borrower or any of its Subsidiaries, and any dividend payment or other distribution by the Borrower or a Subsidiary to Holdings or any other direct or indirect parent holding company of the Borrower utilized for the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of Holdings or such other direct or indirect parent holding company held by any current or former officer, director, employee or consultant of the Borrower or any of its Subsidiaries or Holdings or such other parent holding company, in each case, pursuant to any equity subscription agreement, stock option agreement, shareholders’ agreement or similar agreement or benefit plan or other agreement of any kind; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests may not exceed $5,000,000 in any fiscal year (it being understood, however, that unused amounts permitted to be paid pursuant to this proviso are available to be carried over to subsequent fiscal years but in no event shall the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests exceed $10,000,000 in any year); provided further that such amount in any fiscal year may be further increased by an amount not to exceed:

(i) the net cash proceeds from the sale of Equity Interests of the Borrower (other than Disqualified Stock) and, to the extent contributed to the Borrower as equity capital (other than Disqualified

-78-

Stock), Equity Interests of Holdings or any other direct or indirect parent company of the Borrower, in each case to members of management, directors or consultants of the Borrower, any of its Subsidiaries, Holdings or any other direct or indirect parent company of the Borrower that occurs after the Closing Date, plus

(ii) the cash proceeds of key man life insurance policies received by the Borrower and its Subsidiaries after the Closing Date, minus

(iii) the amount of any Restricted Payments previously made pursuant to clauses (i) and (ii) of this Section 7.06(f);

and provided, further, that cancellation of Indebtedness owing to the Borrower or any Subsidiary from members of management of the Borrower, any of the Borrower’s direct or indirect parent companies or any of the Borrower’s Subsidiaries in connection with a repurchase of Equity Interests of the Borrower or any of its direct or indirect parent companies will not be deemed to constitute a Restricted Payment for purposes of this Section 7.06 or any other provision of this Agreement;

(g) all payments to be made under the Purchase Agreement and all other payments made or to be made in connection with the Transactions (including payments made to Parent to permit it to make such payments) as set forth in the Offering Memorandum for the Senior Secured Notes, including payments to stockholders, and holders of options and warrants for common stock, of the merger consideration (or, in the case of options and warrants, the merger consideration less the exercise price thereof), and all payments made to former stockholders of the Borrower who have validly exercised appraisal rights, in connection with the Transactions;

(h) purchases of receivables pursuant to a Receivables Repurchase Obligation and distributions or payments of Receivables Fees and any other payments, in each case, in connection with a Qualified Receivables Transaction;

(i) the declaration and payment of regularly scheduled or accrued dividends to holders of any class or series of Disqualified Stock of the Borrower or any Subsidiary of the Borrower which Disqualified Stock was issued after the Closing Date in accordance with the provisions of Section 7.02;

(j) the repurchase of Equity Interests deemed to occur upon the exercise of options, rights or warrants to the extent such Equity Interests represent a portion of the exercise price of those options, rights or warrants;

(k) payment of fees and reimbursement of other expenses to the Permitted Holders in connection with the Transactions as described in the Offering Memorandum for the Senior Secured Notes under the caption “Certain Relationships and Related Transactions” or dividends to any direct or indirect parent of the Borrower to fund such payments;

(l) the payment of any dividend or other distribution or the consummation of any irrevocable redemption within 60 days after the date of declaration of the dividend or giving of the redemption notice, as the case may be, if at the date of declaration or notice, the dividend or redemption payment would have otherwise been permitted pursuant to this Section 7.06;

(m) the repurchase, redemption or other acquisition or retirement for value of Disqualified Stock of the Borrower or any Subsidiary of the Borrower made by exchange for, or out of the proceeds of the substantially concurrent sale of Replacement Preferred Stock that is permitted pursuant to Section 7.02; and

(n) cash payments in lieu of fractional shares issuable as dividends on preferred stock or upon the conversion of any preferred stock or convertible debt securities of the Borrower or any of its Subsidiaries.

7.07. Change in Nature of Business. Engage in any business other than Permitted Businesses, except to such extent as would not be material to the Borrower and its Subsidiaries taken as a whole.

-79-

7.08. Transactions with Affiliates. Enter into any transaction of any kind with any Affiliate of the Borrower involving an aggregate consideration in excess of $2,500,000, whether or not in the ordinary course of business, other than on terms, taken as a whole, not materially less favorable to the Borrower or such Subsidiary as would be obtainable by the Borrower or such Subsidiary at the time with a Person other than an Affiliate; provided that the foregoing restriction shall not apply to:

(a) transactions between or among the Borrower, the Subsidiary Guarantors and the Qualified Subsidiaries;

(b) (i) payments by the Borrower or any of its Subsidiaries to the Permitted Holders for any financial advisory, financing, underwriting or placement services or in respect of other investment banking activities, including, without limitation, in connection with acquisitions or divestitures, which payments are approved by the majority of the disinterested members of the board of directors of the Borrower in good faith in an aggregate amount for all such fees for any transaction not to exceed 2.00% of the aggregate value of such transaction, and (ii) fees payable pursuant to the Sponsor Management Agreement as in effect on the Closing Date or as amended in a manner not adverse in any material respect to the Lenders;

(c) any lease or sublease entered into between the Borrower or any Subsidiary, as lessee, and any Affiliate of the Borrower, as lessor or sublessor, which is approved by a majority of the disinterested members of the board of directors of the Borrower in good faith;

(d) existing Indebtedness and any other obligations pursuant to an agreement existing on the Closing Date as set forth on Schedule 7.02, as such agreement may be amended pursuant to Section 7.02(g);

(e) any employment agreement, employee benefit plan, officer or director indemnification agreement or any similar arrangement entered into by the Borrower or any of its Subsidiaries in the ordinary course of business and payments pursuant thereto;

(f) payments made pursuant to Section 7.06(g);

(g) payment of reasonable directors’ fees;

(h) any issuance of Equity Interests (other than Disqualified Stock) of Holdings to Affiliates of the Borrower;

(i) Investments made pursuant to Section 7.03(b), (c), (e), (h), (j), (k), or (n) or Restricted Payments made pursuant to Section 7.06;

(j) payment of fees and the reimbursement of other expenses to the Permitted Holders in connection with the Transactions;

(k) loans (or cancellation of loans) or advances to employees in the ordinary course of business;

(l) transactions with joint ventures, customers, suppliers, contractors, joint venture partners (including, without limitation, physicians) or purchasers or sellers of goods or services, in each case which are in the ordinary course of business (including, without limitation, pursuant to joint venture agreements) and otherwise in compliance with the terms of the Loan Documents, and which are fair to the Borrower or its Subsidiaries, as applicable, in the reasonable determination of the board of directors, chief executive officer or chief financial officer of the Borrower or its Subsidiaries, as applicable, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party;

(m) the existence of, or the performance by the Borrower or any Subsidiary of their obligations, if any, or obligations of Holdings under the terms of, any subscription, registration rights or stockholders agreement, partnership agreement or limited liability company agreement or similar agreement to which Holdings, the Borrower or any Subsidiary is a party as of the Closing Date and listed on Schedule 7.08 and any similar agreements which the

-80-

Borrower, any Subsidiary, Holdings or any other direct or indirect parent company of the Borrower may enter into thereafter; provided, however, that the entering into by the Borrower or any Subsidiary or the performance by the Borrower or any Subsidiary of obligations under any future amendment to any such existing agreement or under any similar agreement entered into after the Closing Date will only be permitted by this clause to the extent that the terms of any such amendment or new agreement, taken as a whole, are not materially disadvantageous to the Lenders, as determined in good faith by the board of directors, chief executive officer or chief financial officer of the Borrower;

(n) the Transactions, including all payments made or to be made in connection with the Transactions as described in the Offering Memorandum for the Senior Secured Notes;

(o) the entering into of any tax sharing agreement or arrangement and any Permitted Payments to Holdings;

(p) the issuance of Equity Interests (other than Disqualified Stock) in Holdings or any Subsidiary for compensation purposes in the ordinary course of business;

(q) intellectual property licenses in the ordinary course of business;

(r) transactions in which the Borrower or any Subsidiary delivers to the Administrative Agent a letter from an accounting, appraisal or investment banking firm of national standing stating that such transaction is fair to the Borrower or such Subsidiary from a financial point of view and which are approved by a majority of the disinterested members of the board of directors of the Borrower in good faith; and

(s) customary transactions pursuant to Qualified Receivables Transactions.

7.09. Burdensome Agreements. Enter into or permit to exist any Contractual Obligation (other than this Agreement, any other Loan Document or the Intercreditor Agreement) that (a) limits the ability (i) of any Subsidiary to make Restricted Payments to the Borrower or any Guarantor or to otherwise transfer property to or invest in the Borrower or any Guarantor; provided that nothing in this Section 7.09 shall prohibit any limitation, restriction or prohibition contained in the Senior Secured Notes or any Permitted Refinancing Indebtedness in respect thereof, to the extent such limitations, restrictions and prohibitions are not, when taken as a whole, materially more burdensome to the Borrower and the Guarantors than those in effect on the Closing Date, and provided, further, that the restrictions of this Section 7.09 shall not apply to encumbrances or restrictions existing or by reason of:

(a) agreements governing (x) Indebtedness (other than the Indebtedness under this Agreement and Indebtedness owed to Holdings or any of its Subsidiaries), existing on the Closing Date and (y) this Agreement as in effect on the Closing Date;

(b) the Senior Secured Notes Documents and all other agreements, instruments and other documents pursuant to which the Senior Secured Notes have been or will be issued or otherwise setting forth the terms of the Senior Secured Notes and the Intercreditor Agreement;

(c) applicable law, rule, regulation or order, including any requirement of any governmental healthcare programs;

(d) any instrument or agreement governing Indebtedness or the Equity Interests of a Subsidiary acquired by the Borrower or any of its Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness or Equity Interests were incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person or any of its Subsidiaries, or the property or assets of the Person or any of its Subsidiaries, so acquired; provided that, in the case of Indebtedness, such Indebtedness was permitted to be incurred by this Agreement;

-81-

(e) customary non-assignment provisions in contracts, leases, subleases, licenses and sublicenses entered into in the ordinary course of business;

(f) customary restrictions in leases (including capital leases), security agreements or mortgages or other purchase money obligations for property acquired in the ordinary course of business;

(g) any agreement for the sale or other disposition of all or substantially all the Equity Interests or the assets of a Subsidiary that restricts distributions by that Subsidiary pending the sale or other disposition;

(h) Liens permitted to be incurred under Section 7.01 that limit the right of the debtor to dispose of the assets subject to such Liens;

(i) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business;

(j) customary provisions imposed on the transfer of copyrighted or patented materials;

(k) customary provisions restricting dispositions of real property interests set forth in any reciprocal easement agreements of the Borrower or any Subsidiary;

(l) contracts entered into in the ordinary course of business, not relating to any Indebtedness, and that do not, individually or in the aggregate, detract from the value of property or assets of the Borrower or any Subsidiary of the Borrower in any manner material to the Borrower or any Subsidiary of the Borrower;

(m) restrictions on the transfer of property or assets required by any regulatory authority having jurisdiction over the Borrower or any Subsidiary of the Borrower or any of their businesses;

(n) any instrument or agreement governing Indebtedness or preferred stock of any Subsidiary that is incurred or issued subsequent to the Closing Date and not in violation of Section 7.02; provided that the Borrower’s board of directors determines in good faith that restrictions are not reasonably likely to have a materially adverse effect on the Borrower’s and/or Guarantors’ ability to make principal and interest payments under this Agreement;

(o) customary provisions in joint venture and other similar agreements, including agreements related to the ownership and operation of dialysis clinics, relating solely to such joint venture or facilities or the Persons who own Equity Interests therein;

(p) any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the Indebtedness, preferred stock, Liens, agreements, contracts, licenses, leases, subleases, instruments or obligations referred to in clauses (a), (b), (d) and (o) above; provided, however, that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are not materially more restrictive, taken as a whole, (as determined by the Borrower in good faith) than those restrictions contained in the Indebtedness, preferred stock, Liens, agreements, contracts, licenses, leases, subleases, instruments or obligations referred to in clauses (a), (b), (d) and (o) above, as applicable prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing;

(q) customary provisions in connection with a Qualified Receivables Transaction; and

(r) restrictions in the Management Agreement that require the payment of management fees to the Borrower or one of its Subsidiaries prior to payment of dividends or distributions.

-82-

7.10. Financial Covenants.

(a) Consolidated Leverage Ratio. Permit the Consolidated Leverage Ratio as of the end of any fiscal quarter of the Borrower to be greater than the ratio set forth below opposite the period in which the last day of such fiscal quarter falls:

Period	Maximum Consolidated Leverage Ratio
September 30, 2010 through September 30, 2011	5.75:1.00
December 31, 2011 through September 30, 2012	5.50:1.00
December 31, 2012 through September 30, 2013	5.00:1.00
December 31, 2013 through September 30, 2014	4.75:1.00
December 31, 2014 and thereafter	4.25:1.00

(b) Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage Ratio as of the end of any fiscal quarter of the Borrower to be less than the ratio set forth below opposite the period in which the last day of such fiscal quarter falls:

Period	Minimum Fixed Charge Coverage Ratio
September 30, 2010 through September 30, 2011	1.80:1.00
December 31, 2011 through September 30, 2012	1.80:1.00
December 31, 2012 through September 30, 2013	2.00:1.00
December 31, 2013 through September 30, 2014	2.25:1.00
December 31, 2014 and thereafter	2.50:1.00

7.11. Sale and Leaseback Transactions. Enter into any arrangement, directly or indirectly, with any person whereby it shall sell or transfer any property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property which it intends to use for substantially the same purpose or purposes as the property being sold or transferred (a “Sale and Leaseback Transaction”) unless (i) the sale of such property is permitted by Section 7.05 and (ii) any Liens arising in connection with its use of such property are permitted by Section 7.01.

7.12. Amendments of Organization Documents. Amend any of its Organization Documents in any manner adverse to the Lenders.

7.13. Fiscal Year. Make any change in its fiscal year.

7.14. Prepayments, etc. of Indebtedness. Prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity thereof in any manner, or make any payment in violation of any subordination terms thereof or any subordination agreement affecting, (i) any Indebtedness that is subordinated in right of payment to any of the Obligations, (ii) the Senior Secured Notes or any Permitted Refinancing Indebtedness thereof, other than with any Declined Proceeds in accordance with Section 2.06(b)(ii), (iii) any Indebtedness which is unsecured or (iv) any Indebtedness (including, without limitation, the Senior Secured Notes) secured by a Lien on any Collateral, which Lien is junior to, or in any manner has a lower priority in right of payment than, the Liens securing the Obligations; provided that notwithstanding the foregoing (A) so long as no Default has occurred and is continuing, in each year up to 10% of the aggregate principal amount of the Senior Secured Notes (or any Permitted Refinancing Indebtedness thereof) may be prepaid, redeemed, purchased, defeased or satisfied prior to their scheduled maturity and (B) any such prepayment, redemption, purchase, defeasance or other satisfaction may be made to the extent constituting a refinancing of Indebtedness with the proceeds of Permitted Refinancing Indebtedness incurred pursuant to Section 7.02(b), (d), (g) or (m).

7.15. Holding Company. In the case of Holdings, hold any material assets, become liable for any material obligations, engage in any trade or business, or conduct any business activity, other than (a) the issuance of its Equity Interests to its shareholders, (b the execution and delivery of the Loan Documents to which it is a party and the performance of its obligations thereunder (and the acknowledgment of the Intercreditor Agreement), (c) the execution and delivery of the Senior Secured Notes Documents (and any documents relating to any Permitted Refinancing Indebtedness in respect of the Senior Secured Notes) to which it is a party and the performance of its obligations thereunder, (d) the incurrence of Indebtedness that is permitted to be incurred by the Borrower under Section 7.02; provided that the net proceeds of such Indebtedness are promptly received by the Borrower (and Borrower becomes the primary obligor thereon) and not retained by Holdings and (e) activities incidental thereto.

-83-

ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES

8.01. Events of Default. Any of the following shall constitute an Event of Default:

(a) Non-Payment. The Borrower or any other Loan Party fails to (i) pay when and as required to be paid herein, any amount of principal of any Loan or any L/C Obligation or deposit any funds as Cash Collateral in respect of L/C Obligations, or (ii) pay within three days after the same becomes due, any interest on any Loan or on any L/C Obligation, or any fee due hereunder, or (iii) pay within five days after the same becomes due, any other amount payable hereunder or under any other Loan Document; or

(b) Specific Covenants. The Borrower fails to perform or observe any term, covenant or agreement contained in any of Section 6.03(a), 6.05(a) (with respect to preservation of corporate existence of the Borrower) or Article VII; or

(c) Other Defaults. Any Loan Party fails to perform or observe any other covenant or agreement (not specified in Section 8.01(a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for 30 days after receipt of notice from the Administrative Agent; or

(d) Representations and Warranties. Any representation and warranty made or deemed made by or on behalf of the Borrower or any other Loan Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith shall be incorrect in any material respect when made or deemed made; or

(e) Cross-Default. (i) Any Loan Party or any Subsidiary thereof (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee (other than Indebtedness hereunder and Indebtedness under Swap Contracts) having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than the Threshold Amount, or (B) fails to observe or perform any other agreement or condition relating to any such Indebtedness or Guarantee or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or such Guarantee to become payable or cash collateral in respect thereof to be demanded; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which a Loan Party or any Subsidiary thereof is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which a Loan Party or any Subsidiary thereof is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by such Loan Party or such Subsidiary as a result thereof is greater than the Threshold Amount; or

(f) Insolvency Proceedings, Etc. Any Loan Party or any Subsidiary thereof institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for 60 calendar days, or an order for relief is entered in any such proceeding; or

-84-

(g) Inability to Pay Debts; Attachment. (i) Any Loan Party or any Subsidiary thereof becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or substantially all of the property of any such Person and is not released, vacated or fully bonded within 60 days after its issue or levy; or

(h) Judgments. There is entered against any Loan Party or any Subsidiary thereof one or more final judgments or orders for the payment of money in an aggregate amount (as to all such judgments and orders) exceeding the Threshold Amount (to the extent not covered by independent third-party insurance as to which the insurer has been notified of the potential claim and does not dispute coverage), and (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of 60 consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or

(i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of the Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold Amount, or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or

(j) Invalidity of Loan Documents or the Intercreditor Agreement. Any provision of any Loan Document or the Intercreditor Agreement, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Loan Party or any other Person contests in any manner the validity or enforceability of any Loan Document or the Intercreditor Agreement; or any Loan Party denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any Loan Document; or

(k) Change of Control. There occurs any Change of Control; or

(l) Collateral Documents. With respect to any Collateral having a fair market value in excess of $3,000,000, individually or in the aggregate (i) the security interest under the Collateral Documents, at any time, ceases to be in full force and effect for any reason other than in accordance with the terms of this Agreement, the Collateral Documents and the Intercreditor Agreement, or (ii) any security interest created thereunder or under the Indenture is declared invalid or unenforceable by a court of competent jurisdiction.

8.02. Remedies upon Event of Default. If any Event of Default occurs and is continuing, the Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders, take any or all of the following actions:

(a) declare the commitment of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions to be terminated, whereupon such commitments and obligation shall be terminated;

(b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrower;

(c) require that the Borrower Cash Collateralize the L/C Obligations (in an amount equal to the then Outstanding Amount thereof); and

-85-

(d) exercise on behalf of itself, the Lenders and the L/C Issuer all rights and remedies available to it, the Lenders and the L/C Issuer under the Loan Documents;

provided, however, that upon the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code of the United States, the obligation of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable, and the obligation of the Borrower to Cash Collateralize the L/C Obligations as aforesaid shall automatically become effective, in each case without further act of the Administrative Agent or any Lender.

8.03. Application of Funds. After the exercise of remedies provided for in Section 8.02 (or after the Loans have automatically become immediately due and payable and the L/C Obligations have automatically been required to be Cash Collateralized as set forth in the proviso to Section 8.02), any amounts received on account of the Obligations shall, subject to the provisions of Sections 2.14 and 2.15, be applied by the Administrative Agent in the following order:

First, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to the Administrative Agent and amounts payable under Article III) payable to the Administrative Agent in its capacity as such;

Second, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal, interest and Letter of Credit Fees) payable to the Lenders and the L/C Issuer (including fees, charges and disbursements of one counsel to the respective Lenders and the L/C Issuer arising under the Loan Documents and, if necessary, one local counsel and one regulatory counsel in any jurisdiction, and amounts payable under Article III), ratably among them in proportion to the respective amounts described in this clause Second payable to them;

Third, to payment of that portion of the Obligations constituting accrued and unpaid Letter of Credit Fees and interest on the Loans, L/C Borrowings and other Obligations arising under the Loan Documents, ratably among the Lenders and the L/C Issuer in proportion to the respective amounts described in this clause Third payable to them;

Fourth, to payment of that portion of the Obligations constituting unpaid principal of the Loans, L/C Borrowings and Obligations then owing under Secured Hedge Agreements and Secured Cash Management Agreements, ratably among the Lenders, the L/C Issuer, the Hedge Banks and the Cash Management Banks in proportion to the respective amounts described in this clause Fourth held by them;

Fifth, to the Administrative Agent for the account of the L/C Issuer, to Cash Collateralize that portion of L/C Obligations comprised of the aggregate undrawn amount of Letters of Credit to the extent not otherwise Cash Collateralized by the Borrower pursuant to Sections 2.05(b)(ii) and 2.14; and

Last, the balance, if any, after all of the Obligations have been paid in full, to the Borrower or as otherwise required by Law.

Subject to Sections 2.03(c) and 2.14, amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause Fifth above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above.

Notwithstanding the foregoing, Obligations arising under Secured Cash Management Agreements and Secured Hedge Agreements shall be excluded from the application described above if the Administrative Agent has not received written notice thereof, together with such supporting documentation as the Administrative Agent may request, from the applicable Cash Management Bank or Hedge Bank, as the case may be. Each Cash Management Bank or Hedge Bank not a party to the Credit Agreement that has given the notice contemplated by the preceding

-86-

sentence shall, by such notice, be deemed to have acknowledged and accepted the appointment of the Administrative Agent pursuant to the terms of Article IX hereof for itself and its Affiliates as if a “Lender” party hereto.

ARTICLE IX

ADMINISTRATIVE AGENT

9.01. Appointment and Authority.

(a) Each of the Lenders and the L/C Issuer hereby irrevocably appoints Bank of America to act on its behalf as the Administrative Agent hereunder, under the other Loan Documents and the Intercreditor Agreement and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and the L/C Issuer, and the Borrower shall not have rights as a third party beneficiary of any of such provisions.

(b) The Administrative Agent shall also act as the “collateral agent” under the Loan Documents and the Intercreditor Agreement, and each of the Lenders (including in its capacities as a potential Hedge Bank and a potential Cash Management Bank) and the L/C Issuer hereby irrevocably appoints and authorizes the Administrative Agent to act as the agent of such Lender and the L/C Issuer for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Loan Parties to secure any of the Obligations, together with such powers and discretion as are reasonably incidental thereto. In this connection, the Administrative Agent, as “collateral agent” and any co-agents, sub-agents and attorneys-in-fact appointed by the Administrative Agent pursuant to Section 9.05 for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Collateral Documents, or for exercising any rights and remedies thereunder at the direction of the Administrative Agent), shall be entitled to the benefits of all provisions of this Article IX and Article XI (including Section 11.04(c), as though such co-agents, sub-agents and attorneys-in-fact were the “collateral agent” under the Loan Documents and the Intercreditor Agreement) as if set forth in full herein with respect thereto.

9.02. Rights as a Lender. The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.

9.03. Exculpatory Provisions. The Administrative Agent shall not have any duties or obligations except those expressly set forth herein, in the other Loan Documents and the Intercreditor Agreement. Without limiting the generality of the foregoing, the Administrative Agent:

(a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;

(b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby, by the other Loan Documents or the Intercreditor Agreement that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein, in the other Loan Documents or the Intercreditor Agreement), provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or the Intercreditor Agreement or applicable law;

-87-

(c) shall not, except as expressly set forth herein, in the other Loan Documents or the Intercreditor Agreement, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity;

(d) shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 11.01 and 8.02) or (ii) in the absence of its own gross negligence or willful misconduct. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given to the Administrative Agent by the Borrower, a Lender or the L/C Issuer; and

(e) shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement, any other Loan Document or the Intercreditor Agreement, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document, the Intercreditor Agreement or any other agreement, instrument or document, or the creation, perfection or priority of any Lien purported to be created by the Collateral Documents, (v) the value or the sufficiency of any Collateral, or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

9.04. Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the L/C Issuer, the Administrative Agent may presume that such condition is satisfactory to such Lender or the L/C Issuer unless the Administrative Agent shall have received notice to the contrary from such Lender or the L/C Issuer prior to the making of such Loan or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

9.05. Delegation of Duties. The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder, under any other Loan Document or the Intercreditor Agreement by or through any one or more co-agents, sub-agents or attorneys-in-fact appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.

9.06. Resignation of Administrative Agent. The Administrative Agent may at any time give notice of its resignation to the Lenders, the L/C Issuer and the Borrower. If the Lender acting as Administrative Agent is replaced pursuant to Section 11.14, then such Lender shall be deemed to have submitted its resignation as Administrative Agent concurrent with such replacement. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States; provided that, so long as no Default shall have occurred and be continuing, the Borrower shall have the right to

-88-

approve (such approval not to be unreasonably withheld) such successor (it being understood that such approval shall be deemed given if Borrower shall have not responded to a request for such approval within 15 days after notice is given to the Borrower of the name of the successor the Required Lenders intend to appoint). If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may on behalf of the Lenders and the L/C Issuer and in consultation with the Borrower, appoint a successor Administrative Agent meeting the qualifications set forth above; provided that if the Administrative Agent shall notify the Borrower and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (a) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder, under the other Loan Documents and the Intercreditor Agreement (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders or the L/C Issuer under any of the Loan Documents, the retiring Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (b) all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender and the L/C Issuer directly, until such time as the Required Lenders appoint a successor Administrative Agent as provided for above in this Section. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Administrative Agent, and the retiring Administrative Agent shall be discharged from all of its duties and obligations hereunder, under the other Loan Documents and the Intercreditor Agreement (if not already discharged therefrom as provided above in this Section). The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring Administrative Agent’s resignation hereunder, under the other Loan Documents and the Intercreditor Agreement, the provisions of this Article and Section 11.04 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.

Any resignation by Bank of America as Administrative Agent pursuant to this Section shall also constitute its resignation as L/C Issuer and Swing Line Lender. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, (i) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer and Swing Line Lender, (ii) the retiring L/C Issuer and Swing Line Lender shall be discharged from all of their respective duties and obligations hereunder or under the other Loan Documents, and (iii) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the retiring L/C Issuer to effectively assume the obligations of the retiring L/C Issuer with respect to such Letters of Credit.

9.07. Non-Reliance on Administrative Agent and Other Lenders. Each Lender and the L/C Issuer acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and the L/C Issuer also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document, the Intercreditor Agreement or any related agreement or any document furnished hereunder or thereunder.

9.08. No Other Duties, Etc. Anything herein to the contrary notwithstanding, none of the Book Managers or Lead Arrangers listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement, any of the other Loan Documents or the Intercreditor Agreement, except in its capacity, as applicable, as the Administrative Agent, a Lender or the L/C Issuer hereunder.

9.09. Administrative Agent May File Proofs of Claim . In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan or L/C Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise

-89-

(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, L/C Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be reasonably necessary or advisable in order to have the claims of the Lenders, the L/C Issuer and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the L/C Issuer and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders, the L/C Issuer and the Administrative Agent under Sections 2.03(h) and (i), 2.09 and 11.04) allowed in such judicial proceeding; and

(b) to collect and receive any monies 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 Lender and the L/C Issuer to make such payments to the Administrative Agent and, if the Administrative Agent shall consent to the making of such payments directly to the Lenders and the L/C Issuer, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.09 and 11.04.

Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or the L/C Issuer any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or the L/C Issuer to authorize the Administrative Agent to vote in respect of the claim of any Lender or the L/C Issuer or in any such proceeding.

9.10. Collateral and Guaranty Matters. Each of the Lenders (including in its capacities as a potential Cash Management Bank and a potential Hedge Bank) and the L/C Issuer irrevocably authorize the Administrative Agent, at its option and in its discretion,

(a) to release any Lien on any property granted to or held by the Administrative Agent under any Loan Document (i) upon termination of the Facility and payment in full of all Obligations (other than (A) contingent indemnification obligations and (B) obligations and liabilities under Secured Cash Management Agreements and Secured Hedge Agreements) and the expiration or termination of all Letters of Credit (other than Letters of Credit as to which other arrangements satisfactory to the Administrative Agent and the L/C Issuer shall have been made), (ii) that is sold or to be sold as part of or in connection with any sale permitted hereunder or under any other Loan Document, or (iii) if approved, authorized or ratified in writing in accordance with Section 11.01;

(b) to release any Guarantor from its obligations under the Guaranty if such Person ceases to be a Subsidiary as a result of a transaction permitted hereunder; and

(c) to subordinate any Lien on any property granted to or held by the Administrative Agent under any Loan Document to the holder of any Lien on such property that is permitted by Section 7.01(k).

Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority to release or subordinate its interest in particular types or items of property, or to release any Guarantor from its obligations under the Guaranty pursuant to this Section 9.10. In each case as specified in this Section 9.10, the Administrative Agent will, at the Borrower’s expense, execute and deliver to the applicable Loan Party such documents as such Loan Party may reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted under the Collateral Documents or to subordinate its interest in such item, or to release such Guarantor from its obligations under the Guaranty, in each case in accordance with the terms of the Loan Documents and this Section 9.10.

-90-

9.11. Secured Cash Management Agreements and Secured Hedge Agreements. No Cash Management Bank or Hedge Bank that obtains the benefits of Section 8.03, the Guaranty or any Collateral by virtue of the provisions hereof or of the Guaranty or any Collateral Document shall have any right to notice of any action or to consent to, direct or object to any action hereunder, under any other Loan Document or the Intercreditor Agreement or otherwise in respect of the Collateral (including the release or impairment of any Collateral) other than in its capacity as a Lender and, in such case, only to the extent expressly provided in the Loan Documents or the Intercreditor Agreement. Notwithstanding any other provision of this Article IX to the contrary, the Administrative Agent shall not be required to verify the payment of, or that other satisfactory arrangements have been made with respect to, Obligations arising under Secured Cash Management Agreements and Secured Hedge Agreements upon termination of the Facility.

9.12. Withholding Tax. To the extent required by any applicable law, the Administrative Agent may withhold from any payment to any Lender an amount equal to any applicable withholding tax. If the IRS or any Governmental Authority asserts a claim that the Administrative Agent did not properly withhold tax from any amount paid to or for the account of any Lender for any reason (including because the appropriate form was not delivered or was not properly executed, or because such Lender failed to notify the Administrative Agent of a change in circumstances that rendered the exemption from, or reduction of, withholding tax ineffective), such Lender shall indemnify and hold harmless the Administrative Agent (to the extent that the Administrative Agent has not already been reimbursed by the Borrower or Holdings and without limiting or expanding the obligation of the Borrower and Holdings to do so) for all amounts paid, directly or indirectly, by the Administrative Agent as tax or otherwise, including any penalties, additions to tax or interest thereto, together with all expenses incurred, including legal expenses and any out-of-pocket expenses, whether or not such tax was correctly or legally imposed or asserted by the relevant Government Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error.

Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under this Agreement or any other Loan Document against any amount due to the Administrative Agent under this Section 9.12. The agreements in this Section 9.12 shall survive the resignation and/or replacement of the Administrative Agent, any assignment of rights by, or the replacement of, a Lender, the termination of the Facility and the repayment, satisfaction or discharge of all Obligations. Unless required by applicable Laws, at no time shall the Administrative Agent have any obligation to file for or otherwise pursue on behalf of a Lender any refund of Taxes withheld or deducted from funds paid for the account of such Lender.

ARTICLE X

CONTINUING GUARANTY

10.01. Guaranty. Holdings hereby absolutely and unconditionally guarantees, as a guaranty of payment and performance and not merely as a guaranty of collection, prompt payment when due, whether at stated maturity, by required prepayment, upon acceleration, demand or otherwise, and at all times thereafter, of any and all of the Obligations, whether for principal, interest, premiums, fees, indemnities, damages, costs, expenses or otherwise, of the Borrower to the Secured Parties, and whether arising hereunder or under any other Loan Document, any Secured Cash Management Agreement or any Secured Hedge Agreement (including all renewals, extensions, amendments, refinancings and other modifications thereof and all costs, attorneys’ fees and expenses incurred by the Secured Parties in connection with the collection or enforcement thereof). The Administrative Agent’s books and records showing the amount of the Obligations shall be admissible in evidence in any action or proceeding, and shall be binding upon Holdings, and conclusive for the purpose of establishing the amount of the Obligations. This Guaranty shall not be affected by the genuineness, validity, regularity or enforceability of the Obligations or any instrument or agreement evidencing any Obligations, or by the existence, validity, enforceability, perfection, non-perfection or extent of any collateral therefor, or by any fact or circumstance relating to the Obligations which might otherwise constitute a defense to the obligations of Holdings under this Guaranty, and Holdings hereby irrevocably waives any defenses it may now have or hereafter acquire in any way relating to any or all of the foregoing.

-91-

10.02. Rights of Lenders. Holdings consents and agrees that the Secured Parties may, at any time and from time to time, without notice or demand, and without affecting the enforceability or continuing effectiveness hereof: (a) amend, extend, renew, compromise, discharge, accelerate or otherwise change the time for payment or the terms of the Obligations or any part thereof; (b) take, hold, exchange, enforce, waive, release, fail to perfect, sell, or otherwise dispose of any security for the payment of this Guaranty or any Obligations; (c) apply such security and direct the order or manner of sale thereof as the Administrative Agent, the L/C Issuer and the Lenders in their sole discretion may determine; and (d) release or substitute one or more of any endorsers or other guarantors of any of the Obligations. Without limiting the generality of the foregoing, Holdings consents to the taking of, or failure to take, any action which might in any manner or to any extent vary the risks of Holdings under this Guaranty or which, but for this provision, might operate as a discharge of Holdings.

10.03. Certain Waivers. Holdings waives (a) any defense arising by reason of any disability or other defense of the Borrower or any other guarantor, or the cessation from any cause whatsoever (including any act or omission of any Secured Party) of the liability of the Borrower; (b) any defense based on any claim that Holdings’ obligations exceed or are more burdensome than those of the Borrower; (c) the benefit of any statute of limitations affecting Holdings’ liability hereunder; (d) any right to proceed against the Borrower, proceed against or exhaust any security for the Obligations, or pursue any other remedy in the power of any Secured Party whatsoever; (e) any benefit of and any right to participate in any security now or hereafter held by any Secured Party; and (f) to the fullest extent permitted by law, any and all other defenses or benefits that may be derived from or afforded by applicable law limiting the liability of or exonerating guarantors or sureties. Holdings expressly waives all setoffs and counterclaims and all presentments, demands for payment or performance, notices of nonpayment or nonperformance, protests, notices of protest, notices of dishonor and all other notices or demands of any kind or nature whatsoever with respect to the Obligations, and all notices of acceptance of this Guaranty or of the existence, creation or incurrence of new or additional Obligations.

10.04. Obligations Independent. The obligations of Holdings hereunder are those of primary obligor, and not merely as surety, and are independent of the Obligations and the obligations of any other guarantor, and a separate action may be brought against Holdings to enforce this Guaranty whether or not the Borrower or any other person or entity is joined as a party.

10.05. Subrogation. Holdings shall not exercise any right of subrogation, contribution, indemnity, reimbursement or similar rights with respect to any payments it makes under this Guaranty until all of the Obligations and any amounts payable under this Guaranty (other than obligations and liabilities under Secured Cash Management Agreements and Secured Hedge Agreements) have been paid and performed in full in cash and the Commitments and the Facility is terminated. If any amounts are paid to Holdings in violation of the foregoing limitation, then such amounts shall be held in trust for the benefit of the Secured Parties and shall forthwith be paid to the Secured Parties to reduce the amount of the Obligations, whether matured or unmatured.

10.06. Termination; Reinstatement. This Guaranty is a continuing and irrevocable guaranty of all Obligations now or hereafter existing and shall remain in full force and effect until all Obligations and any other amounts payable under this Guaranty (other than obligations and liabilities under Secured Cash Management Agreements and Secured Hedge Agreements) are paid in full in cash and the Commitments are terminated. Notwithstanding the foregoing, this Guaranty shall continue in full force and effect or be revived, as the case may be, if any payment by or on behalf of the Borrower or Holdings is made, or any of the Secured Parties exercises its right of setoff, in respect of the Obligations and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by any of the Secured Parties in their discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Laws or otherwise, all as if such payment had not been made or such setoff had not occurred and whether or not the Secured Parties are in possession of or have released this Guaranty and regardless of any prior revocation, rescission, termination or reduction. The obligations of Holdings under this paragraph shall survive termination of this Guaranty.

10.07. Subordination. Holdings hereby subordinates the payment of all obligations and indebtedness of the Borrower owing to Holdings, whether now existing or hereafter arising, including but not limited to any obligation of the Borrower to Holdings as subrogee of the Secured Parties or resulting from Holdings’ performance

-92-

under this Guaranty, to the payment in full in cash of all Obligations (other than obligations and liabilities under Secured Cash Management Agreements and Secured Hedge Agreements). If the Secured Parties so request, any such obligation or indebtedness of the Borrower to Holdings shall be enforced and performance received by Holdings as trustee for the Secured Parties and the proceeds thereof shall be paid over to the Secured Parties on account of the Obligations, but without reducing or affecting in any manner the liability of Holdings under this Guaranty.

10.08. Stay of Acceleration. If acceleration of the time for payment of any of the Obligations is stayed, in connection with any case commenced by or against Holdings or the Borrower under any Debtor Relief Laws, or otherwise, all such amounts shall nonetheless be payable by Holdings immediately upon demand by the Secured Parties.

10.09. Condition of Borrower. Holdings acknowledges and agrees that it has the sole responsibility for, and has adequate means of, obtaining from the Borrower and any other guarantor such information concerning the financial condition, business and operations of the Borrower and any such other guarantor as Holdings requires, and that none of the Secured Parties has any duty, and Holdings is not relying on the Secured Parties at any time, to disclose to Holdings any information relating to the business, operations or financial condition of the Borrower or any other guarantor (Holdings waiving any duty on the part of the Secured Parties to disclose such information and any defense relating to the failure to provide the same).

ARTICLE XI

MISCELLANEOUS

11.01. Amendments, Etc. No amendment or waiver of any provision of this Agreement, any other Loan Document or the Intercreditor Agreement, and no consent to any departure by the Borrower or any other Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders and the Borrower or the applicable Loan Party, as the case may be, and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such amendment, waiver or consent shall:

(a) extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 8.02) without the written consent of such Lender (it being understood and agreed that a waiver of any condition precedent set forth in Article IV or of any Default is not considered an extension or increase in Commitments of any Lender);

(b) postpone any date fixed by this Agreement or any other Loan Document for any payment (excluding mandatory prepayments) of principal, interest or fees due to the Lenders (or any of them) hereunder or under such other Loan Document without the written consent of each Lender entitled to such payment;

(c) reduce the principal of, or the rate of interest specified herein on, any Loan or L/C Borrowing, or (subject to clause (iv) of the second proviso to this Section 11.01) any fees or other amounts payable hereunder or under any other Loan Document without the written consent of each Lender entitled to such amount; provided, however, that only the consent of the Required Lenders shall be necessary (i) to amend the definition of “Default Rate” or to waive any obligation of the Borrower to pay interest or Letter of Credit Fees at the Default Rate or (ii) to amend any financial covenant hereunder (or any defined term used therein) even if the effect of such amendment would be to reduce the rate of interest on any Loan or L/C Borrowing or to reduce any fee payable hereunder;

(d) change Section 8.03 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender directly affected thereby;

(e) change any provision of this Section 11.01 or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder without the written consent of each Lender directly affected thereby;

-93-

(f) release all or substantially all of the Collateral in any transaction or series of related transactions, without the written consent of each Lender; or

(g) release all or substantially all of the value of the Guaranty, without the written consent of each Lender, except to the extent the release of any Subsidiary from the Guaranty is permitted pursuant to Section 9.10 (in which case such release may be made by the Administrative Agent acting alone);

and provided, further, that (i) no amendment, waiver or consent shall, unless in writing and signed by the L/C Issuer in addition to the Lenders required above, affect the rights or duties of the L/C Issuer under this Agreement or any Issuer Document relating to any Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing and signed by the Swing Line Lender in addition to the Lenders required above, affect the rights or duties of the Swing Line Lender under this Agreement; (iii) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this Agreement, any other Loan Document or the Intercreditor Agreement; (iv) the Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto; and (v) any amendment, waiver or consent of the Intercreditor Agreement shall only require the consent of any Loan Party to the extent required pursuant to the terms thereof. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender more adversely than other affected Lenders shall require the consent of such Defaulting Lender.

If any Lender (other than any Lender who was a Lender on the Closing Date or any Lender who is an Affiliate of such a Lender) does not consent to a proposed amendment, waiver, consent or release with respect to any Loan Document or the Intercreditor Agreement that requires the consent of each Lender and that has been approved by the Required Lenders, the Borrower may replace such non-consenting Lender in accordance with Section 11.13; provided that such amendment, waiver, consent or release can be effected as a result of the assignment contemplated by such Section (together with all other such assignments required by the Borrower to be made pursuant to this paragraph).

11.02. Notices; Effectiveness; Electronic Communications.

(a) Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:

(i) if to Holdings, the Borrower, the Administrative Agent, the L/C Issuer or the Swing Line Lender, to the address, telecopier number, electronic mail address or telephone number specified for such Person on Schedule 11.02; and

(ii) if to any other Lender, to the address, telecopier number, electronic mail address or telephone number specified in its Administrative Questionnaire (including, as appropriate, notices delivered solely to the Person designated by a Lender on its Administrative Questionnaire then in effect for the delivery of notices that may contain material non-public information relating to the Borrower).

Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by telecopier shall

-94-

be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). Notices and other communications delivered through electronic communications to the extent provided in subsection (b) below shall be effective as provided in such subsection (b).

(b) Electronic Communications. Notices and other communications to the Lenders and the L/C Issuer hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender or the L/C Issuer pursuant to Article II if such Lender or the L/C Issuer, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.

Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.

(c) The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “Agent Parties”) have any liability to Holdings, the Borrower, any Lender, the L/C Issuer or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Borrower’s or the Administrative Agent’s transmission of Borrower Materials through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Agent Party; provided, however, that in no event shall any Agent Party have any liability to Holdings, the Borrower, any Lender, the L/C Issuer or any other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages).

(d) Change of Address, Etc. Each of Holdings, the Borrower, the Administrative Agent, the L/C Issuer and the Swing Line Lender may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the other parties hereto. Each other Lender may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the Borrower, the Administrative Agent, the L/C Issuer and the Swing Line Lender. In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, telecopier number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender. Furthermore, each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable Law, including United States Federal and state securities Laws, to make reference to Borrower Materials that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to the Borrower or its securities for purposes of United States Federal or state securities laws.

-95-

11.03. Reliance by Administrative Agent, L/C Issuer and Lenders. The Administrative Agent, the L/C Issuer and the Lenders shall be entitled to rely and act upon any notices (including telephonic Committed Loan Notices and Swing Line Loan Notices) purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Borrower shall indemnify the Administrative Agent, the L/C Issuer, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Borrower. All telephonic notices to and other telephonic communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.

11.04. No Waiver; Cumulative Remedies; Enforcement. No failure by any Lender, the L/C Issuer or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder, under any other Loan Document or the Intercreditor Agreement shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided, and provided under each other Loan Document and the Intercreditor Agreement, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Section 8.02 for the benefit of all the Lenders and the L/C Issuer; provided, however, that the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Loan Documents, (b) the L/C Issuer or the Swing Line Lender from exercising the rights and remedies that inure to its benefit (solely in its capacity as L/C Issuer or Swing Line Lender, as the case may be) hereunder and under the other Loan Documents, (c) any Lender from exercising setoff rights in accordance with Section 11.08 (subject to the terms of Section 2.13), or (d) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any Debtor Relief Law; and provided, further, that if at any time there is no Person acting as Administrative Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 8.02 and (ii) in addition to the matters set forth in clauses (b), (c) and (d) of the preceding proviso and subject to Section 2.13, any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.

11.05. Expenses; Indemnity; Damage Waiver.

(a) Costs and Expenses. The Borrower shall pay (i) all reasonable and invoiced out-of-pocket expenses incurred by the Administrative Agent and its Affiliates (including the reasonable and invoiced fees, charges and disbursements of counsel for the Administrative Agent), in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement, the other Loan Documents and the Intercreditor Agreement or any amendments, modifications or waivers of the provisions hereof or thereof; provided that under this Section 11.05(a) the Borrower shall not be required to reimburse the expenses of more than one firm of counsel to the Administrative Agent and its Affiliates, plus, if necessary, one firm of local counsel in each applicable jurisdiction and one regulatory counsel in each applicable jurisdiction, (ii) all reasonable and invoiced out-of-pocket expenses incurred by the L/C Issuer in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all reasonable and invoiced out-of-pocket expenses incurred by the Administrative Agent, any Lender or the L/C Issuer (including the reasonable and invoiced fees, charges and disbursements of any one counsel for the Administrative Agent, any Lender or the L/C Issuer, taken as a whole, and, if necessary, of one local counsel in any jurisdiction and one regulatory counsel in any jurisdiction), in connection with the enforcement or protection of its rights (A) in connection with this Agreement, the other Loan Documents and the Intercreditor Agreement, including its rights under this Section, or (B) in connection with Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.

-96-

(b) Indemnification by the Borrower. The Borrower shall indemnify the Administrative Agent (and any sub-agent thereof), each Lender and the L/C Issuer, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee by any third party or by the Borrower or any other Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document, the Intercreditor Agreement or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, or, in the case of the Administrative Agent (and any sub-agent thereof) and its Related Parties only, the administration of this Agreement, the other Loan Documents and the Intercreditor Agreement, (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the L/C Issuer to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower or any other Loan Party or any of the Borrower’s or such Loan Party’s directors, shareholders or creditors, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the bad faith, gross negligence or willful misconduct of such Indemnitee.

(c) Reimbursement by Lenders. To the extent that the Borrower for any reason fails to pay any amount required under subsection (a) or (b) of this Section to be paid by it to the Administrative Agent (or any sub-agent thereof), the L/C Issuer or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), the L/C Issuer or such Related Party, as the case may be, such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent) or the L/C Issuer in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent) or L/C Issuer in connection with such capacity. The obligations of the Lenders under this subsection (c) are subject to the provisions of Section 2.12(d).

(d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document, the Intercreditor Agreement or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof. No Indemnitee referred to in subsection (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems in connection with this Agreement, the other Loan Documents, the Intercreditor Agreement or the transactions contemplated hereby or thereby other than for direct or actual damages resulting from the bad faith, gross negligence or willful misconduct of such Indemnitee as determined by a final and nonappealable judgment of a court of competent jurisdiction.

(e) Payments. All amounts due under this Section shall be payable not later than 30 Business Days after demand therefor.

-97-

(f) Survival. The agreements in this Section shall survive the resignation of the Administrative Agent, the L/C Issuer and the Swing Line Lender, the replacement of any Lender, the termination of the Facility and the repayment, satisfaction or discharge of all the other Obligations.

11.06. Payments Set Aside. To the extent that any payment by or on behalf of the Borrower is made to the Administrative Agent, the L/C Issuer or any Lender, or the Administrative Agent, the L/C Issuer or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent, the L/C Issuer or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender and the L/C Issuer severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the Lenders and the L/C Issuer under clause (b) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.

11.07. Successors and Assigns.

(a) Successors and Assigns Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender (each such consent not to be unreasonably withheld or delayed) and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of Section 11.07(b), (ii) by way of participation in accordance with the provisions of Section 11.07(d), or (iii) by way of pledge or assignment of a security interest subject to the restrictions of Section 11.07(f) (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the L/C Issuer and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) Assignments by Lenders. Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment(s) and the Loans (including for purposes of this Section 11.07(b), participations in L/C Obligations and in Swing Line Loans) at the time owing to it); provided that any such assignment shall be subject to the following conditions:

(i) Minimum Amounts.

(A) In the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and the Revolving Credit Loans at the time owing to it or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and

(B) In any case not described in subsection (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the Commitment is not then in effect, the principal outstanding balance of the Revolving Credit Loans of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $1,000,000, unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed); provided, however, that concurrent assignments to members of an Assignee Group and concurrent assignments from members of an Assignee Group to a single Eligible Assignee (or to an Eligible Assignee and members of its Assignee Group) will be treated as a single assignment for purposes of determining whether such minimum amount has been met.

-98-

(ii) Proportionate Amounts. Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Revolving Credit Loans or the Commitment assigned, except that this clause (ii) shall not apply to the Swing Line Lender’s rights and obligations in respect of Swing Line Loans.

(iii) Required Consents. No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section and, in addition:

(A) the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (1) an Event of Default has occurred and is continuing at the time of such assignment or (2) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund;

(B) the consent of the Administrative Agent and the Swing Line Lender (such consent not to be unreasonably withheld or delayed) shall be required for assignments in respect of any Commitment if such assignment is to a Person that is not a Lender, an Affiliate of such Lender or an Approved Fund with respect to such Lender;

(C) the consent of the L/C Issuer (such consent not to be unreasonably withheld or delayed) shall be required for any assignment that increases the obligation of the assignee to participate in exposure under one or more Letters of Credit (whether or not then outstanding).

(iv) Assignment and Assumption. The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee in the amount of $3,500; provided, however, that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

(v) No Assignment to Certain Persons. No such assignment shall be made (A) to the Borrower or any of the Borrower’s Affiliates or Subsidiaries, or (B) to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (B), or (C) to a natural person.

(vi) Certain Additional Payments. In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Borrower and the Administrative Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent or any Lender hereunder (and interest accrued thereon) and (y) acquire (and fund as appropriate) its full pro rata share of all Loans and participations in Letters of Credit and Swing Line Loans in accordance with its Applicable Percentage. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable Law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.

Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption,

-99-

have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 3.01, 3.04, 3.05 and 11.04 with respect to facts and circumstances occurring prior to the effective date of such assignment. Upon request, the Borrower (at its expense) shall execute and deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 11.07(d).

(c) Register. The Administrative Agent, acting solely for this purpose as an agent of the Borrower (and such agency being solely for tax purposes), shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal and interest amounts of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. In addition, the Administrative Agent shall maintain on the Registrar information regarding the designation, and revocation of designation, of any Lender as a Defaulting Lender. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(d) Participations. Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural person, a Defaulting Lender or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans (including such Lender’s participations in L/C Obligations and/or Swing Line Loans) owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent, the Lenders and the L/C Issuer shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 11.01 that affects such Participant. Subject to subsection (e) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 3.01, 3.04 and 3.05 (subject to the requirements and limitations of such Sections, including the documentation requirements of Section 3.01(e)) to the same extent as if it were a Lender and had acquired its participating interest by assignment pursuant to Section 11.07(b). To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 11.08 as though it were a Lender, provided such Participant agrees to be subject to Section 2.13 as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower and Holdings (and such agency being solely for tax purposes), maintain a register on which it enters the name and address of each Participant and the principal amounts (and interest amounts) of each Participant’s interest in the Loans or other obligations under this Agreement (the “Participant Register”). The entries in the Participant Register shall be conclusive and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.

(e) Limitations upon Participant Rights. A Participant shall not be entitled to receive any greater payment under Section 3.01 or 3.04 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent (which consent shall not be unreasonably withheld).

(f) Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender,

-100-

including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

(g) Resignation as L/C Issuer or Swing Line Lender After Assignment. Notwithstanding anything to the contrary contained herein, if at any time Bank of America assigns all of its Commitments and Revolving Credit Loans pursuant to Section 11.07(b), Bank of America may, (i) upon 30 days’ notice to the Borrower and the Lenders, resign as L/C Issuer and/or (ii) upon 30 days’ notice to the Borrower, resign as Swing Line Lender. In the event of any such resignation as L/C Issuer or Swing Line Lender, the Borrower shall be entitled to appoint from among the Lenders a successor L/C Issuer or Swing Line Lender hereunder; provided, however, that no failure by the Borrower to appoint any such successor shall affect the resignation of Bank of America as L/C Issuer or Swing Line Lender, as the case may be. If Bank of America resigns as L/C Issuer, it shall retain all the rights, powers, privileges and duties of the L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations with respect thereto (including the right to require the Lenders to make Base Rate Loans or fund risk participations in Unreimbursed Amounts pursuant to Section 2.03(c)). If Bank of America resigns as Swing Line Lender, it shall retain all the rights of the Swing Line Lender provided for hereunder with respect to Swing Line Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to make Base Rate Loans or fund risk participations in outstanding Swing Line Loans pursuant to Section 2.04(c). Upon the appointment of a successor L/C Issuer and/or Swing Line Lender, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer or Swing Line Lender, as the case may be, and (b) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to Bank of America to effectively assume the obligations of Bank of America with respect to such Letters of Credit.

11.08. Treatment of Certain Information; Confidentiality. Each of the Administrative Agent, the Lenders and the L/C Issuer agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, trustees, advisors and representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder, under any other Loan Document, the Intercreditor Agreement or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (g) with the consent of the Borrower or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent, any Lender, the L/C Issuer or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower.

For purposes of this Section, “Information” means all information received from the Borrower or any Subsidiary relating to the Borrower or any Subsidiary or any of their respective businesses, other than any such information that is available to the Administrative Agent, any Lender or the L/C Issuer on a nonconfidential basis prior to disclosure by the Borrower or any Subsidiary, provided that, in the case of information received from the Borrower or any Subsidiary after the Closing Date, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

Each of the Administrative Agent, the Lenders and the L/C Issuer acknowledges that (a) the Information may include material non-public information concerning the Borrower or a Subsidiary, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with applicable Law, including United States Federal and state securities Laws.

-101-

The Schedules to this Agreement shall be provided to the Administrative Agent and may be viewed by any other Secured Party at the offices of the Administrative Agent upon request.

11.09. Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender, the L/C Issuer and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender, the L/C Issuer or any such Affiliate to or for the credit or the account of the Borrower or Holdings against any and all of the obligations of the Borrower or Holdings now or hereafter existing under this Agreement or any other Loan Document to such Lender or the L/C Issuer, such obligations of the Borrower or Holdings are due and payable, but irrespective of whether they are owed to a branch or office of such Lender or the L/C Issuer different from the branch or office holding such deposit or obligated on such indebtedness. The rights of each Lender, the L/C Issuer and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, the L/C Issuer or their respective Affiliates may have. Each Lender and the L/C Issuer agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application. Notwithstanding the provisions of this Section 11.09, if at any time any Lender, the L/C Issuer or any of their respective Affiliates maintains one or more deposit accounts for the Borrower or any other Loan Party into which Medicare and/or Medicaid receivables are deposited, such Person shall waive the right of setoff set forth herein.

11.10. Interest Rate Limitation. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “Maximum Rate”). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

11.11. Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Documents and the Intercreditor Agreement constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by telecopy or other electronic imaging means shall be effective as delivery of a manually executed counterpart of this Agreement.

11.12. Survival of Representations and Warranties. All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default at the time of any Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.

-102-

11.13. Severability. If any provision of this Agreement, the other Loan Documents or the Intercreditor Agreement is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement, the other Loan Documents and the Intercreditor Agreement shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Without limiting the foregoing provisions of this Section 11.13, if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in good faith by the Administrative Agent, the L/C Issuer or the Swing Line Lender, as applicable, then such provisions shall be deemed to be in effect only to the extent not so limited.

11.14. Replacement of Lenders. If any Lender requests compensation under Section 3.04 or 3.05, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01, or if any Lender gives any notice under Section 3.02, or a Lender (a “Non-Consenting Lender”) does not consent to a proposed change, waiver, discharge or termination with respect to any Loan Document that has been approved by the Required Lenders as provided in Section 11.01 but requires unanimous consent of all Lenders or all Lenders directly affected thereby (as applicable) or if any Lender is a Defaulting Lender or if any other circumstance exists hereunder that gives the Borrower the right to replace a Lender as a party hereto, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 11.07), all of its interests, rights and obligations under this Agreement and the related Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that:

(a) the Administrative Agent shall have received the assignment fee specified in Section 11.07(b);

(b) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and L/C Advances, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 3.05) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts);

(c) in the case of any such assignment resulting from a claim for compensation under Section 3.04 or payments required to be made pursuant to Section 3.01, such assignment will result in a reduction in such compensation or payments thereafter;

(d) such assignment does not conflict with applicable Laws; and

(e) in the case of any such assignment resulting from a Non-Consenting Lender’s failure to consent to a proposed change, waiver, discharge or termination with respect to any Loan Document, the applicable replacement bank, financial institution or Fund consents to the proposed change, waiver, discharge or termination; provided that the failure by such Non-Consenting Lender to execute and deliver an Assignment and Assumption shall not impair the validity of the removal of such Non-Consenting Lender and the mandatory assignment of such Non-Consenting Lender’s Commitments and outstanding Loans and participations in L/C Obligations and Swing Line Loans pursuant to this Section 11.14 shall nevertheless be effective without the execution by such Non-Consenting Lender of an Assignment and Assumption.

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

11.15. Governing Law; Jurisdiction; Etc.

(a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

-103-

(b) SUBMISSION TO JURISDICTION. EACH OF THE BORROWER AND HOLDINGS IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, ANY LENDER OR THE L/C ISSUER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR HOLDINGS OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

(c) WAIVER OF VENUE. EACH OF THE BORROWER AND HOLDINGS IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

(d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.02. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

11.16. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

11.17. No Advisory or Fiduciary Responsibility. In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), each of the Borrower and Holdings acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (i) (A) the arranging and other services regarding this Agreement provided by the Administrative Agent and the Lead Arrangers, are arm’s-length commercial transactions between the Borrower, Holdings and their respective Affiliates, on the one hand, and the Administrative Agent and the Lead Arrangers, on the other hand, (B) each of the Borrower and Holdings has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) each of the Borrower and Holdings is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) the Administrative Agent and the Lead Arrangers each is and has been acting

-104-

solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrower, Holdings or any of their respective Affiliates, or any other Person and (B) neither the Administrative Agent nor the Lead Arrangers has any obligation to the Borrower, Holdings or any of their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) the Administrative Agent and the Lead Arrangers and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower, Holdings and their respective Affiliates, and neither the Administrative Agent nor the Lead Arrangers has any obligation to disclose any of such interests to the Borrower, Holdings or any of their respective Affiliates. To the fullest extent permitted by law, each of the Borrower and Holdings hereby waives and releases any claims that it may have against the Administrative Agent and the Lead Arrangers and the other Lead Arranger(s) with respect to any breach or alleged breach (in each case, in the absence of gross negligence or willful misconduct) of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby. Holdings acknowledges that one or more Affiliates of Barclays Capital (“Barclays”), the investment banking division of Barclays Bank PLC has been retained by Holdings as a buy-side financial advisor (in such capacity, the “Borrower Financial Advisor”) in connection with the Transaction. Each of the Borrower and Holdings agrees not to assert any claim it might allege based on any actual or potential conflict of interest that might be asserted to arise or result from, on the one hand, the engagement of the Borrower Financial Advisor and, on the other hand, Barclays’ or its Affiliates’ relationship with Holdings as described and referred to herein. Nothing in this Section or elsewhere in this Agreement is intended to, or shall, diminish the obligations or liabilities of the parties under the engagement letter agreement among the Sponsor and one or more Affiliates and one or more Affiliates of Barclays Capital as a buy-side financial advisor in connection with the Transaction.

11.18. Electronic Execution of Assignments and Certain Other Documents. The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption or in any amendment or other modification hereof (including waivers and consents) shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

11.19. USA PATRIOT Act. Each Lender that is subject to the Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the Act, it is required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of each Loan Party and other information that will allow such Lender or the Administrative Agent, as applicable, to identify each Loan Party in accordance with the Act. The Borrower shall, promptly following a request by the Administrative Agent or any Lender, provide all documentation and other information that the Administrative Agent or such Lender requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Act.

-105-

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

C.P. ATLAS ACQUISITION CORP. (which on the Closing Date shall be merged with and into AMERICAN RENAL HOLDINGS INC. with AMERICAN RENAL HOLDINGS INC. surviving such merger as the Borrower)
By:	/s/ Jared S Hendricks
Name:	Jared S. Hendricks
Title:	Vice President
C.P. ATLAS INTERMEDIATE HOLDINGS, LLC
By:	/s/ Jared S Hendricks
Name:	Jared S. Hendricks
Title:	Vice President

S-1

BANK OF AMERICA, N.A., as Administrative Agent
By:	Mollie S. Canup
Name:	Mollie S. Canup
Title:	Vice President

S-2

BANK OF AMERICA, N.A., as a Lender, L/C Issuer and Swing Line Lender
By:	/s/ David H. Strickett
Name:	David H. Strickett
Title:	Senior Vice President

S-3

BARCLAYS BANK PLC, as a Lender
By:	/s/ Diane Rolfe
Name:	Diane Rolfe
Title:	Director

S-4

WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Lender
By:	/s/ Dana D. Cagle
Name:	Dana D. Cagle
Title:	Director

S-5

Execution Version

Schedules to the Credit Agreement

Schedule 2.01

Commitments and Applicable Percentages

Lender	Commitment		Applicable Percentage
Bank of America, N.A.	$	10,625,000.00		42.500000000	%
Barclays Bank PLC	$	10,625,000.00		42.500000000	%
Wells Fargo Bank, National Association	$	3,750,000.00		15.000000000	%
Total	$	25,000,000.00		100.000000000	%

- 2 -

Schedule 5.03

Certain Authorizations

UCC-1 Filings

Type of Filing	Entity	Jurisdictions
UCC-1 Financing Statement	C.P. Atlas Intermediate Holdings LLC	Delaware Secretary of State
UCC-1 Financing Statement	C.P. Atlas Acquisition Corp.	Delaware Secretary of State
UCC-1 Financing Statement	American Renal Holdings Inc.	Delaware Secretary of State
UCC-1 Financing Statement	American Renal Associates LLC	Delaware Secretary of State
UCC-1 Financing Statement	American Renal Management LLC	Delaware Secretary of State
UCC-1 Financing Statement	AKC Holding LLC	Delaware Secretary of State
UCC-1 Financing Statement	JKC Holding LLC	Delaware Secretary of State
UCC-1 Financing Statement	ARA-Boca Raton Holding LLC	Delaware Secretary of State
UCC-1 Financing Statement	ARA-Ohio Holdings LLC	Delaware Secretary of State
UCC-1 Financing Statement	ARA-Rhode Island Dialysis II LLC	Delaware Secretary of State
UCC-1 Financing Statement	Texas-ARA LLC	Delaware Secretary of State
UCC-1 Financing Statement	American Renal Texas L.P.	Texas Secretary of State
UCC-1 Financing Statement	American Renal Texas II, L.P.	Texas Secretary of State
UCC-1 Financing Statement	Acute Dialysis Services-ARA LLC	Delaware Secretary of State

Intellectual Property Filings

Entity	Jurisdictions
American Renal Associates LLC	United States Patent and Trademark Office

- 3 -

Schedule 5.06

Litigation

None.

- 4 -

Schedule 5.07(b)

Existing Liens

Jurisdiction	Secured Party	Filing Type	Filing Date	Original Filing Number
Debtor: ARA-Boca Raton Dialysis LLC
Delaware SOS	CIT Healthcare LLC	UCC-1	08/10/2007	20073050407
Collateral Encumbered: All accounts
Jurisdiction	Secured Party	Filing Type	Filing Date	Original Filing Number
Debtor: ARA-Boca Raton Dialysis LLC
Delaware SOS	Bank of the West, Trinity Division	UCC-1	09/29/2009	20093115109
Collateral Encumbered: Leased Equipment
Jurisdiction	Secured Party	Filing Type	Filing Date	Original Filing Number
Debtor: Debtor: ARA-Chillicothe Dialysis LLC
Delaware SOS	The CIT Group/Equipment Financing, Inc.	UCC-1	06/30/2005	52096783
Collateral Encumbered: Specific Equipment
Jurisdiction	Secured Party	Filing Type	Filing Date	Original Filing Number
Debtor: ARA-Chillicothe Dialysis LLC
Delaware SOS	The CIT Group/Equipment Financing, Inc.	UCC-1	09/30/2005	52096791
Collateral Encumbered: Specific Equipment

- 5 -

Jurisdiction	Secured Party	Filing Type	Filing Date	Original Filing Number
Debtor: ARA-Chillicothe Dialysis LLC
Delaware SOS	The CIT Group/Equipment Financing, Inc.	UCC-1	08/09/2005	52516822
Collateral Encumbered: Specific Equipment
Jurisdiction	Secured Party	Filing Type	Filing Date	Original Filing Number
Debtor: ARA-Crystal Lake Dialysis LLC
Delaware SOS	The CIT Group/Equipment Financing, Inc.	UCC-1	08/25/2005	52687193
Collateral Encumbered: Specific Equipment
Jurisdiction	Secured Party	Filing Type	Filing Date	Original Filing Number
Debtor: ARA-East Providence Dialysis LLC
Delaware SOS	Bank Rhode Island	UCC-1	12/14/2006	64373858
Collateral Encumbered: All accounts
Jurisdiction	Secured Party	Filing Type	Filing Date	Original Filing Number
Debtor: ARA-Fall River Dialysis LLC
Delaware SOS	Bank Rhode Island	UCC-1	12/14/2006	64374278
Collateral Encumbered: All accounts

- 6 -

Jurisdiction	Secured Party	Filing Type	Filing Date	Original Filing Number
Debtor: ARA-Hazleton LLC
Pennsylvania SOS	Fleet Capital Leasing Healthcare Finance (a division of Fleet Business Credit Corporation)	UCC-1	07/19/2001	34160011
Collateral Encumbered: Leased Equipment
Jurisdiction	Secured Party	Filing Type	Filing Date	Original Filing Number
Debtor: ARA-Johnston Dialysis LLC
Delaware SOS	Bank Rhode Island	UCC-1	12/14/2006	64374435
Collateral Encumbered: All accounts
Jurisdiction	Secured Party	Filing Type	Filing Date	Original Filing Number
Debtor: ARA-Richmond Dialysis LLC
Virginia SOS	SunTrust Bank	UCC-1	03/13/2009	090313 7214-1
Collateral Encumbered: All assets
Jurisdiction	Secured Party	Filing Type	Filing Date	Original Filing Number
Debtor: ARA-Sebring Dialysis LLC
Florida Secured Transaction Registry	The CIT Group/Equipment Financing, Inc.	UCC-1	08/09/2005	200500399601
Collateral Encumbered: Specific Equipment

- 7 -

Jurisdiction	Secured Party	Filing Type	Filing Date	Original Filing Number
Debtor: ARA-South Barrington Dialysis LLC
Delaware SOS	The CIT Group/Equipment Financing, Inc.	UCC-1	05/31/2005	51655555
Collateral Encumbered: Specific Equipment
Jurisdiction	Secured Party	Filing Type	Filing Date	Original Filing Number
Debtor: ARA-South Barrington Dialysis LLC
Delaware SOS	The CIT Group/Equipment Financing, Inc.	UCC-1	06/30/2005	52096775
Collateral Encumbered: Specific Equipment
Jurisdiction	Secured Party	Filing Type	Filing Date	Original Filing Number
Debtor: Capitol Dialysis LLC
District of Columbia Recorder of Deeds	CIT Healthcare LLC	UCC-1	05/15/2006	20060602182
Collateral Encumbered: All assets
Jurisdiction	Secured Party	Filing Type	Filing Date	Original Filing Number
Debtor: Dialysis Care Center of Palm Coast LLC
Delaware SOS	CIT Healthcare LLC	UCC-1	01/11/2008	20080137636
Collateral Encumbered: All assets

- 8 -

Jurisdiction	Secured Party	Filing Type	Filing Date	Original Filing Number
Debtor: Dialysis Center of Wakefield LLC
Delaware SOS	CIT Healthcare LLC	UCC-1	05/08/2006	61549757
Collateral Encumbered: All assets
Jurisdiction	Secured Party	Filing Type	Filing Date	Original Filing Number
Debtor: Dialysis Center of West Warwick LLC
Delaware SOS	Bank Rhode Island	UCC-1	05/01/2009	20091378634
Collateral Encumbered: All accounts
Jurisdiction	Secured Party	Filing Type	Filing Date	Original Filing Number
Debtor: Dialysis Center of Westerly LLC
Delaware SOS	CIT Healthcare LLC	UCC-1	05/08/2006	61549211
Collateral Encumbered: All assets
Jurisdiction	Secured Party	Filing Type	Filing Date	Original Filing Number
Debtor: Dialysis Center of Woonsocket LLC
Delaware SOS	CIT Healthcare LLC	UCC-1	05/08/2006	61552637
Collateral Encumbered: All assets

- 9 -

Jurisdiction	Secured Party	Filing Type	Filing Date	Original Filing Number
Debtor: Ellicott City Dialysis Center LLC
Delaware SOS	CIT Healthcare LLC	UCC-1	05/25/2007	20071975597
Collateral Encumbered: All assets
Jurisdiction	Secured Party	Filing Type	Filing Date	Original Filing Number
Debtor: Kenosha Kidney Dialysis LLC
Delaware SOS	CIT Healthcare LLC	UCC-1	11/16/2007	20074382262
Collateral Encumbered: All assets
Jurisdiction	Secured Party	Filing Type	Filing Date	Original Filing Number
Debtor: Logan Dialysis Center LLC
Delaware SOS	CIT Healthcare LLC	UCC-1	06/02/2008	20081872942
Collateral Encumbered: All assets
Jurisdiction	Secured Party	Filing Type	Filing Date	Original Filing Number
Debtor: Metro St. Louis Dialysis – Florissant LLC
Delaware SOS	CIT Healthcare LLC	UCC-1	03/23/2007	20071098655
Collateral Encumbered: All assets

- 10 -

Jurisdiction	Secured Party	Filing Type	Filing Date	Original Filing Number
Debtor: Miami-ARA LLC
Florida Secured Transaction Registry	Fleet Healthcare Finance a division of Fleet Business Credit Corporation	UCC-1	06/28/2001	200100143160
Collateral Encumbered: Leased Equipment
Jurisdiction	Secured Party	Filing Type	Filing Date	Original Filing Number
Debtor: ARA-Fall River Dialysis LLC
Delaware SOS	Citizens Bank of Rhode Island	UCC-1	06/24/2005	51952903
Collateral Encumbered: All accounts
Jurisdiction	Secured Party	Filing Type	Filing Date	Original Filing Number
Debtor: ARA-Johnston Dialysis LLC
Delaware SOS	Citizens Bank of Rhode Island	UCC-1	05/04/2005	51373472
Collateral Encumbered: Leased Equipment

- 11 -

Jurisdiction	Secured Party	Filing Type	Filing Date	Original Filing Number
Debtor: Capitol Dialysis LLC
District of Columbia Recorder of Deeds	Government of District of Columbia	Certificate of Delinquent Tax	02/08/2007	2007018791/200 7020095
Collateral Encumbered: $202.56*
Jurisdiction	Secured Party	Filing Type	Filing Date	Original Filing Number
Debtor: ARA-Kittanning Dialysis LLC
Armstrong County, Pennsylvania	Department of Labor & Industry	UCC-1	08/15/08	2008-1510-Civil
Collateral Encumbered: $3,250.00

* Payment in the amount of $202.56 was mailed to District of Columbia Recorder of Deeds on May 6, 2010. It is anticipated that the lien will be terminated as a result of such payment.

- 12 -

Schedule 5.07(c)

Material Real Property

None.

- 13 -

Schedule 5.12

Subsidiaries and Other Equity Investments; Loan Parties

Part A

Current Legal         Entities Owned	Record Owner	Percent Owned
American Renal Holdings Inc.	C.P. Atlas Holdings, Inc.	100%
American Renal Associates LLC	American Renal Holdings Inc.	100%
American Renal Management LLC	American Renal Associates LLC	100%
AKC Holding LLC	American Renal Associates LLC	100%
JKC Holding LLC	American Renal Associates LLC	100%
ARA-Boca Raton Holding LLC	American Renal Associates LLC	100%
ARA-Ohio Holdings LLC	American Renal Associates LLC	100%
ARA-Rhode Island Dialysis II LLC	American Renal Associates LLC	100%
Texas-ARA LLC	American Renal Associates LLC	100%
American Renal Texas L.P.	Texas-ARA LLC (0.5%) American Renal Associates LLC (99.5%)	99.5% American Renal Associates LLC 0.5% Texas-ARA LLC
American Renal Texas II, L.P.	Texas-ARA LLC (0.5%) American Renal Associates LLC (99.5%)	99.5% American Renal Associates LLC 0.5% Texas-ARA LLC
Acute Dialysis Services-ARA LLC	American Renal Associates LLC	100%
ARA-Yuba City Dialysis LLC	American Renal Associates LLC	60%
Kidney Center of Arvada LLC	American Renal Associates LLC	51%
Kidney Center of Lafayette LLC	American Renal Associates LLC	51%

- 14 -

Kidney Center of Lakewood LLC	American Renal Associates LLC	51%
Kidney Center of Longmont LLC	American Renal Associates LLC	51%
Kidney Center of Westminster LLC	American Renal Associates LLC	51%
Capitol Dialysis, LLC	American Renal Associates LLC	60%
ARA-Augusta, LLC	American Renal Associates LLC	51%
ARA-Augusta Clinic LLC	ARA-Augusta, LLC	100%
ARA-South Augusta Clinic LLC	ARA-Augusta, LLC	100%
Grovetown Dialysis Clinic, LLC	American Renal Associates LLC	51%
Louisville Dialysis Clinic, LLC	American Renal Associates LLC	51%
Waynesboro Dialysis Clinic, LLC	American Renal Associates LLC	51%
Dublin Dialysis Center, LLC	American Renal Associates LLC	100%
Atlantic Kidney Center LLC	AKC Holding, LLC	60%
Jupiter Kidney Center LLC	JKC Holding, LLC	51%
ARA-Aventura LLC	American Renal Associates LLC	60%
Miami-ARA LLC	American Renal Associates LLC	60%
ARA-Boca Raton Dialysis LLC	ARA-Boca Raton Holding, LLC	51%
Delray Beach Dialysis Center LLC	American Renal Associates LLC	51%
ARA-Daytona Beach Dialysis LLC	American Renal Associates LLC	60%
ARA-Naples Dialysis Center LLC	American Renal Associates LLC	51%
ARA-Naples South Dialysis Center LLC	American Renal Associates LLC	51%

- 15 -

ARA-Orange Park LLC	American Renal Associates LLC	60%
ARA-Sebring Dialysis LLC	American Renal Associates LLC	51%
ARA-Sun City Dialysis LLC	American Renal Associates LLC	60%
Bradenton Dialysis Center LLC	American Renal Associates LLC	51%
Palmetto Dialysis Center LLC	American Renal Associates LLC	51%
ARA-Titusville Dialysis LLC	American Renal Associates LLC	60%
ARA-West Jacksonville LLC	American Renal Associates LLC	51%
Middleburg Dialysis LLC	American Renal Associates LLC	51%
Hilliard Dialysis Center LLC	American Renal Associates LLC	51%
Dialysis Care Center of Palm Coast LLC	American Renal Associates LLC	51%
Goldtree Kidney Center LLC	American Renal Associates LLC	51%
Western Community Dialysis Center, LLC	American Renal Associates LLC	51%
Southwest Jacksonville Dialysis Center LLC	American Renal Associates LLC	51%
Northwest Jacksonville Dialysis Center, LLC	American Renal Associates LLC	51%
Lehigh Acres Dialysis Center, LLC	American Renal Associates LLC	51%
Florida Dialysis Center of Orlando LLC	American Renal Associates LLC	51%
ARA-N.W. Chicago LLC	American Renal Associates LLC	51%
ARA-Crystal Lake Dialysis LLC	ARA-N.W. Chicago LLC	100%
ARA-South Barrington Dialysis LLC	ARA-N.W. Chicago LLC	100%

- 16 -

Harvard-Woodstock Dialysis Center, LLC	ARA-N.W. Chicago LLC	100%
New Orleans Kidney Center LLC	American Renal Associates LLC	51%
Freret Street Kidney Center LLC	American Renal Associates LLC	51%
ARA-Adelphi LLC	American Renal Associates LLC	51%
Ellicott City Dialysis Center LLC	American Renal Associates LLC	51%
Universal Dialysis Center, LLC	American Renal Associates LLC	51%
Taunton Healthcare Clinic, LLC	American Renal Associates LLC	100%
Brockton Healthcare Clinic, LLC	American Renal Associates LLC	100%
ARA-Fall River Dialysis LLC	American Renal Associates LLC	58.501%
ARA-Springfield Dialysis LLC	American Renal Associates LLC	59%
ARA-Holyoke Dialysis LLC	American Renal Associates LLC	51%
Dialysis Center of Western Massachusetts LLC	American Renal Associates LLC	51%
Heritage Dialysis Center LLC	American Renal Associates LLC	51%
Waltham Dialysis LLC	American Renal Associates LLC	51%
Nephrology Center of Detroit, LLC	American Renal Associates LLC	51%
Metro St. Louis Dialysis – Florissant, LLC	American Renal Associates LLC	51%
Gateway St. Louis Dialysis, LLC	American Renal Associates LLC	51%

- 17 -

Woodland Park Dialysis Center, LLC	American Renal Associates LLC	51%
Mohawk Valley Dialysis Center, LLC	American Renal Associates LLC	51%
ARA-Columbus LLC	American Renal Associates LLC	60%
ARA-Bexley LLC	ARA-Columbus LLC	100%
ARA-North Columbus Dialysis LLC	ARA-Columbus LLC	100%
ARA-South Columbus Dialysis LLC	ARA-Columbus LLC	100%
ARA-South Central Ohio LLC	American Renal Associates LLC	51%
ARA-Chillicothe Dialysis LLC	ARA-South Central Ohio LLC	100%
ARA-Jackson Dialysis LLC	ARA-South Central Ohio LLC	100%
ARA-Piketon Dialysis LLC	ARA-South Central Ohio LLC	100%
Pickaway Dialysis Center LLC	American Renal Associates LLC	51%
Logan Dialysis Center LLC	American Renal Associates LLC	51%
Fairfield Kidney Center LLC	American Renal Associates LLC	51%
Kidney Care Centers of Zanesville Ohio, LLC	American Renal Associates LLC	51%
Kidney Care Centers of Cambridge Ohio, LLC	Kidney Care Centers of Zanesville Ohio, LLC	100%
Kidney Care Centers of Coshocton Ohio, LLC	Kidney Care Centers of Zanesville Ohio, LLC	100%
Boardman Dialysis Center LLC	American Renal Associates LLC	51%
Warren Dialysis Center LLC	American Renal Associates LLC	51%

- 18 -

Youngstown-Warren Home Dialysis, LLC	American Renal Associates LLC	51%
ARA-Hazleton LLC	American Renal Associates LLC	51%
Butler-ARA, LLC	American Renal Associates LLC	51%
Central Kittanning Dialysis Center LLC	American Renal Associates LLC	51%
ARA-Kittanning Dialysis LLC	American Renal Associates LLC	51%
ARA-Newcastle Dialysis LLC	American Renal Associates LLC	51%
ARA-Dialysis Unit at Ohio Valley Hospital LLC	American Renal Associates LLC	51%
Langhorne Dialysis LLC	American Renal Associates LLC	51%
Bristol Dialysis LLC	American Renal Associates LLC	51%
Bensalem Dialysis Center LLC	American Renal Associates LLC	51%
Woodhaven Dialysis Center, LLC	American Renal Associates LLC	51%
ARA-Rhode Island Dialysis LLC	American Renal Associates LLC	85%
ARA-Providence Dialysis LLC	ARA-Rhode Island Dialysis LLC	100%
ARA-Pawtucket Dialysis LLC	ARA-Rhode Island Dialysis LLC	100%
ARA-Tiverton Dialysis LLC	ARA-Rhode Island Dialysis LLC	100%
ARA-Cranston Dialysis LLC	American Renal Associates LLC	51%
ARA-East Providence Dialysis LLC	American Renal Associates LLC	54.825%
ARA-Johnston Dialysis LLC	American Renal Associates LLC	51%

- 19 -

Dialysis Center of Wakefield LLC	American Renal Associates LLC	51%
Dialysis Center of Warwick LLC	American Renal Associates LLC	66%
Dialysis Center of West Warwick LLC	American Renal Associates LLC	51%
Dialysis Center of Westerly LLC	American Renal Associates LLC	51%
Dialysis Center of Woonsocket LLC	American Renal Associates LLC	51%
Carolina Dialysis LLC	American Renal Associates LLC	51%
Spartanburg Dialysis LLC	American Renal Associates LLC	51%
North East Kidney Center, LLC	American Renal Associates LLC	90%
North Main Kidney Center, LLC	American Renal Associates LLC	90%
Beaumont-ARA Dialysis L.L.P.	American Renal Texas L.P.	60%
Jasper-ARA Dialysis L.L.P.	American Renal Texas L.P.	60%
Woodville Dialysis Center LLP	American Renal Texas L.P.	60%
Bay City Dialysis Center, LLP	American Renal Texas L.P.	51%
ARA-Forest Park Dialysis LLC	American Renal Associates LLC	60%
ARA-Mechanicsville Dialysis LLC	American Renal Associates LLC	60%
ARA-Richmond Dialysis LLC	American Renal Associates LLC	75%
ARA-South Laburnum Dialysis LLC	American Renal Associates LLC	51%
ARA-Milwaukee Dialysis LLC	American Renal Associates LLC	51%
Kenosha Kidney Dialysis LLC	American Renal Associates LLC	51%
Comprehensive Dialysis Care, LLC	American Renal Associates LLC	100%
Brazoria County Dialysis LLP	American Renal Texas L.P.	51%

- 20 -

Part B

None.

- 21 -

Schedule 5.16

Intellectual Property Matters

United States Trademark Registrations

Trademark	Reg. #		Appl. #		Owner
ARA		3,711,453		77673941	American Renal Associates LLC
AMERICANRENAL ASSOCIATES		3774101		77673955	American Renal Associates LLC
A		3774100		77673947	American Renal Associates LLC
AMERICANRENAL		3,776,872		77673890	American Renal Associates LLC

Domain Names

www.americanrenal.com

- 22 -

Schedule 5.19

Collateral Documents

See Schedule 5.03.

- 23 -

Schedule 6.12

Guarantors

C.P. Atlas Intermediate Holdings, LLC

American Renal Management LLC

American Renal Associates LLC

AKC Holding LLC

ARA-Boca Raton Holding LLC

ARA-Ohio Holdings LLC

JKC Holding LLC

ARA-Rhode Island Dialysis II LLC

Texas-ARA LLC

American Renal Texas L.P.

American Renal Texas II, L.P.

Acute Dialysis Services-ARA LLC

- 24 -

Schedule 6.17

Post-Closing Deliverables

The Borrower shall, within 180 days of the Closing Date, cause Liens on all Deposit Accounts and Securities Accounts other than Excluded Deposit Accounts (each such term as defined in the Security Agreement) maintained by the Borrower and the Guarantors to be created and perfected in favor of the Administrative Agent, all pursuant to such documents and instruments as shall be reasonably satisfactory in form and substance to the Administrative Agent.

- 25 -

Schedule 7.02

Existing Indebtedness

	PRINCIPAL OUTSTANDING AS  OF MAY 7, 2010
A.     Bank Rhode Island:
1.      Dialysis Center of West Warwick LLC
Term Loan Promissory Note dated May 4, 2009	$	964,666.46
2.      ARA-East Providence Dialysis LLC
Term Loan Promissory Note dated December 13, 2006, as amended May 4, 2009	$	566,666.67
3.      ARA-Johnston Dialysis LLC
Term Loan Promissory Note dated December 13, 2006, as amended May 4, 2009	$	666,666.80
4.      ARA-Fall River Dialysis LLC
Term Loan Promissory Note dated December 13, 2006, as amended May 4, 2009	$	733,333.20
B.     Wachovia Bank, N.A.:
1.      Nephrology Centers of America LLC/Grovetown Dialysis Clinic, LLC
Promissory Note dated January 8, 2009	$	189,729.95
2.      Nephrology Centers of America LLC/Waynesboro Dialysis Clinic, LLC
Promissory Note dated April 28, 2008	$	88,954.02
C.     CIT Group/Equipment Financing, Inc.:
1.      ARA-Crystal Lake Dialysis LLC
Master Security Agreement dated August 22, 2005, together with all schedules thereto, as amended September 7, 2005	$	44,808.11
2.      ARA-South Barrington Dialysis LLC
Master Security Agreement dated May 19, 2005, together with all schedules thereto, as amended June 29, 2005	$	14,423.31
3.      ARA-Chillicothe Dialysis LLC (Capital Lease)
February 16, 2005 Lease Agreement, as revised March 15, 2005	$	43,674.90
August 5, 2005 Lease Agreement	$	4,312.25
4.      ARA-Sebring Dialysis LLC (Capital Lease)
August 5, 2005 Lease Agreement	$	3,668.27
D.     CIT Healthcare LLC:
1.      ARA-Boca Raton Dialysis LLC
Term Loan Promissory Note dated August 10, 2007	$	174,825.03
2.      Capitol Dialysis, LLC
Term Loan Promissory Note dated June 23, 2006	$	109,165.80
Term Loan Promissory Note dated June 28, 2006	$	93,144.00
Term Loan Promissory Note dated June 5, 2007	$	244,231.16
Term Loan Promissory Note dated December 7, 2007	$	606,504.33
Term Loan Promissory Note dated June 6, 2008	$	135,333.84
Term Loan Promissory Note dated October 16, 2008	$	458,604.38
3.      Dialysis Care Center of Palm Coast LLC
Working Capital Note dated January 15, 2008	$	200,000.00
Term Loan Promissory Note dated January 16, 2009	$	589,866.30

- 26 -

4.      Dialysis Center of Wakefield LLC
Term Loan Promissory Note dated April 2, 2008	$	889,952.48
5.      Dialysis Center of Westerly LLC
Term Loan Promissory Note dated May 1, 2006	$	85,865.98
6.      Dialysis Center of Woonsocket LLC
Term Loan Promissory Note dated May 1, 2006	$	120,856.46
Term Loan Promissory Note dated April 2, 2007	$	108,473.28
7.      Ellicott City Dialysis Center LLC
Term Loan Promissory Note dated as of October 17, 2009	$	168,549.97
Term Loan Promissory Note dated as of July 5, 2007	$	61,720.36
8.      Kenosha Kidney Dialysis LLC
Working Capital Note dated as of November 20, 2007	$	200,000.00
Term Loan Promissory Note dated as of November 14, 2008	$	860,856.65
9.      Logan Dialysis LLC
Working Capital Note dated as of June 23, 2008	$	100,000.00
Term Loan Promissory Note dated as of May 30, 2009	$	483,932.83
10.    Metro St. Louis Dialysis – Florissant, LLC
Term Loan Promissory Note dated as of March 29, 2007	$	260,018.34
E.     Hibernia National Bank:
1.      Beaumont-ARA Dialysis L.L.P.
Real Estate Note dated December 14, 2001	$	150,403.62
2.      Jasper-ARA Dialysis L.L.P.
Real Estate Note dated September 21, 2002	$	96,064.58
F.     SunTrust Bank:
1.      ARA-Richmond Dialysis LLC
Commercial Note dated December 9, 2008	$	187,783.79
G.     Trinity, a division of Bank of the West:
1.      ARA-Boca Raton Dialysis LLC (Capital Lease)
Commercial Master Lease Agreement dated September 30, 2009	$	240,941.61
H.     Nephrology Centers of America, LLC
1.      American Renal Associates LLC
Promissory Note, dated May 1, 2009, made in connection with that certain Contribution and Asset Purchase Agreement, dated May 1, 2009, by and among American Renal Associates LLC, Nephrology Centers of America, LLC and Waynesboro Dialysis Clinic, LLC	$	164,489.18
Promissory Note, dated May 1, 2009, by American Renal Associates LLC made in connection with that certain Contribution and Asset Purchase Agreement, dated May 1, 2009, by and among American Renal Associates LLC, Nephrology Centers of America, LLC and Grovetown Dialysis Clinic, LLC	$	114,933.41
Promissory Note, dated May 1, 2009, by American Renal Associates LLC made in connection with that certain Contribution and Asset Purchase Agreement, dated May 1, 2009, by and among American Renal Associates LLC, Nephrology Centers of America, LLC and Louisville Dialysis Clinic, LLC*	$	35,364.14
TOTAL ASSUMED CLINIC DEBT:	$	10,262,785.46

- 27 -

Schedule 7.03

Existing Investments

None.

- 28 -

Schedule 7.08

Affiliate Transactions

Investors’ Rights Agreement dated December 16, 2005 by and among American Renal Holdings Inc. and the Investors (as defined therein).

- 29 -

Schedule 11.02

Administrative Agent’s Office, Certain Addresses for Notices

To the Borrower:

C.P. Atlas Acquisition Corp. (to be merged with and into American Renal Holdings Inc.)

66 Cherry Hill Drive

Beverly, MA 01915

Facsimile No. (978) 232-4060

Phone No.: (978) 922-3080

Attention: General Counsel

To Holdings:

C.P. Atlas Intermediate Holdings, LLC

c/o Centerbridge Capital Partners L.P.

375 Park Avenue, 12^th Floor

New York, NY 10152

Facsimile No.: (212) 672-5001

Phone No.: (212) 672-5000

Attention: Jared S. Hendricks

To Administrative Agent:

Administrative Agent’s Office

(for payment and Requests for Credit Extensions)

Bank of America, N.A.

101 N. Tryon St.

NC1-001-04-39

Charlotte, NC 28255-0001

Attn: Sandra (Sandi) McEachern

Telephone: 980-388-1524

Facsimile: 704-409-0857

Email: sandra.a.mceachern@baml.com

To Swing Line Lender:

Bank of America, N.A.

101 N. Tryon St.

NC1-001-04-39

Charlotte, NC 28255-0001

Attn: Sandra (Sandi) McEachern

Telephone: 980-388-1524

Facsimile: 704-409-0857

- 30 -

Email: sandra.a.mceachern@baml.com

Remittance Instructions:

Bank of America, N.A.

New York, NY

ABA#: 026009593

Acct.#: 1366212250600

Attn: Credit Services Charlotte

Ref: American Renal Holdings Inc.

All Other Notices/Deliveries to Administrative Agent:

Bank of America, N.A.

Agency Management

NC1-002-15-36

101 South Tryon Street, 15^th Floor

Charlotte, NC 28255

Attn: Mollie S. Canup

Telephone: (980) 387-5449

Facsimile: (704) 409-0011

Email: mollie.s.canup@baml.com

To L/C Issuer:

L/C Issuer’s Office:

(for payments due LC Issuer only and new LC requests and amendments):

Bank of America, N.A.

Trade Operations

1 Fleet Way

Mail Code: PA6-580-02-30

Scranton, PA 18507

Attention: Mary J. Cooper

Telephone: 570.330.4235

Telecopier: 570.330.4186

Electronic Mail: mary.j.cooper@bankofamerica.com

Remittance Instructions:

Bank of America, N.A.

New York, NY

ABA #: 026-009-593

Account #: 04535-883980

Attn: Scranton Standby

Ref: American Renal Holdings Inc.

- 31 -

EXHIBIT A

FORM OF COMMITTED LOAN NOTICE

Date:                     ,         

To:	Bank of America, N.A., as Administrative Agent
	Street Address
	Mail Code:
	City, State ZIP Code
	Attention:
	Telephone:
	Telecopier:
	Electronic Mail:                 @bankofamerica.com

Ladies and Gentlemen:

Reference is made to that certain Credit Agreement, dated as of May 7, 2010 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), among C.P. ATLAS ACQUISITION CORP., a Delaware corporation (the “Borrower”), which merged with and into AMERICAN RENAL HOLDINGS INC. (the “Company”) on the Closing Date, upon and following which the Borrower became the Company, C.P. ATLAS INTERMEDIATE HOLDINGS, LLC, a Delaware limited liability company (“Holdings”), the Lenders from time to time party thereto, and BANK OF AMERICA, N.A., as Administrative Agent, L/C Issuer and Swing Line Lender.

The undersigned hereby requests (select one):

¨  A Borrowing of Revolving Credit Loans

¨  A conversion or continuation of Revolving Credit Loans

1. On                                                                               (a Business Day).

2. In the amount of $                    

3. Comprised of                                                                                  

                         [Type of Loan requested]

4. For Eurodollar Rate Loans: with an Interest Period of          months.

A - 1

Form of Committed Loan Notice

[The Borrower hereby represents and warrants that the conditions specified in Sections 4.02(a), (b) and (c) shall be satisfied on and as of the date of the Credit Extension.]¹

AMERICAN RENAL HOLDINGS INC.

By:

Name:

Title:

¹ This sentence is not required for Committed Loan Notices that request only a conversion of Loans to the other Type, or a continuation of Eurodollar Rate Loans.

A - 2

Form of Committed Loan Notice

EXHIBIT B

FORM OF SWING LINE LOAN NOTICE

Date:                     ,         

To:	Bank of America, N.A., as Swing Line Lender
	Bank of America, N.A., as Administrative Agent
	Street Address
	Mail Code:
	City, State ZIP Code
	Attention:
	Telephone:
	Telecopier:
	Electronic Mail:                 @bankofamerica.com

Ladies and Gentlemen:

Reference is made to that certain Credit Agreement, dated as of May 7, 2010 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), among C.P. ATLAS ACQUISITION CORP., a Delaware corporation (the “Borrower”), which merged with and into AMERICAN RENAL HOLDINGS INC. (the “Company”) on the Closing Date, upon and following which the Borrower became the Company, C.P. ATLAS INTERMEDIATE HOLDINGS, LLC, a Delaware limited liability company (“Holdings”), the Lenders from time to time party thereto, and BANK OF AMERICA, N.A., as Administrative Agent, L/C Issuer and Swing Line Lender.

The undersigned hereby requests a Swing Line Loan:

1. On                                                                                   (a Business Day).

2. In the amount of $                    .

The Swing Line Borrowing requested herein complies with the requirements of the provisos to the first sentence of Section 2.04(a) of the Agreement.

The Borrower hereby represents and warrants that the conditions specified in Sections 4.02(a),(b) and (c) shall be satisfied on and as of the date of the Credit Extension.

AMERICAN RENAL HOLDINGS INC.

By:

Name:

Title:

B - 1

Form of Swing Line Loan Notice

EXHIBIT C

FORM OF NOTE

                    ,         

FOR VALUE RECEIVED, the undersigned, hereby promises to pay to                      or registered assigns (the “Lender”), in accordance with the provisions of the Agreement (as hereinafter defined), the principal amount of each Revolving Credit Loan from time to time made by the Lender to the Borrower under that certain Credit Agreement, dated as of May 7, 2010 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), among C.P. ATLAS ACQUISITION CORP., a Delaware corporation (the “Borrower”), which [shall be] [was] merged with and into AMERICAN RENAL HOLDINGS INC. (the “Company”) on the Closing Date, upon and following which the Borrower [shall be] [became] the Company, C.P. ATLAS INTERMEDIATE HOLDINGS, LLC, a Delaware limited liability company (“Holdings”), the Lenders from time to time party thereto, and BANK OF AMERICA, N.A., as Administrative Agent, L/C Issuer and Swing Line Lender.

The Borrower promises to pay interest on the unpaid principal amount of each Revolving Credit Loan from the date of such Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Agreement. Except as otherwise provided in Section 2.04(f) of the Agreement with respect to Swing Line Loans, all payments of principal and interest shall be made to the Administrative Agent for the account of the Lender in Dollars in immediately available funds at the Administrative Agent’s Office. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Agreement.

This Note is one of the Notes referred to in the Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject to the terms and conditions provided therein. This Note is also entitled to the benefits of the Guaranty and is secured by the Collateral. Upon the occurrence and continuation of one or more of the Events of Default specified in the Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable all as provided in the Agreement. Revolving Credit Loans made by the Lender shall be evidenced by one or more loan accounts or records maintained by the Lender in the ordinary course of business. The Lender may also attach schedules to this Note and endorse thereon the date, amount and maturity of its Revolving Credit Loans and payments with respect thereto.

The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Note.

C - 1

Form of Note

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

C.P. ATLAS ACQUISITION CORP. (which on the Closing Date shall be merged with and into AMERICAN RENAL HOLDINGS INC. with AMERICAN RENAL HOLDINGS INC. surviving such merger as the Borrower)²

By:

Name:

Title:

² If document is dated following the Closing Date, executing party shall be American Renal Holdings Inc.

C - 2

Form of Note

LOANS AND PAYMENTS WITH RESPECT THERETO

Date Amount of Loan Made End of Interest Period Amount of Principal or Interest Paid This Date Outstanding Principal Balance This Date Notation Made By

C - 3

Form of Note

EXHIBIT D

FORM OF COMPLIANCE CERTIFICATE

Financial Statement Date:                     ,         

To:	Bank of America, N.A., as Administrative Agent
	Street Address
	Mail Code:
	City, State ZIP Code
	Attention:
	Telephone:
	Telecopier:
	Electronic Mail:                 @bankofamerica.com

Ladies and Gentlemen:

Reference is made to that certain Credit Agreement, dated as of May 7, 2010 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), among C.P. ATLAS ACQUISITION CORP., a Delaware corporation (the “Borrower”), which merged with and into AMERICAN RENAL HOLDINGS INC. (the “Company”) on the Closing Date, upon and following which the Borrower became the Company, C.P. ATLAS INTERMEDIATE HOLDINGS, LLC, a Delaware limited liability company (“Holdings”), the Lenders from time to time party thereto, and BANK OF AMERICA, N.A., as Administrative Agent, L/C Issuer and Swing Line Lender.

The undersigned Responsible Officer³ hereby certifies as of the date hereof that he/she is the                                          of the Borrower, and that, as such, he/she is authorized to execute and deliver this Certificate to the Administrative Agent on the behalf of the Borrower, and that:

[Use following paragraph 1 for fiscal year-end financial statements]

1. The Borrower has delivered the year-end audited financial statements required by Section 6.01(a) of the Agreement for the fiscal year of the Borrower ended as of the above date.

[Use following paragraph 1 for fiscal quarter-end financial statements]

1. The Borrower has delivered the unaudited financial statements required by Section 6.01(b) of the Agreement for the fiscal quarter of the Borrower ended as of the above

³ This certificates should be from the chief executive officer, chief financial officer, treasurer or controller of the Borrower.

D - 1

Form of Compliance Certificate

date. Such consolidated financial statements fairly present the financial condition, results of operations and cash flows of the Borrower and its Subsidiaries in accordance with GAAP as at such date and for such period, subject only to normal year-end audit adjustments and the absence of footnotes.

2. The undersigned has reviewed and is familiar with the terms of the Agreement and has made, or has caused to be made under his/her supervision, a detailed review of the transactions and financial condition of the Borrower during the accounting period covered by such financial statements.

3.

[select one:]

[To the best knowledge of the undersigned, during such fiscal period the Borrower performed and observed each covenant and condition of the Loan Documents applicable to it, and no Default has occurred and is continuing.]

—or—

[To the best knowledge of the undersigned, the following covenants or conditions have not been performed or observed and the following is a list of each such Default and its nature and status:]

4. The representations and warranties of the Borrower and Holdings contained in Article V of the Agreement and all representations and warranties of any Loan Party that are contained in any document furnished at any time under or in connection with the Loan Documents, are true and correct on and as of the date hereof, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date, and except that for purposes of this Compliance Certificate, the representations and warranties contained in subsection (a) of Section 5.05 of the Agreement shall be deemed to refer to the most recent quarterly or annual statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01 of the Agreement, including the statements in connection with which this Compliance Certificate is delivered.

5. The financial covenant analyses and information set forth on Schedule 1 attached hereto are true and accurate on and as of the date of this Certificate.

D - 2

Form of Compliance Certificate

IN WITNESS WHEREOF, the undersigned has executed this Certificate as of                     ,         .

AMERICAN RENAL HOLDINGS INC.

By:

Name:

Title:

D - 3

Form of Compliance Certificate

For the Quarter/Year ended                         ,          (“Statement Date”)

SCHEDULE 1

to the Compliance Certificate⁴

($ in 000’s)

I.	Section 7.10 (a) – Consolidated Leverage Ratio.
	A.	Consolidated Net Debt at Statement Date
		1.	The aggregate principal amount of all obligations of the Borrower and its Subsidiaries for borrowed money outstanding as of such date determined on a consolidated basis on the Statement Date:	$
		2.	The aggregate principal amount of all obligations of the Borrower and its Subsidiaries evidenced by bonds, debentures, notes or similar instruments determined on a consolidated basis on the Statement Date:	$
		3.	The aggregate principal amount of all capital lease obligations of the Borrower and its Subsidiaries determined on a consolidated basis on the Statement Date:	$
		4.	The amount of unrestricted cash and cash equivalents held by the Borrower and the Subsidiary Guarantors on the Statement Date:	$
		5.	The amount of unrestricted cash and cash equivalents held on the Statement Date by any Subsidiary that is not a Subsidiary Guarantor, up to, the greater of (x) the aggregate principal amount of Indebtedness of such Subsidiary included in Lines I.A.1, 2 and 3 and (y) the amount of such unrestricted cash and Cash Equivalents of such Subsidiary times the percentage of outstanding Equity Interests in such Subsidiary owned by the Borrower or a Subsidiary Guarantor:	$
		6.	Consolidated Net Debt (Lines I.A.1 + 2 + 3 - 4 -5):	$

⁴ In the event of any inconsistency between (x) the requirements for calculating compliance with any covenant or disclosing information in this Form of Compliance Certificate, and (y) the requirements for calculating compliance with any covenant or disclosing information in the Credit Agreement, the terms of the Credit Agreement shall govern.

D - 4

Form of Compliance Certificate

B.	Consolidated EBITDA for the period of four full fiscal quarters for which internal financial statements are available immediately preceding the date above (“Measurement Period”):
	1.	Consolidated Net Income for Measurement Period:
	2.	Consolidated interest expense of the Borrower and its Subsidiaries for Measurement Period and, to the extent not reflected in such total interest expense, increased by payments made by the Borrower or any Subsidiary in respect of hedging obligations or other derivative instruments entered into for the purpose of hedging interest rate risk, minus any payments received in respect of such hedging obligations or other derivative instruments:	$
	3.	Consolidated tax expense of the Borrower and its Subsidiaries based on income, profits or capital, including state, franchise, capital and similar taxes and withholding taxes paid or accrued for Measurement Period:	$
	4.	All amounts attributable to depreciation and amortization expense of the Borrower and its Subsidiaries for Measurement Period:	$
	5.	Any Non- Cash Charges of the Borrower and its Subsidiaries for Measurement Period:	$
	6.	Costs associated with the Transactions made or incurred by the Borrower and its Subsidiaries in connection with the Transactions for such period that are paid, accrued or reserved for within 365 days of the consummation of the Transactions for Measurement Period:	$
	7.	Without duplication of any Pro Forma Cost Savings, any restructuring charges (including restructuring costs related to acquisitions pursuant to Section 7.03(g) or (i) of the Agreement and to closure or consolidation of facilities) for such period and any “Specified Payments” as defined in Schedule 11.2(a)(vi) to the Purchase Agreement for Measurement Period:	$
	8.	Without duplication of any Pro Forma Cost Savings, any unusual or nonrecurring fees, cash charges and other cash expenses for such period (A) made or incurred by the Borrower and its Subsidiaries in connection with any Investment pursuant to Section 7.03(g) or (i) of the	$

D - 5

Form of Compliance Certificate

	Agreement, including severance, relocation and facilities closing costs, including any earnout payments, whether or not accounted for as such, that are paid, accrued or reserved for within 365 days of such Investment or (B) incurred in connection with the issuance of Equity Interests or Indebtedness by the Borrower and its Subsidiaries for Measurement Period:
9.	Cash expenses incurred the Borrower and its Subsidiaries during such period in connection with an acquisition pursuant to Section 7.03(g) or (i) of the Agreement to the extent that such expenses are reimbursed in cash during such period pursuant to indemnification provisions of any agreement relating to such acquisition for Measurement Period:	$
10.	Annual management fees paid by the Borrower and its Subsidiaries that are permitted to be paid to the Sponsor under Section 7.08(b)(ii) of the Agreement for Measurement Period:	$
11.	Cash expenses incurred by the Borrower and its Subsidiaries during such period in connection with extraordinary casualty events to the extent such expenses are reimbursed in cash to the Borrower and its Subsidiaries by insurance for Measurement Period:	$
12.	The amount of any minority interest expense consisting of Subsidiary income attributable to minority Equity Interests of third parties in any Subsidiary that is not a Wholly-Owned Subsidiary to the extent (and not to exceed the amount of) Indebtedness owed by such Subsidiary is included in the Indebtedness of the Borrower for Measurement Period:	$
13.	Any cash payments made by to the Borrower and its Subsidiaries during such period in respect of Non-Cash Charges described in Line I.B.5 taken in a prior period or taken in Measurement Period:	$
14.	To the extent included in determining Consolidated Net Income, any non-cash items of income of to the Borrower and its Subsidiaries for such period (other than the accrual of revenue or recording of receivables in the ordinary course of business) for Measurement Period:	$
15.	Consolidated EBITDA (Lines I.B.1 + 2 + 3 + 4 + 5 + 6 + 7 + +8 + 9 + 10 + 11 + 12 - 13 - 14):	$

D - 6

Form of Compliance Certificate

	C.	Consolidated Leverage Ratio (Line I.A.6 ÷ Line I.B.15):		to 1
		Consolidated Leverage Ratio is in compliance with Section 7.10(a)? Yes/No
II.	Section 7.10(b) - Fixed Charge Coverage Ratio
	A.	Consolidated EBITDA for Measurement Period:
		1.	Consolidated interest expense and other Fixed Charges (Lines II.B.2, 3, 4, 5, 6, 7, 8 and 9) of the Borrower and its Subsidiaries for such period and, to the extent not reflected in such total interest expense, increased by payments made by the Borrower or any Subsidiary in respect of hedging obligations or other derivative instruments entered into for the purpose of hedging interest rate risk, minus the sum of (x) any payments received in respect of such hedging obligations or other derivative instruments and (y) interest income of the Borrower and its Subsidiaries for Measurement Period.	$
		2.	Consolidated EBITDA for Measurement Period (Line I.B.15 - Line I.B.2 + Line II.A.1)	$
	B.	Fixed Charges for Measurement Period:		$
		1.	The consolidated interest expense of Borrower and its Subsidiaries for such period, net of interest income, whether paid or accrued, including, without limitation, original issue discount, non-cash interest payments, the interest component of all payments associated with capital lease obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings, and net of the effect of all cash payments made or received pursuant to hedging obligations in respect of interest rates for Measurement Period:	$
		2.	Amortization of deferred financing costs for Measurement Period:	$
		3.	Accretion or accrual of discounted liabilities not constituting Indebtedness for Measurement Period:	$

D - 7

Form of Compliance Certificate

	4.	Any expense resulting from the discounting of any Indebtedness in connection with the application of purchase accounting in connection with any acquisition for Measurement Period:	$
	5.	Any expensing of bridge, commitment and other financing fees for Measurement Period:	$
	6.	To the extent included in Fixed Charges, the portion of consolidated interest expenses of the Borrower and its subsidiaries attributable to Indebtedness incurred in connection with the acquisition of discontinued operations for Measurement Period:	$
	7.	Any interest on Indebtedness of another Person (other than the Borrower or any of its Subsidiaries) that is guaranteed by the Borrower or one of its Subsidiaries or secured by a Lien on assets of the Borrower or one of its Subsidiaries, but only to the extent such Guarantee or Lien is called upon for the Measurement Period:	$
	8.	All cash dividends paid on any series of preferred stock of the Borrower or any of its Subsidiaries (other than to the Borrower or any Qualified Subsidiary), in each case, determined on a consolidated basis in accordance with GAAP for Measurement Period:	$
	9.	The current combined federal, state, and local statutory tax rate of the Borrower and its Subsidiaries expressed as a decimal.
	10.	Fixed Charges (Lines II.B.1 - 2 - 3 - 4 -5 - 6 + 7 + (Line II.B.8 * (1 ÷ (1-Line II.B.9)))	$
C.	Consolidated Fixed Charge Coverage Ratio (Line II.B.2 ÷ Line II.B.10):
	Fixed Charge Coverage Ratio is in compliance with Section 7.10(b)? Yes/No

D - 8

Form of Compliance Certificate

EXHIBIT E

ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (this “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between [the][each]⁵ Assignor identified in item 1 below ([the][each, an] “Assignor”) and [the][each]⁶ Assignee identified in item 2 below ([the][each, an] “Assignee”). [It is understood and agreed that the rights and obligations of [the Assignors][the Assignees]⁷ hereunder are several and not joint.]⁸ Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, [the][each] Assignor hereby irrevocably sells and assigns to [the Assignee][the respective Assignees], and [the][each] Assignee hereby irrevocably purchases and assumes from [the Assignor][the respective Assignors], subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of [the Assignor’s][the respective Assignors’] rights and obligations in [its capacity as a Lender][their respective capacities as Lenders] under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of [the Assignor][the respective Assignors] under the facility identified below (including, without limitation, the Letters of Credit and the Swing Line Loans included in such facility) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of [the Assignor (in its capacity as a Lender)][the respective Assignors (in their respective capacities as Lenders)] against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity

⁵ For bracketed language here and elsewhere in this form relating to the Assignor(s), if the assignment is from a single Assignor, choose the first bracketed language. If the assignment is from multiple Assignors, choose the second bracketed language.

⁶ For bracketed language here and elsewhere in this form relating to the Assignee(s), if the assignment is to a single Assignee, choose the first bracketed language. If the assignment is to multiple Assignees, choose the second bracketed language.

⁷ Select as appropriate.

⁸ Include bracketed language if there are either multiple Assignors or multiple Assignees.

E - 1

Form of Assignment and Assumption

related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned by [the][any] Assignor to [the][any] Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively as [the][an] “Assigned Interest”). Each such sale and assignment is without recourse to [the][any] Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by [the][any] Assignor.

1.	Assignor[s]:
2.	Assignee[s]:
	[for each Assignee, indicate [Affiliate][Approved Fund] of [identify Lender]]
3.	Borrower(s):
4.	Administrative Agent: Bank of America, N.A., as the administrative agent under the Credit Agreement
5.	Credit Agreement: Credit Agreement, dated as of May 7, 2010, among C.P. ATLAS ACQUISITION CORP., a Delaware corporation (the “Borrower”), which merged with and into AMERICAN RENAL HOLDINGS INC. (the “Company”) on the Closing Date, upon and following which the Borrower became the Company, C.P. ATLAS INTERMEDIATE HOLDINGS, LLC, a Delaware limited liability company (“Holdings”), the Lenders from time to time party thereto, and BANK OF AMERICA, N.A., as Administrative Agent, L/C Issuer and Swing Line Lender.
6.	Assigned Interest:

Assignor[s]9	Assignee[s]10	Aggregate Amount of Commitment/Loans for all Lenders11	Amount of Commitment/Loans Assigned	Percentage Assigned of Commitment/Loans12		CUSIP Number
		$	$		%
		$	$		%
		$	$		%

[7. Trade Date:                     ]¹³

⁹ List each Assignor, as appropriate.

¹⁰ List each Assignee, as appropriate.

¹¹ Amounts in this column and in the column immediately to the right to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.

¹² Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.

¹³ To be completed if the Assignor and the Assignee intend that the minimum assignment amount is to be determined as of the Trade Date.

E - 2

Form of Assignment and Assumption

Effective Date:                     , 20     [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

ASSIGNOR
[NAME OF ASSIGNOR]
By:
	Name:
	Title:
ASSIGNEE
[NAME OF ASSIGNEE]
By:
	Name:
	Title:

[Consented to and]14 Accepted:
BANK OF AMERICA, N.A., as Administrative Agent[,] [and] Swing Line Lender [and L/C Issuer]
By:
	Name:
	Title:

[Consented to:]¹⁵

¹⁴ To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.

¹⁵ To be added only if the consent of the Borrower and/or other parties (e.g. Swing Line Lender, L/C Issuer) is required by the terms of the Credit Agreement.

E - 3

Form of Assignment and Assumption

By:
	Name:
	Title:

E - 4

Form of Assignment and Assumption

ANNEX 1 TO ASSIGNMENT AND ASSUMPTION

Credit Agreement dated May 7, 2010, among C.P. ATLAS ACQUISITION CORP., a Delaware corporation (the “Borrower”), which merged with and into AMERICAN RENAL HOLDINGS INC. (the “Company”) on the Closing Date, upon and following which the Borrower became the Company, C.P. ATLAS INTERMEDIATE HOLDINGS, LLC, a Delaware limited liability company (“Holdings”), the Lenders from time to time party thereto, and BANK OF AMERICA, N.A., as Administrative Agent, L/C Issuer and Swing Line Lender.

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1. Representations and Warranties.

1.1. Assignor. [The][Each] Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of [the][[the relevant] Assigned Interest, (ii) [the][such] Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

1.2. Assignee. [The][Each] Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all the requirements to be an assignee under Section 11.07(b)(iii), (v) and (vi) of the Credit Agreement (subject to such consents, if any, as may be required under Section 11.07(b)(iii) of the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of [the][the relevant] Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by [the][such] Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire [the][such] Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 6.01(a) or 6.01(b) thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, (vi) it has, independently and without reliance upon the Administrative Agent or any other Lender and

E - 5

Form of Assignment and Assumption

based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, and (vii) if it is a Foreign Lender, attached hereto is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by [the][such] Assignee; and (b) agrees that (i) it will, independently and without reliance upon the Administrative Agent, [the][any] Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

2. Payments. From and after the Effective Date, the Administrative Agent shall make all payments in respect of [the][each] Assigned Interest (including payments of principal, interest, fees and other amounts) to [the][the relevant] Assignor for amounts which have accrued to but excluding the Effective Date and to [the][the relevant] Assignee for amounts which have accrued from and after the Effective Date.

3. General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.

E - 6

Form of Assignment and Assumption

EXHIBIT E-2

FORM OF ADMINISTRATIVE QUESTIONNAIRE

In a form to be agreed by the Lenders.

E-2 - 1

Form of Administrative Questionnaire

EXHIBIT F

FORM OF GUARANTY

F - 1

Form of Guaranty

GUARANTY

FOR VALUE RECEIVED, the sufficiency of which is hereby acknowledged, and in consideration of credit and/or financial accommodation heretofore or hereafter from time to time made or granted to C.P. ATLAS ACQUISITION CORP. (the “Borrower”) which shall be merged with and into AMERICAN RENAL HOLDINGS INC. (the “Company”) on the Closing Date by BANK OF AMERICA, N.A. (the “Administrative Agent”) and the other Secured Parties, the undersigned Guarantors (whether one or more the “Guarantor”, and if more than one jointly and severally) hereby furnishes its guaranty of the Guaranteed Obligations (as hereinafter defined) as set forth below.

Reference is made to that certain Credit Agreement dated as of May 7, 2010 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”) among the Borrower, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, each lender from time to time party thereto (the “Lenders”) and the other parties thereto. Capitalized terms used and not defined herein (including, without limitation, the term “Obligations”, as used in Section 1 and elsewhere herein) are used with the meanings assigned to such terms in the Credit Agreement.

1. Guaranty. The Guarantor hereby absolutely and unconditionally guarantees, as a guaranty of payment and performance and not merely as a guaranty of collection, prompt payment when due, whether at stated maturity, by required prepayment, upon acceleration, demand or otherwise, and at all times thereafter, of any and all of the Obligations whether for principal, interest, premiums, fees, indemnities, damages, costs, expenses or otherwise, of the Borrower to the Secured Parties, and whether arising under the Credit Agreement or under any other Loan Document, or under any Secured Cash Management Agreement or any Secured Hedge Agreement (including all renewals, extensions, amendments, refinancings and other modifications thereof and all costs, attorneys’ fees and expenses incurred by the Secured Parties in connection with the collection or enforcement thereof), and whether recovery upon such indebtedness and liabilities may be or hereafter become unenforceable or shall be an allowed or disallowed claim under any proceeding or case commenced by or against the Guarantor or the Borrower under the Debtor Relief Laws, and including interest that accrues after the commencement by or against the Borrower of any proceeding under any Debtor Relief Laws (collectively, the “Guaranteed Obligations”). The Administrative Agent’s books and records showing the amount of the Guaranteed Obligations shall be admissible in evidence in any action or proceeding, and shall be binding upon the Guarantor for the purpose of establishing the amount of the Guaranteed Obligations and conclusive absent manifest error. This Guaranty shall not be affected by the genuineness, validity, regularity or enforceability of the Guaranteed Obligations or any instrument or agreement evidencing any Guaranteed Obligations, or by the existence, validity, enforceability, perfection, non-perfection or extent of any collateral therefor, or by any fact or circumstance relating to the Guaranteed Obligations which might otherwise constitute a defense (other than a defense of payment in full of the Guaranteed Obligations) to the obligations of the Guarantor under this Guaranty, and the Guarantor hereby irrevocably waives any defenses it may now have or hereafter acquire in any way relating to any or all of the foregoing.

2. Rights of Lenders. The Guarantor consents and agrees that the Secured Parties may, at any time and from time to time, without notice or demand, and without affecting the enforceability or continuing effectiveness hereof: (a) amend, extend, renew, compromise, discharge, accelerate or otherwise change the time for payment or the terms of the Guaranteed Obligations or any part thereof; (b) take, hold, exchange, enforce, waive, release, fail to perfect, sell, or otherwise dispose of any security for the payment of this Guaranty or any Guaranteed Obligations; (c) apply such security and direct the order or manner of sale thereof as the Administrative Agent, the L/C Issuer and the Lenders in their sole discretion may determine; and (d) release or substitute one or more of any endorsers or other guarantors of any of the Guaranteed Obligations. Without limiting the generality of the foregoing, the Guarantor consents to the taking of, or failure to take, any action which might in any manner or to any extent vary the risks of the Guarantor under this Guaranty or which, but for this provision, might operate as a discharge of the Guarantor.

3. Certain Waivers. The Guarantor waives (a) any defense arising by reason of any disability or other defense of the Borrower or any other guarantor, or the cessation from any cause whatsoever (including any act or omission of any Secured Party) of the liability of the Borrower; (b) any defense based on any claim that the Guarantor’s obligations exceed or are more burdensome than those of the Borrower; (c) the benefit of any statute of limitations affecting the Guarantor’s liability hereunder; (d) any right to proceed against the Borrower, proceed against or exhaust any security for the Guaranteed Obligations, or pursue any other remedy in the power of any Secured Party whatsoever; (e) any benefit of and any right to participate in any security now or hereafter held by any Secured Party; and (f) to the fullest extent permitted by law, any and all other defenses or benefits that may be derived from or afforded by applicable law limiting the liability of or exonerating guarantors or sureties. The Guarantor expressly waives all setoffs and counterclaims and all presentments, demands for payment or performance, notices of nonpayment or nonperformance, protests, notices of protest, notices of dishonor and all other notices or demands of any kind or nature whatsoever with respect to the Guaranteed Obligations, and all notices of acceptance of this Guaranty or of the existence, creation or incurrence of new or additional Guaranteed Obligations.

4. Obligations Independent. The obligations of the Guarantor hereunder are those of primary obligor, and not merely as surety, and are independent of the Guaranteed Obligations and the obligations of any other guarantor, and a separate action may be brought against the Guarantor to enforce this Guaranty whether or not the Borrower or any other person or entity is joined as a party.

5. Subrogation. The Guarantor shall not exercise any right of subrogation, contribution, indemnity, reimbursement or similar rights with respect to any payments it makes under this Guaranty until all of the Guaranteed Obligations and any amounts payable under this Guaranty (other than obligations and liabilities under Secured Cash Management Agreements and Secured Hedge Agreements) have been paid and performed in full in cash and the Commitments and the Facility are terminated. If any amounts are paid to the Guarantor in violation of the foregoing limitation, then such amounts shall be held in trust for the benefit of the Secured Parties and shall forthwith be paid to the Secured Parties to reduce the amount of the Guaranteed Obligations, whether matured or unmatured.

6. Termination; Reinstatement. This Guaranty is a continuing and irrevocable guaranty of all Guaranteed Obligations now or hereafter existing and shall remain in full force and effect until all Guaranteed Obligations and any other amounts payable under this Guaranty (other than obligations and liabilities under Secured Cash management Agreements and Secured Hedge Agreements) are paid in full in cash and the Commitments are terminated. Notwithstanding the foregoing, this Guaranty shall continue in full force and effect or be revived, as the case may be, if any payment by or on behalf of the Borrower or the Guarantor is made, or any of the Secured Parties exercises its right of setoff, in respect of the Guaranteed Obligations and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by any of the Secured Parties in their discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Laws or otherwise, all as if such payment had not been made or such setoff had not occurred and whether or not the Secured Parties are in possession of or have released this Guaranty and regardless of any prior revocation, rescission, termination or reduction. The obligations of the Guarantor under this paragraph shall survive termination of this Guaranty.

7. Subordination. The Guarantor hereby subordinates the payment of all obligations and indebtedness of the Borrower owing to the Guarantor, whether now existing or hereafter arising, including but not limited to any obligation of the Borrower to the Guarantor as subrogee of the Secured Parties or resulting from the Guarantor’s performance under this Guaranty, to the payment in full in cash of all Guaranteed Obligations (other than obligations and liabilities under Secured Cash Management Agreements and Secured Hedge Agreements). If the Secured Parties so request, any such obligation or indebtedness of the Borrower to the Guarantor shall be enforced and performance received by the Guarantor as trustee for the Secured Parties and the proceeds thereof shall be paid over to the Secured Parties on account of the Guaranteed Obligations, but without reducing or affecting in any manner the liability of the Guarantor under this Guaranty.

8. Stay of Acceleration. In the event that acceleration of the time for payment of any of the Guaranteed Obligations is stayed, in connection with any case commenced by or against the Guarantor or the Borrower under any Debtor Relief Laws, or otherwise, all such amounts shall nonetheless be payable by the Guarantor immediately upon demand by the Secured Parties.

9. Expenses. The Guarantor shall pay all reasonable and invoiced out-of-pocket expenses incurred by the Administrative Agent, any Lender or the L/C Issuer (including the reasonable and invoiced fees, charges and disbursements of any one counsel for the Administrative Agent, any Lender or the L/C Issuer, taken as a whole, and, if necessary, of one local counsel in any jurisdiction and one regulatory counsel in any jurisdiction), in connection with the enforcement or protection of its rights under this Guaranty. The agreements in this paragraph shall survive the resignation of the Administrative Agent, the L/C Issuer and the Swing Line Lender, the replacement of any Lender, the termination of the Guaranty and the repayment, satisfaction or discharge of all the other Guaranteed Obligations

10. Miscellaneous. No provision of this Guaranty may be waived, amended, supplemented or modified, except by a written instrument executed by the Administrative Agent

and the Guarantor (with the consent of the Lenders or the Required Lenders if required under the Credit Agreement). No failure by Administrative Agent to exercise, and no delay in exercising, any right, remedy or power hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy or power hereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies herein provided are cumulative and not exclusive of any remedies provided by law or in equity. The unenforceability or invalidity of any provision of this Guaranty shall not affect the enforceability or validity of any other provision herein. Unless otherwise agreed by the Administrative Agent and the Guarantor in writing, this Guaranty is not intended to supersede or otherwise affect any other guaranty now or hereafter given by the Guarantor for the benefit of the Secured Parties or any term or provision thereof.

11. Guarantor Supplements. Upon the execution and delivery by any Person of a Guaranty Supplement substantially in the form attached hereto as Exhibit A (a “Guarantor Supplement”), (a) such Person shall be referred to as an “Additional Guarantor” and shall become and be a Guarantor hereunder, and each reference in this Guaranty to a “Guarantor” shall also mean and be a reference to such Additional Guarantor, and each reference in any other Loan Document to a “Guarantor” shall also mean and be a reference to such Additional Guarantor, and (b) each reference herein to “this Guaranty”, “hereunder”, “hereof” or words of like import referring to this Guaranty, and each reference in any other Loan Document to the “Guaranty”, “thereunder”, “thereof” or words of like import referring to this Guaranty, shall mean and be a reference to this Guaranty as supplemented by such Guaranty Supplement.

12. Other Guarantors. To the extent that any Guarantor shall be required hereunder to pay a portion of the Guaranteed Obligations exceeding the greater of (a) the amount of the economic benefit actually received by such Guarantor from the Loans and (b) the amount such Guarantor would otherwise have paid if such Guarantor had paid the aggregate amount of the Guaranteed Obligations (excluding the amount thereof repaid by the Borrower) in the same proportion as such Guarantor’s net worth at the date enforcement is sought hereunder bears to the aggregate net worth of all the Guarantors (taken together with the aggregate net worth of all other “Guarantors” (as such term is defined in the Credit Agreement) obligated with respect to the Guaranteed Obligations (the “Other Guarantors”)) at the date of enforcement is sought hereunder, then each Other Guarantor shall reimburse such other Guarantors for the amount of such excess, pro rata, based on the respective net worths of such Other Guarantors at the date enforcement hereunder is sought.

13. Condition of Borrower. The Guarantor acknowledges and agrees that it has the sole responsibility for, and has adequate means of, obtaining from the Borrower and any other guarantor such information concerning the financial condition, business and operations of the Borrower and any such other guarantor as the Guarantor requires, and that none of the Secured Parties has any duty, and the Guarantor is not relying on the Secured Parties at any time, to disclose to the Guarantor any information relating to the business, operations or financial condition of the Borrower or any other guarantor (the Guarantor waiving any duty on the part of the Secured Parties to disclose such information and any defense relating to the failure to provide the same).

14. Setoff. If and to the extent any payment is not made when due hereunder, the Administrative Agent may setoff and charge from time to time any amount so due against any or all of the Guarantor’s accounts or deposits with the Administrative Agent.

15. Representations and Warranties. Each of the representations set forth in Credit Agreement set forth in Sections 5.01, 5.02, 5.03 and 5.04 of the Credit Agreement, insofar as they relate directly to any Guarantor, are true and correct in all material respects on and as of the Closing Date with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date.

16. Indemnification and Survival. Without limitation on any other obligations of the Guarantor or remedies of the Administrative Agent under this Guaranty, the Guarantor shall, to the fullest extent permitted by law, indemnify, defend and save and hold harmless the Secured Parties from and against, and shall pay on demand, any and all damages, losses, liabilities and expenses (including attorneys’ fees and expenses and the allocated cost and disbursements of internal legal counsel) that may be suffered or incurred by the Secured Parties in connection with or as a result of any failure of any Guaranteed Obligations to be the legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with their terms. The obligations of the Guarantor under this paragraph shall survive the payment in full of the Guaranteed Obligations and termination of this Guaranty.

17. GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

18. SUBMISSION TO JURISDICTION. THE GUARANTOR IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS GUARANTY SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, ANY LENDER OR THE L/C ISSUER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS GUARANTY AGAINST THE GUARANTOR OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

19. WAIVER OF VENUE. THE GUARANTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY

APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY IN ANY COURT REFERRED TO IN SECTION 18. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

20. SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.02 OF THE CREDIT AGREEMENT. NOTHING IN THIS GUARANTY WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

21. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS GUARANTY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

Executed as of the date first written above.

AMERICAN RENAL ASSOCIATES LLC
	By: AMERICAN RENAL HOLDINGS INC.
By:	/s/ Joseph A. Carlucci
	Name:    Joseph A. Carlucci
	Title:      Chief Executive Officer
AMERICAN RENAL MANAGEMENT LLC
AKC HOLDING LLC
JKC HOLDING LLC
ARA-BOCA RATON HOLDING LLC
ARA-RHODE ISLAND DIALYSIS II LLC
ARA-OHIO HOLDINGS LLC
TEXAS-ARA LLC
ACUTE DIALYSIS SERVICES-ARA LLC,
	By: AMERICAN RENAL ASSOCIATES LLC
By:	/s/ Joseph A. Carlucci
	Name:    Joseph A. Carlucci
	Title:      Chief Executive Officer
AMERICAN RENAL TEXAS L.P.
AMERICAN RENAL TEXAS II, L.P.
	By: TEXAS-ARA LLC
By:	/s/ Joseph A. Carlucci
	Name:    Joseph A. Carlucci
	Title:      Chief Executive Officer

Accepted and Agreed:
BANK OF AMERICA, N.A, as Administrative Agent
By:	/s/ Willam S. Cessna
	Name:        William S. Cessna
	Title:          Vice President

EXHIBIT G

FORM OF SECURITY AGREEMENT

G - 1

Form of Security Agreement

SECURITY AGREEMENT

By

C.P. ATLAS ACQUISITION CORP.

(to be merged with and into AMERICAN RENAL HOLDINGS INC.),

as Borrower

and

THE GUARANTORS PARTY HERETO

and

BANK OF AMERICA, N.A.,

as Administrative Agent

Dated as of May 7, 2010

TABLE OF CONTENTS

		Page
PREAMBLE			1
RECITALS			1
AGREEMENT			2
ARTICLE I DEFINITIONS AND INTERPRETATION
SECTION 1.1.	Definitions		2
SECTION 1.2.	Interpretation		8
ARTICLE II GRANT OF SECURITY AND OBLIGATIONS
SECTION 2.1.	Grant of Security Interest		8
SECTION 2.2.	Filings		10
ARTICLE III PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES; USE OF PLEDGED COLLATERAL
SECTION 3.1.	Delivery of Certificated Securities Collateral		10
SECTION 3.2.	Perfection of Uncertificated Securities Collateral		11
SECTION 3.3.	Financing Statements and Other Filings; Maintenance of Perfected Security Interest		11
SECTION 3.4.	Other Actions		11
SECTION 3.5.	Joinder of Additional Guarantors		15
SECTION 3.6.	Supplements; Further Assurances		15
ARTICLE IV REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 4.1.	Title		15
SECTION 4.2.	Validity of Security Interest		16
SECTION 4.3.	Defense of Claims; Transferability of Pledged Collateral		16
SECTION 4.4.	Other Financing Statements		16
SECTION 4.5.	Location of Inventory and Equipment.		17
SECTION 4.6.	Due Authorization and Issuance		17

-i-

		Page
SECTION 4.7.	Consents, etc.		17
SECTION 4.8.	Pledged Collateral		17
SECTION 4.9.	Insurance		17
ARTICLE V CERTAIN PROVISIONS CONCERNING SECURITIES COLLATERAL
SECTION 5.1.	Pledge of Additional Securities Collateral		17
SECTION 5.2.	Voting Rights; Distributions; etc.		18
SECTION 5.3.	Certain Agreements of Pledgors as Issuers and Holders of Equity Interests		19
ARTICLE VI CERTAIN PROVISIONS CONCERNING INTELLECTUAL PROPERTY COLLATERAL
SECTION 6.1.	Grant of Intellectual Property License		20
SECTION 6.2.	Protection of Administrative Agent’s Security		20
SECTION 6.3.	After-Acquired Property		21
SECTION 6.4.	Litigation		21
SECTION 6.5.	Permitted Disposal of Intellectual Property Collateral		21
ARTICLE VII CERTAIN PROVISIONS CONCERNING RECEIVABLES
SECTION 7.1.	Maintenance of Records		22
SECTION 7.2.	Legend		22
ARTICLE VIII TRANSFERS
SECTION 8.1.	Transfers of Pledged Collateral		22
ARTICLE IX REMEDIES
SECTION 9.1.	Remedies		22
SECTION 9.2.	Notice of Sale		24
SECTION 9.3.	Waiver of Notice and Claims		24
SECTION 9.4.	Certain Sales of Pledged Collateral		25
SECTION 9.5.	No Waiver; Cumulative Remedies		26
SECTION 9.6.	Certain Additional Actions Regarding Intellectual Property		27

-ii-

		Page
ARTICLE X APPLICATION OF PROCEEDS
SECTION 10.1.	Application of Proceeds		27
ARTICLE XI MISCELLANEOUS
SECTION 11.1.	Concerning Administrative Agent		27
SECTION 11.2.	Intercreditor Agreement		29
SECTION 11.3.	Administrative Agent May Perform; Administrative Agent Appointed Attorney-in-Fact		29
SECTION 11.4.	Continuing Security Interest; Assignment		29
SECTION 11.5.	Termination; Release		30
SECTION 11.6.	Modification in Writing		30
SECTION 11.7.	Notices		31
SECTION 11.8.	Governing Law, Consent to Jurisdiction and Service of Process; Waiver of Jury Trial		31
SECTION 11.9.	Severability of Provisions		31
SECTION 11.10.	Execution in Counterparts		31
SECTION 11.11.	Business Days		31
SECTION 11.12.	No Credit for Payment of Taxes or Imposition		31
SECTION 11.13.	No Claims Against Administrative Agent		31
SECTION 11.14.	No Release		32
SECTION 11.15.	Obligations Absolute		32
SIGNATURES			S-1

-iii-

EXHIBIT 1 EXHIBIT 2 EXHIBIT 3 EXHIBIT 4 EXHIBIT 5 EXHIBIT 6 Form of Issuer’s Acknowledgment Form of Securities Pledge Amendment Form of Security Agreement Supplement Form of Copyright Security Agreement Form of Patent Security Agreement Form of Trademark Security Agreement

-iv-

SECURITY AGREEMENT

This SECURITY AGREEMENT dated as of May 7, 2010 (as amended, amended and restated, supplemented or otherwise modified from time to time in accordance with the provisions hereof and the Credit Agreement (as defined below), this “Agreement”) made by C.P. ATLAS ACQUISITION CORP., a Delaware corporation (which on the Closing Date shall be merged with and into AMERICAN RENAL HOLDINGS INC., a Delaware corporation (the “Company”), with the Company surviving such merger as the borrower, the “Borrower”), and the Guarantors from to time to time party hereto (the “Guarantors”), as pledgors, assignors and debtors (the Borrower, together with the Guarantors, in such capacities and together with any successors in such capacities, the “Pledgors,” and each, a “Pledgor”), in favor of BANK OF AMERICA, N.A., in its capacity as Administrative Agent pursuant to the Credit Agreement, as pledgee, assignee and secured party (in such capacities and together with any successors in such capacities, the “Administrative Agent”).

R E C I T A L S :

A. The Borrower, the Guarantors, the Administrative Agent and the lending institutions party to the Credit Agreement (as defined below) have, in connection with the execution and delivery of this Agreement, entered into that certain credit agreement, dated as of May 7, 2010 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”).

B. Each Guarantor has, pursuant to the Guaranty, unconditionally guaranteed the Obligations.

C. The Borrower and each Guarantor will receive substantial benefits from the extensions of credit to be made to the Borrower under the Credit Agreement and the other Loan Documents and each is, therefore, willing to enter into this Agreement.

D. This Agreement is given by each Pledgor in favor of the Administrative Agent for the benefit of the Secured Parties to secure the payment and performance of all of the Obligations.

E. It is a condition to (i) the obligations of the Lenders to make the Loans under the Credit Agreement, (ii) the obligations of the L/C Issuer to issue Letters of Credit and (iii) the performance of the obligations of the Secured Parties under Secured Hedging Agreements and Secured Cash Management Agreements that each Pledgor execute and deliver the applicable Loan Documents, including this Agreement.

F. In order to secure the obligations under the Senior Secured Notes (as hereinafter defined), the Pledgors have granted to the Notes Collateral Agent (as hereinafter defined) for the benefit of the holders of the Senior Secured Notes and certain other secured parties, a first priority security interest (subject to certain priorities upon realization of any value from the Pledged Collateral as set forth in the Intercreditor Agreement).

A G R E E M E N T :

NOW THEREFORE, in consideration of the foregoing premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Pledgor and the Administrative Agent hereby agree as follows:

ARTICLE I

DEFINITIONS AND INTERPRETATION

SECTION 1.1. Definitions.

(a) Unless otherwise defined herein or in the Credit Agreement, capitalized terms used herein that are defined in the UCC shall have the meanings assigned to them in the UCC; provided that in any event, the following terms shall have the meanings assigned to them in the UCC:

“Accounts”; “Bank”; “Chattel Paper”; “Commercial Tort Claim”; “Commodity Account”; “Commodity Contract”; “Commodity Intermediary”; “Documents”; “Electronic Chattel Paper”; “Entitlement Order”; “Equipment”; “Financial Asset”; “Fixtures”; “General Intangibles”, “Goods”, “Inventory”; “Letter-of-Credit Rights”; “Letters of Credit”; “Money”; “Payment Intangibles”; “Proceeds”; “ Records”; “Securities Account”; “Securities Intermediary”; “Security Entitlement”; “Supporting Obligations”; and “Tangible Chattel Paper.”

(b) Terms used but not otherwise defined herein that are defined in the Credit Agreement shall have the meanings given to them in the Credit Agreement.

(c) The following terms shall have the following meanings:

“Account Debtor” shall mean each person who is obligated on a Receivable or Supporting Obligation related thereto.

“Agreement” shall have the meaning assigned to such term in the Preamble hereof.

“Borrower” shall have the meaning assigned to such term in the Preamble hereof.

“Collateral Support” shall mean all property (real or personal) assigned, hypothecated or otherwise securing any Pledged Collateral and shall include any security agreement or other agreement granting a lien or security interest in such real or personal property.

“Commodity Account Control Agreement” shall mean a control agreement in a form that is reasonably satisfactory to the Administrative Agent establishing the Administrative Agent’s Control with respect to any Commodity Account.

-2-

“Contracts” shall mean, collectively, with respect to each Pledgor, the Related Documents, all sale, service, performance, equipment or property lease contracts, agreements and grants and all other contracts, agreements or grants (in each case, whether written or oral, or third party or intercompany), between such Pledgor and any third party, and all assignments, amendments, restatements, supplements, extensions, renewals, replacements or modifications thereof.

“Control” shall mean (i) in the case of each Deposit Account, “control,” as such term is defined in Section 9-104 of the UCC, (ii) in the case of any Security Entitlement, “control,” as such term is defined in Section 8-106 of the UCC, and (iii) in the case of any Commodity Contract, “control,” as such term is defined in Section 9-106 of the UCC.

“Control Agreements” shall mean, collectively, the Deposit Account Control Agreements, the Securities Account Control Agreements and the Commodity Account Control Agreements.

“Copyright Security Agreement” shall mean an agreement substantially in the form of Exhibit 4 hereto.

“Copyrights” shall mean, collectively, with respect to each Pledgor, all copyrights (whether statutory or common law, whether established or registered in the United States or any other country or any political subdivision thereof, whether registered or unregistered and whether published or unpublished) and all copyright registrations and applications made by such Pledgor, in each case, whether now owned or hereafter created or acquired by or assigned to such Pledgor, together with any and all (i) rights and privileges arising under applicable law with respect to such Pledgor’s use of such copyrights, (ii) reissues, renewals, continuations and extensions thereof and amendments thereto, (iii) income, fees, royalties, damages, claims and payments now or hereafter due and/or payable with respect thereto, including damages and payments for past, present or future infringements thereof, (iv) rights corresponding thereto throughout the world and (v) rights to sue for past, present or future infringements thereof.

“Credit Agreement” shall have the meaning assigned to such term in Recital A hereof.

“Deposit Account Control Agreement” shall mean a control agreement in a form that is reasonably satisfactory to the Administrative Agent establishing the Administrative Agent’s Control with respect to any Deposit Account.

“Deposit Accounts” shall mean, collectively, with respect to each Pledgor, (i) all “deposit accounts” as such term is defined in the UCC and all accounts and sub-accounts relating to any of the foregoing accounts and (ii) all cash, funds, checks, notes and instruments from time to time on deposit in any of the accounts or sub-accounts described in clause (i) of this definition.

“Distributions” shall mean, collectively, with respect to each Pledgor, all dividends, cash, options, warrants, rights, instruments, distributions, returns of capital or principal, income, interest, profits and other property, interests (debt or equity) or proceeds, including as a result of a split, revision, reclassification or other like change of the Pledged Securities, from time to time received, receivable or otherwise distributed to such Pledgor in respect of or in exchange for any or all of the Pledged Securities or Intercompany Notes.

-3-

“Excluded Deposit Accounts” means (1) any deposit accounts specially and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of the Borrower’s or any Guarantor’s employees, (2) any Deposit Account of any Pledgor into which proceeds from any receivables in respect of participation in federal and state healthcare programs, including the Medicare or Medicaid programs, are paid into, so long as the balance of such Deposit Account is swept at the end of each Business Day into a Deposit Account subject to a Control Agreement and (3) any deposit account specially and exclusively used to hold cash deposits required to be held in escrow, and which by terms of the agreement creating the escrow obligations shall not be subject to any other Liens.

“Excluded Property” means:

(i) any rights or interests in any permit, license, lease or contract entered into by the Borrower or any Guarantor (A) that prohibits, or requires the consent of any Person other than the Borrower and its Affiliates which has not been obtained as a condition to, the creation by the Borrower or the applicable Guarantor of a Lien on any right, title or interest in such permit, license, lease or contract or (B) to the extent that any requirement of law applicable thereto prohibits the creation of a Lien thereon, but only, with respect to the prohibition in clauses (A) and (B), to the extent, and for as long as, such prohibition is not terminated or rendered unenforceable or otherwise deemed ineffective by the Uniform Commercial Code, any other requirement of law or principles of equity;

(ii) the Equity Interests of and other assets of Persons that are not Wholly Owned Subsidiaries to the extent and for so long as the granting of security interests in such Equity Interests and assets would be prohibited by a shareholders agreement or similar contract governing such Persons to the extent, and for as long as, such prohibition is not terminated or rendered unenforceable or otherwise deemed ineffective by the Uniform Commercial Code, any other requirement of law or principles of equity;

(iii) property owned by the Borrower or any Guarantor that is subject to a Lien permitted by Section 7.01(i) of the Credit Agreement if the contractual obligation pursuant to which such Lien is granted (or in the document providing for such Lien) prohibits or requires the consent of any Person other than the Borrower and its Affiliates which has not been obtained as a condition to the creation of any other Lien on such item of property;

(iv) motor vehicles and other assets subject to certificates of title to the extent a Lien thereon cannot be perfected by the filing of UCC financing statements in the grantor’s jurisdiction of organization;

(v) any Equity Interests consisting of voting stock in any CFC directly owned by the Borrower or any Guarantor in excess of 66% of the outstanding voting stock of such CFC;

-4-

(vi) any “intent-to-use” application for registration of a trademark filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. Section 1051, prior to the filing of a “Statement of Use” pursuant to Section 1(d) of the Lanham Act or an “Amendment to Allege Use” pursuant to Section 1(c) of the Lanham Act with respect thereto, solely to the extent, if any, that, and solely during the period, if any, in which, the grant of a security interest therein would impair the validity or enforceability of any registration that issues from such intent-to-use application under applicable federal law;

(vii) Excluded Deposit Accounts; and

(viii) those assets as to which the Administrative Agent and the Borrower reasonably agree that the cost of obtaining such a security interest or perfection thereof is excessive in relation to the benefit to the lenders under the Credit Agreement of the security to be afforded thereby.

;provided, however, that Excluded Property shall not include any Proceeds, substitutions or replacements of any Excluded Property referred to in clauses (i) through (viii) (unless such Proceeds, substitutions or replacements would constitute Excluded Property referred to in clauses (i) through (viii)).

“Goodwill” shall mean, collectively, with respect to each Pledgor, the goodwill connected with such Pledgor’s business including all goodwill connected with (i) the use of and symbolized by any Trademark owned by such Pledgor and (ii) all know-how, trade secrets, customer and supplier lists, proprietary information, inventions, methods, procedures, formulae, descriptions, compositions, technical data, drawings, specifications, nameplates, catalogs, confidential information and the right to limit the use or disclosure thereof by any person, pricing and cost information, business and marketing plans and proposals and such other assets which relate to such goodwill.

“Guarantors” shall have the meaning assigned to such term in the Preamble hereof.

“Instruments” shall mean, collectively, with respect to each Pledgor, all “instruments,” as such term is defined in Article 9, rather than Article 3, of the UCC, and shall include all promissory notes, drafts, bills of exchange or acceptances.

“Intellectual Property Collateral” shall mean, collectively, the Patents, Trademarks, Copyrights, Intellectual Property Licenses and Goodwill.

“Intellectual Property Licenses” shall mean, collectively, with respect to each Pledgor, all written license agreements with, and covenants not to sue, any other party with respect to any Patent, Trademark or Copyright or any other patent, trademark or copyright, whether such Pledgor is a licensor or licensee under any such license agreement, together with any and all (i) renewals, extensions, supplements and continuations thereof, (ii) income, fees, royalties, damages, claims and payments now and hereafter due and/or payable thereunder and with respect thereto including damages and payments for past, present or future infringements or violations thereof, (iii) rights to sue for past, present and future infringements or violations thereof and (iv) other rights to use, exploit or practice any or all of the Patents, Trademarks or Copyrights or any other patent, trademark or copyright.

-5-

“Intercompany Notes” shall mean, with respect to each Pledgor, all intercompany notes described in Schedule 8 to the Perfection Certificate and intercompany notes hereafter acquired by such Pledgor and all certificates, instruments or agreements evidencing such intercompany notes, and all assignments, amendments, restatements, supplements, extensions, renewals, replacements or modifications thereof to the extent permitted pursuant to the terms hereof, and in each case, required to be pledged hereunder.

“Intercreditor Agreement” means that certain intercreditor agreement dated the Closing Date (as amended, modified, supplemented or restated and in effect from time to time in accordance with the terms thereof and the Credit Agreement), among the Borrower, the Administrative Agent and the Notes Collateral Agent, and acknowledged by the Pledgors.

“Investment Property” shall mean a security, whether certificated or uncertificated, Security Entitlement, Securities Account, Commodity Contract or Commodity Account, excluding, however, the Securities Collateral.

“Material Intellectual Property Collateral” shall mean any Intellectual Property Collateral that is material (i) to the use and operation of the Pledged Collateral or Mortgaged Property or (ii) to the business, results of operations or financial condition of any Pledgor.

“Mortgaged Property” shall have the meaning assigned to such term in the Mortgages.

“Notes Collateral Agent” shall mean Wilmington Trust FSB, as collateral agent with respect to the obligations under the Senior Secured Notes.

“Patent Security Agreement” shall mean an agreement substantially in the form of Exhibit 5 hereto.

“Patents” shall mean, collectively, with respect to each Pledgor, all patents issued or assigned to, and all patent applications and registrations made by, such Pledgor (whether established or registered or recorded in the United States or any other country or any political subdivision thereof), together with any and all (i) rights and privileges arising under applicable law with respect to such Pledgor’s use of any patents, (ii) inventions and improvements described and claimed therein, (iii) reissues, divisions, continuations, renewals, extensions and continuations-in-part thereof and amendments thereto, (iv) income, fees, royalties, damages, claims and payments now or hereafter due and/or payable thereunder and with respect thereto including damages and payments for past, present or future infringements thereof, (v) rights corresponding thereto throughout the world and (vi) rights to sue for past, present or future infringements thereof.

“Perfection Certificate” shall mean that certain perfection certificate dated May 7, 2010, executed and delivered by each Pledgor in favor of the Administrative Agent for the benefit of the Secured Parties, and each other Perfection Certificate (which shall be in form and

-6-

substance reasonably acceptable to the Administrative Agent) executed and delivered by the applicable Guarantor in favor of the Administrative Agent for the benefit of the Secured Parties contemporaneously with the execution and delivery of each Security Agreement Supplement executed in accordance with Section 3.5 hereof, in each case, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time.

“Permitted Liens” shall have the meaning assigned to such term in Section 3.3 hereof.

“Pledge Amendment” shall have the meaning assigned to such term in Section 5.1 hereof.

“Pledged Collateral” shall have the meaning assigned to such term in Section 2.1 hereof.

“Pledged Securities” shall mean, collectively, with respect to each Pledgor, (i) all issued and outstanding Equity Interests of each issuer set forth on Schedules 7(a) and 7(b) to the Perfection Certificate as being owned by such Pledgor and all options, warrants, rights, agreements and additional Equity Interests of whatever class of any such issuer acquired by such Pledgor (including by issuance), together with all rights, privileges, authority and powers of such Pledgor relating to such Equity Interests in each such issuer or under any Organization Document of each such issuer, and the certificates, instruments and agreements representing such Equity Interests and any and all interest of such Pledgor in the entries on the books of any financial intermediary pertaining to such Equity Interests, (ii) all Equity Interests of any issuer, which Equity Interests are hereafter acquired by such Pledgor (including by issuance) and all options, warrants, rights, agreements and additional Equity Interests of whatever class of any such issuer acquired by such Pledgor (including by issuance), together with all rights, privileges, authority and powers of such Pledgor relating to such Equity Interests or under any Organization Document of any such issuer, and the certificates, instruments and agreements representing such Equity Interests and any and all interest of such Pledgor in the entries on the books of any financial intermediary pertaining to such Equity Interests, from time to time acquired by such Pledgor in any manner, and (iii) all Equity Interests issued in respect of the Equity Interests referred to in clause (i) or (ii) upon any consolidation or merger of any issuer of such Equity Interests, and in the case of clauses (i), (ii) and (iii), required to be pledged hereunder.

“Pledgor” shall have the meaning assigned to such term in the Preamble hereof.

“Receivables” shall mean all (i) Accounts, (ii) Chattel Paper, (iii) Payment Intangibles, (iv) General Intangibles, (v) Instruments and (vi) all other rights to payment, whether or not earned by performance, for goods or other property sold, leased, licensed, assigned or otherwise disposed of, or services rendered or to be rendered, regardless of how classified under the UCC together with all of Pledgors’ rights, if any, in any goods or other property giving rise to such right to payment and all Collateral Support and Supporting Obligations related thereto and all Records relating thereto.

-7-

“Securities Account Control Agreement” shall mean a control agreement in a form that is reasonably satisfactory to the Administrative Agent establishing the Administrative Agent’s Control with respect to any Securities Account.

“Securities Collateral” shall mean, collectively, the Pledged Securities, the Intercompany Notes and the Distributions.

“Security Agreement Supplement” shall mean an agreement substantially in the form of Exhibit 3 hereto.

“Trademark Security Agreement” shall mean an agreement substantially in the form of Exhibit 6 hereto.

“Trademarks” shall mean, collectively, with respect to each Pledgor, all trademarks (including service marks), slogans, logos, certification marks, trade dress, uniform resource locators (URLs), domain names, corporate names and trade names, whether registered or unregistered, owned by or assigned to such Pledgor and all registrations and applications for the foregoing (whether statutory or common law and whether established or registered in the United States or any other country or any political subdivision thereof), together with any and all (i) rights and privileges arising under applicable law with respect to such Pledgor’s use of any trademarks, (ii) reissues, continuations, extensions and renewals thereof and amendments thereto, (iii) income, fees, royalties, damages and payments now and hereafter due and/or payable thereunder and with respect thereto, including damages, claims and payments for past, present or future infringements thereof, (iv) rights corresponding thereto throughout the world and (v) rights to sue for past, present and future infringements thereof.

“UCC” shall mean the Uniform Commercial Code as in effect from time to time in the State of New York; provided, however, that, at any time, if by reason of mandatory provisions of law, any or all of the perfection or priority of the Administrative Agent’s and the Secured Parties’ security interest in any item or portion of the Pledged Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial Code as in effect, at such time, in such other jurisdiction for purposes of the provisions hereof relating to such perfection or priority and for purposes of definitions relating to such provisions.

“Voting Equity Interests” of any Person shall mean all classes of Equity Interests of such Person entitled to vote.

SECTION 1.2. Interpretation. The rules of interpretation specified in the Credit Agreement (including Section 1.02 thereof) shall be applicable to this Agreement.

ARTICLE II

GRANT OF SECURITY AND OBLIGATIONS

SECTION 2.1. Grant of Security Interest. As collateral security for the payment and performance in full of all the Obligations, each Pledgor hereby pledges and grants

-8-

to the Administrative Agent for the benefit of the Secured Parties, a lien on and security interest in all of the right, title and interest of such Pledgor in, to and under the following property, wherever located, and whether now existing or hereafter arising or acquired from time to time (collectively, the “Pledged Collateral”):

(i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii)

all Accounts; all Equipment, Goods, Inventory and Fixtures; all Documents, Instruments and Chattel Paper; all Letters of Credit and Letter-of-Credit Rights; all Securities Collateral; all Investment Property; all Intellectual Property Collateral; the Commercial Tort Claims described on Schedule 10 to the Perfection Certificate; all General Intangibles; all Money and all Deposit Accounts; all Supporting Obligations; all books and records relating to the Pledged Collateral; and

(xiii)

to the extent not covered by clauses (i) through (xii) of this sentence, all other personal property of such Pledgor, whether tangible or intangible, and all Proceeds and products of each of the foregoing and all accessions to, substitutions and replacements for, and rents, profits and products of, each of the foregoing, and any and all Proceeds of any insurance, indemnity, warranty or guaranty payable to such Pledgor from time to time with respect to any of the foregoing.

Notwithstanding anything to the contrary contained in clauses (i) through (xiii) above, the security interest created by this Agreement shall not extend to, and the term “Pledged Collateral” shall not include, any Excluded Property, and from and after the Closing Date, no Pledgor shall permit to become effective in any document creating, governing or providing for any permit, license or agreement a provision that would prohibit the creation of a Lien on such permit, license or agreement in favor of the Administrative Agent unless such Pledgor believes, in its reasonable judgment, that such prohibition is usual and customary in transactions of such type.

-9-

SECTION 2.2. Filings.

(a) Each Pledgor hereby irrevocably authorizes the Administrative Agent at any time and from time to time to file in any relevant jurisdiction any financing statements (including fixture filings) and amendments thereto that contain the information required by Article 9 of the Uniform Commercial Code of each applicable jurisdiction for the filing of any financing statement or amendment relating to the Pledged Collateral, including (i) whether such Pledgor is an organization, the type of organization and any organizational identification number issued to such Pledgor, (ii) any financing or continuation statements or other documents without the signature of such Pledgor where permitted by law, including the filing of a financing statement describing the Pledged Collateral as “all assets now owned or hereafter acquired by the Pledgor or in which Pledgor otherwise has rights” and (iii) in the case of a financing statement filed as a fixture filing, a sufficient description of the real property to which such Pledged Collateral relates. Each Pledgor agrees to provide all information described in the immediately preceding sentence to the Administrative Agent promptly upon reasonable request by the Administrative Agent.

(b) Each Pledgor hereby ratifies its authorization for the Administrative Agent to file in any relevant jurisdiction any financing statements relating to the Pledged Collateral if filed prior to the date hereof.

(c) Each Pledgor hereby further authorizes the Administrative Agent to make filings with the United States Patent and Trademark Office or United States Copyright Office (or any successor office), including this Agreement, the Copyright Security Agreement, the Patent Security Agreement and the Trademark Security Agreement, or other documents for the purpose of perfecting, confirming, continuing, enforcing or protecting the security interest granted by such Pledgor hereunder in Intellectual Property Collateral that is registered, or whose registration has been applied for, with the United States Patent and Trademark Office or United States Copyright Office (or any successor office), and naming such Pledgor, as debtor, and the Administrative Agent, as secured party.

ARTICLE III

PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES;

USE OF PLEDGED COLLATERAL

SECTION 3.1. Delivery of Certificated Securities Collateral. Each Pledgor represents and warrants that all certificates or instruments representing or evidencing the Securities Collateral in existence on the date hereof have been delivered to the Administrative Agent in suitable form for transfer by delivery or accompanied by duly executed instruments of transfer or assignment in blank and that the Administrative Agent will have a perfected first priority security interest therein upon completion of the filings and other actions specified on Schedule 4 to the Perfection Certificate. Each Pledgor hereby agrees that all certificates or instruments representing or evidencing Securities Collateral acquired by such Pledgor after the date hereof shall promptly (but in any event within fifteen days after receipt thereof by such Pledgor, or such longer period as the Administrative Agent may agree to in its sole discretion) be delivered to and held by or on behalf of the Administrative Agent pursuant hereto. All

-10-

certificated Securities Collateral shall be in suitable form for transfer by delivery or shall be accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance reasonably satisfactory to the Administrative Agent. The Administrative Agent shall have the right, at any time upon the occurrence and during the continuance of any Event of Default, to endorse, assign or otherwise transfer to or to register in the name of the Administrative Agent or any of its nominees or endorse for negotiation any or all of the Securities Collateral, without any indication that such Securities Collateral is subject to the security interest hereunder. In addition, upon the occurrence and during the continuance of an Event of Default, the Administrative Agent shall have the right at any time to exchange certificates representing or evidencing Securities Collateral for certificates of smaller or larger denominations.

SECTION 3.2. Perfection of Uncertificated Securities Collateral. Each Pledgor represents and warrants that the Administrative Agent has a perfected first priority security interest in all uncertificated Pledged Securities pledged by it hereunder that are in existence on the date hereof. Each Pledgor hereby agrees that if any of the Pledged Securities of a Wholly Owned Subsidiary that constitute “Securities” as defined in Section 8-102(a)(15) of the UCC are at any time not evidenced by certificates of ownership, then each applicable Pledgor shall, to the extent permitted by applicable law, cause the issuer to execute and deliver to the Administrative Agent an acknowledgment of the pledge of such Pledged Securities substantially in the form of Exhibit 1 hereto or such other form that is reasonably satisfactory to the Administrative Agent.

SECTION 3.3. Financing Statements and Other Filings; Maintenance of Perfected Security Interest. Each Pledgor represents and warrants that all financing statements, agreements, instruments and other documents necessary to perfect the security interest granted by it to the Administrative Agent on the date hereof in respect of the Pledged Collateral have been delivered to the Administrative Agent in completed and duly executed form for filing in each governmental, municipal or other office specified in Schedule 4 to the Perfection Certificate. Each Pledgor agrees that at the sole cost and expense of the Pledgors, such Pledgor will, at the request of the Admninistrative Agent, maintain the security interest created by this Agreement in the Pledged Collateral as a perfected first priority security interest subject only to Liens permitted under Section 7.01 of the Credit Agreement (“Permitted Liens”).

SECTION 3.4. Other Actions. In order to further ensure the attachment, perfection and priority of, and the ability of the Administrative Agent to enforce, the Administrative Agent’s security interest in the Pledged Collateral, each Pledgor represents and warrants (as to itself) as follows and agrees, in each case at such Pledgor’s own expense, to take the following actions with respect to the following Pledged Collateral:

(a) Instruments and Tangible Chattel Paper. As of the date hereof, no amounts payable in excess of $500,000 (or solely with respect to intercompany Indebtedness of the Pledgors, no amounts payable) under or in connection with any of the Pledged Collateral are evidenced by any Instrument or Tangible Chattel Paper, other than such Instruments and Tangible Chattel Paper listed in Schedule 8 to the Perfection Certificate. Each Instrument and each item of Tangible Chattel Paper listed in Schedule 8

-11-

to the Perfection Certificate has been properly endorsed, assigned and delivered to the Administrative Agent, accompanied by instruments of transfer or assignment duly executed in blank. If any amount then payable under or in connection with any of the Pledged Collateral shall be evidenced by any Instrument or Tangible Chattel Paper, and such amount, together with all amounts payable evidenced by any Instrument or Tangible Chattel Paper not previously delivered to the Administrative Agent, exceeds $500,000 in the aggregate for all Pledgors (provided that solely with respect to intercompany Indebtedness of the Pledgors, such minimum threshold shall not apply), the Pledgor acquiring such Instrument or Tangible Chattel Paper shall promptly (but in any event within 15 days after receipt thereof or such longer period as the Administrative Agent may agree to in its sole discretion) endorse, assign and deliver the same to the Administrative Agent, accompanied by such instruments of transfer or assignment duly executed in blank as the Administrative Agent may from time to time reasonably request.

(b) Deposit Accounts. As of the date hereof, no Pledgor has any Deposit Accounts other than Excluded Deposit Accounts and those accounts listed in Schedule 11 to the Perfection Certificate. The Administrative Agent has a security interest in each such Deposit Account (other than Excluded Deposit Accounts), which security interest, when required by Section 6.17 of the Credit Agreement, will be perfected by Control. No Pledgor shall hereafter establish and maintain any Deposit Account unless (1) it shall have given the Administrative Agent 10 days’ prior written notice of its intention to establish such new Deposit Account with a Bank and (2) such Bank and such Pledgor shall have duly executed and delivered to the Administrative Agent a Deposit Account Control Agreement with respect to such Deposit Account. The Administrative Agent agrees with each Pledgor that the Administrative Agent shall not give any instructions directing the disposition of funds from time to time credited to any Deposit Account or withhold any withdrawal rights from such Pledgor with respect to funds from time to time credited to any Deposit Account unless an Event of Default has occurred and is continuing, and notice shall have been given by the Administrative Agent to the Borrower of its intent to exercise such rights. Each Pledgor agrees that once the Administrative Agent sends an instruction or notice to a Bank exercising its Control over any Deposit Account (other than Excluded Deposit Accounts) (with a copy of such instruction or notice to the Borrower) such Pledgor shall not give any instructions or orders with respect to such Deposit Account including, without limitation, instructions for distribution or transfer of any funds in such Deposit Account. No Pledgor shall grant Control of any Deposit Account to any person other than the Administrative Agent and the Notes Collateral Agent.

(c) Securities Accounts and Commodity Accounts. (i) As of the date hereof, no Pledgor has any Securities Accounts or Commodity Accounts other than those listed in Schedule 11 to the Perfection Certificate. The Administrative Agent has a security interest in each such Securities Account and Commodity Account, which security interest, when required by Section 6.17 of the Credit Agreement, will be perfected by Control. No Pledgor shall hereafter establish and maintain any Securities Account or Commodity Account with any Securities Intermediary or Commodity Intermediary unless (1) it shall have given the Administrative Agent 10 days’ prior written notice of its

-12-

intention to establish such new Securities Account or Commodity Account with such Securities Intermediary or Commodity Intermediary and (2) such Securities Intermediary or Commodity Intermediary, as the case may be, and such Pledgor shall have duly executed and delivered a Control Agreement with respect to such Securities Account or Commodity Account, as the case may be. Each Pledgor shall accept any cash and Investment Property in trust for the benefit of the Administrative Agent and within one (1) Business Day of actual receipt thereof, deposit any and all cash and Investment Property received by it into a Deposit Account or Securities Account subject to Administrative Agent’s Control. The Administrative Agent agrees with each Pledgor that the Administrative Agent shall not give any Entitlement Orders or instructions or directions to any issuer of uncertificated securities, Securities Intermediary or Commodity Intermediary, and shall not withhold its consent to the exercise of any withdrawal or dealing rights by such Pledgor, unless an Event of Default has occurred and is continuing or, after giving effect to any such investment and withdrawal rights, would occur, and notice shall have been given by the Administrative Agent to the Borrower of its intent to exercise such rights. Each Pledgor agrees that once the Administrative Agent sends an instruction or notice to a Securities Intermediary or Commodity Intermediary exercising its Control over any Securities Account and Commodity Account (with a copy of such instruction or notice to the Borrower) such Pledgor shall not give any instructions or orders with respect to such Securities Account and Commodity Account including, without limitation, instructions for investment, distribution or transfer of any Investment Property or Financial Asset maintained in such Securities Account or Commodity Account. No Pledgor shall grant Control over any Investment Property to any person other than the Administrative Agent and the Notes Collateral Agent.

(ii) As between the Administrative Agent and the Pledgors, the Pledgors shall bear the investment risk with respect to the Investment Property and Pledged Securities, and the risk of loss of, damage to, or the destruction of the Investment Property and Pledged Securities, whether in the possession of, or maintained as a Security Entitlement or deposit by, or subject to the Control of, the Administrative Agent, a Securities Intermediary, a Commodity Intermediary, any Pledgor or any other person.

(d) Electronic Chattel Paper and Transferable Records. As of the date hereof, no amount under or in connection with any of the Pledged Collateral is evidenced by any Electronic Chattel Paper or any “transferable record” (as that term is defined in Section 201 of the Federal Electronic Signatures in Global and National Commerce Act, or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction) other than such Electronic Chattel Paper and transferable records, (i) listed in Schedule 8 to the Perfection Certificate or (ii) whose value does not exceed $500,000 in the aggregate for all Pledgors. If any amount payable under or in connection with any of the Pledged Collateral shall be evidenced by any Electronic Chattel Paper or any transferable record, the Pledgor acquiring such Electronic Chattel Paper or transferable record shall promptly notify the Administrative Agent thereof and shall take such action as the Administrative Agent may reasonably request to vest in the Administrative Agent control of such Electronic Chattel Paper under Section 9-105 of the UCC or control under

-13-

Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or, as the case may be, Section 16 of the Uniform Electronic Transactions Act, as so in effect in such jurisdiction, or such transferable record. The requirement in the preceding sentence shall not apply to the extent that such amount, together with all amounts payable evidenced by Electronic Chattel Paper or any transferable record in which the Administrative Agent has not been vested control within the meaning of the statutes described in the immediately preceding sentence, does not exceed $500,000 in the aggregate for all Pledgors. The Administrative Agent agrees with such Pledgor that the Administrative Agent will arrange, pursuant to procedures reasonably satisfactory to the Administrative Agent and so long as such procedures will not result in the Administrative Agent’s loss of control, for the Pledgor to make alterations to the Electronic Chattel Paper or transferable record permitted under Section 9-105 of the UCC or, as the case may be, Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or Section 16 of the Uniform Electronic Transactions Act for a party in control to allow without loss of control, unless an Event of Default has occurred and is continuing or would occur after taking into account any action by such Pledgor with respect to such Electronic Chattel Paper or transferable record.

(e) Letter-of-Credit Rights. If any Pledgor is at any time a beneficiary under a Letter of Credit now or hereafter issued in favor of such Pledgor that is not a Supporting Obligation, such Pledgor shall promptly notify the Administrative Agent thereof and such Pledgor shall, at the request of the Administrative Agent, pursuant to an agreement in form and substance reasonably satisfactory to the Administrative Agent, either (i) use commercially reasonable efforts to arrange for the issuer and any confirmer of such Letter of Credit to consent to an assignment to the Administrative Agent of the proceeds of any drawing under the Letter of Credit or (ii) use commercially reasonable efforts to arrange for the Administrative Agent to become the transferee beneficiary of such Letter of Credit, with the Administrative Agent agreeing, in each case, that the proceeds of any drawing under the Letter of Credit are to be paid to the applicable Pledgor unless an Event of Default has occurred and is continuing. The actions in the preceding sentence shall not be required to the extent that the amount of any such Letter of Credit, together with the aggregate amount of all other Letters of Credit for which the actions described above in clauses (i) and (ii) have not been taken, does not exceed $500,000 in the aggregate for all Pledgors.

(f) Commercial Tort Claims. As of the date hereof, each Pledgor hereby represents and warrants that it holds no Commercial Tort Claims other than those listed in Schedule 10 to the Perfection Certificate. If any Pledgor shall at any time hold or acquire a Commercial Tort Claim, such Pledgor shall promptly (but in any event within 15 days or such longer period as the Administrative Agent may agree, in its sole discretion) notify the Administrative Agent in writing signed by such Pledgor of the brief details thereof and grant to the Administrative Agent in such writing a security interest therein and in the Proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to the Administrative Agent. The requirement in the preceding sentence shall not apply to the extent that the amount of such Commercial Tort Claim, together with the amount of all other Commercial Tort Claims held by any Pledgor in which the Administrative Agent does not have a security interest, does not exceed $500,000 in the aggregate for all Pledgors.

-14-

SECTION 3.5. Joinder of Additional Guarantors. The Pledgors shall cause each Subsidiary of the Borrower which, from time to time, after the date hereof shall be required to pledge any assets to the Administrative Agent for the benefit of the Secured Parties pursuant to the provisions of the Credit Agreement, to execute and deliver to the Administrative Agent a Joinder Agreement substantially in the form of Exhibit 3 hereto, within thirty (30) days of the date on which it was acquired or created and, upon such execution and delivery, such Subsidiary shall constitute a “Guarantor” and a “Pledgor” for all purposes hereunder with the same force and effect as if originally named as a Guarantor and Pledgor herein. The execution and delivery of such Joinder Agreement shall not require the consent of any Pledgor hereunder. The rights and obligations of each Pledgor hereunder shall remain in full force and effect notwithstanding the addition of any new Guarantor and Pledgor as a party to this Agreement.

SECTION 3.6. Supplements; Further Assurances. Each Pledgor shall take such further actions, and execute and/or deliver to the Administrative Agent such additional financing statements, amendments, assignments, agreements, supplements, powers and instruments, as may be necessary or as the Administrative Agent may reasonably request in order to create, perfect, preserve and protect the security interest in the Pledged Collateral as provided herein and the rights and interests granted to the Administrative Agent hereunder, to carry into effect the purposes hereof or better to assure and confirm the validity, enforceability and priority of the Administrative Agent’s security interest in the Pledged Collateral or permit the Administrative Agent to exercise and enforce its rights, powers and remedies hereunder with respect to any Pledged Collateral, including the filing of financing statements, continuation statements and other documents (including this Agreement) under the Uniform Commercial Code (or other similar laws) in effect in any jurisdiction with respect to the security interest created hereby and the execution and delivery of Control Agreements, all in form reasonably satisfactory to the Administrative Agent and in such offices (including the United States Patent and Trademark Office and the United States Copyright Office) wherever required by law to perfect, continue and maintain the validity, enforceability and priority of the security interest in the Pledged Collateral as provided herein and to preserve the other rights and interests granted to the Administrative Agent hereunder, as against third parties, with respect to the Pledged Collateral. If an Event of Default has occurred and is continuing, the Administrative Agent may institute and maintain, in its own name or in the name of any Pledgor, such suits and proceedings as the Administrative Agent may be advised by counsel shall be necessary or expedient to prevent any impairment of the security interest in or the perfection thereof in the Pledged Collateral. All of the foregoing shall be at the sole cost and expense of the Pledgors.

ARTICLE IV

REPRESENTATIONS, WARRANTIES AND COVENANTS

Each Pledgor represents, warrants and covenants as follows:

SECTION 4.1. Title. Except for the security interest granted to the Administrative Agent for the benefit of the Secured Parties pursuant to this Agreement and

-15-

Permitted Liens, such Pledgor owns and has rights in each item of Pledged Collateral pledged by it hereunder, free and clear of any and all Liens or claims of others, except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or as proposed to be conducted or to utilize such properties for their intended purposes or where the failure to do so could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. In addition, no Liens or claims exist on the Securities Collateral, other than Permitted Collateral Liens.

SECTION 4.2. Validity of Security Interest. The security interest in and Lien on the Pledged Collateral granted to the Administrative Agent for the benefit of the Secured Parties hereunder constitutes (a) a legal and valid security interest in all the Pledged Collateral securing the payment and performance of the Obligations, and (b) upon completion of the filings and other actions described in Schedule 4 to the Perfection Certificate (to the extent required to be listed on the schedules to the Perfection Certificate as of the date this representation is made or deemed made), (i) will constitute a perfected security interest in all the Pledged Collateral in which a security interest may be perfected in the United States by filing, recording or registering a financing statement or analogous document in the United States (or any political subdivision thereof) and its territories and possessions pursuant to the UCC or other applicable law in such jurisdictions and (ii) will constitute a perfected security interest in all Pledged Collateral in which a security interest may be perfected in the United States upon the timely receipt and recording of the Patent Security Agreement, Copyright Security Agreement or Trademark Security Agreement with the United States Patent and Trademark Office and the United States Copyright Office, as applicable. The security interest and Lien granted to the Administrative Agent for the benefit of the Secured Parties pursuant to this Agreement in and on the Pledged Collateral is and shall be prior to all other Liens on the Pledged Collateral except for Permitted Liens.

SECTION 4.3. Defense of Claims; Transferability of Pledged Collateral. Each Pledgor shall, at its own cost and expense, take any and all commercially reasonable actions necessary to defend title to the Pledged Collateral pledged by it hereunder and the security interest therein and Lien thereon granted to the Administrative Agent except with respect to such Pledged Collateral that such Pledgor determines in its reasonable business judgment is no longer necessary or beneficial to the conduct of such Pledgor’s business, and the priority thereof against any Lien not other than Permitted Liens, at its own cost and expense, subject to the rights of such Pledgor under Section 9.10 of the Credit Agreement and corresponding provisions of the Loan Documents to obtain a release of the Liens created under the Loan Documents.

SECTION 4.4. Other Financing Statements. It has not filed, nor authorized any third party to file, any valid or effective financing statement (or similar statement, instrument of registration or public notice under the law of any jurisdiction) covering or purporting to cover any interest of any kind in the Pledged Collateral, except such as have been filed in favor of the Administrative Agent pursuant to this Agreement or in favor of any holder of a Permitted Lien with respect to such Permitted Lien. No Pledgor shall execute, authorize or permit to be filed in any public office any financing statement (or similar statement, instrument of registration or public notice under the law of any jurisdiction) relating to any Pledged Collateral, except financing statements and other statements and instruments filed or to be filed in respect of and covering the security interests granted by such Pledgor to the holder of the Permitted Liens.

-16-

SECTION 4.5. Location of Inventory and Equipment. It shall not move any Equipment or Inventory (other than Equipment or Inventory sold, leased or disposed of in accordance with the Credit Agreement) to any location, other than any location that is listed in the relevant Schedules to the Perfection Certificate or at such other locations as such Pledgor may determine from time to time, provided that such Pledgor shall give written notice to the Administrative Agent (in the form of a certificate of a Responsible Officer) specifying any such other location within 30 days after the date on which any Equipment or Inventory is moved to such location; provided that in no event shall any Equipment or Inventory be moved to any location outside of the continental United States.

SECTION 4.6. Due Authorization and Issuance. All of the Pledged Securities existing on the date hereof have been, and to the extent any Pledged Securities are hereafter issued, such Pledged Securities will be, upon such issuance, duly authorized, validly issued and fully paid and non-assessable to the extent applicable.

SECTION 4.7. Consents, etc. In the event that the Administrative Agent desires to exercise any remedies, voting or consensual rights or attorney-in-fact powers set forth in this Agreement and determines it necessary to obtain any approvals or consents of any Governmental Authority or any other person therefor, then, upon the reasonable request of the Administrative Agent, such Pledgor agrees to use its best efforts to assist and aid the Administrative Agent to obtain as soon as practicable any necessary approvals or consents for the exercise of any such remedies, rights and powers.

SECTION 4.8. Pledged Collateral. All information set forth herein, including the schedules hereto, and all information contained in any documents, schedules and lists heretofore delivered to any Secured Party, including the Perfection Certificate and the schedules thereto, in connection with this Agreement, in each case, relating to the Pledged Collateral, is accurate and complete in all material respects.

SECTION 4.9. Insurance. In the event that the proceeds of any insurance claim are paid to any Pledgor after the Administrative Agent has exercised its right to foreclose after an Event of Default and after notice thereof is given to the Pledgors by the Administrative Agent, such proceeds shall be held in trust for the benefit of the Administrative Agent and promptly after receipt thereof shall be paid to the Administrative Agent upon demand for application in accordance with the Credit Agreement.

ARTICLE V

CERTAIN PROVISIONS CONCERNING SECURITIES COLLATERAL

SECTION 5.1. Pledge of Additional Securities Collateral. Each Pledgor shall, upon obtaining any Pledged Securities or Intercompany Notes of any person which are to be pledged pursuant to this Agreement, accept the same in trust for the benefit of the Administrative Agent and promptly (but in any event within fifteen days after receipt thereof, or

-17-

such longer period as the Administrative Agent may agree to in its sole discretion) deliver to the Administrative Agent a pledge amendment, duly executed by such Pledgor, in substantially the form of Exhibit 2 hereto (each, a “Pledge Amendment”), and the certificates and other documents required under Section 3.1 and Section 3.2 hereof in respect of the additional Pledged Securities or Intercompany Notes which are to be pledged pursuant to this Agreement, and confirming the attachment of the Lien hereby created on and in respect of such additional Pledged Securities or Intercompany Notes. Each Pledgor hereby authorizes the Administrative Agent to attach each Pledge Amendment to this Agreement and agrees that all Pledged Securities or Intercompany Notes listed on any Pledge Amendment delivered to the Administrative Agent shall for all purposes hereunder be considered Pledged Collateral.

SECTION 5.2. Voting Rights; Distributions; etc.

(a) Unless and until an Event of Default shall have occurred and is continuing and the Administrative Agent shall have notified the Pledgors that their rights under this Section 5.2(a) are being suspended:

(i) Each Pledgor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Securities Collateral or any part thereof for any purpose not inconsistent with the terms or purposes hereof, the Credit Agreement or any other document evidencing the Obligations; provided, however, that no Pledgor shall in any event exercise such rights in any manner which could reasonably be expected to have a Material Adverse Effect.

(ii) Each Pledgor shall be entitled to receive and retain, and to utilize free and clear of the Lien hereof, any and all Distributions, but only if and to the extent made in accordance with the provisions of the Credit Agreement, the other Loan Documents and applicable law; provided, however, that any and all such Distributions consisting of rights or interests in the form of securities shall be forthwith delivered to the Administrative Agent to hold as Pledged Collateral and shall, if received by any Pledgor, be received in trust for the benefit of the Administrative Agent, be segregated from the other property or funds of such Pledgor and be promptly delivered to the Administrative Agent as Pledged Collateral in the same form as so received (with any necessary endorsement reasonably requested by the Administrative Agent).

(iii) So long as no Event of Default shall have occurred and be continuing, the Administrative Agent shall be deemed without further action or formality to have granted to each Pledgor all necessary consents relating to voting rights and shall, if necessary, upon written request of any Pledgor and at the sole cost and expense of the Pledgors, from time to time execute and deliver (or cause to be executed and delivered) to such Pledgor all such instruments as such Pledgor may reasonably request in order to permit such Pledgor to exercise the voting and other rights which it is entitled to exercise pursuant to Section 5.2(a)(i) hereof and to receive the Distributions which it is authorized to receive and retain pursuant to Section 5.2(a)(ii) hereof.

-18-

(b) Upon the occurrence and during the continuance of any Event of Default, after the Administrative Agent shall have notified the Pledgors of the suspension of their rights under Section 5.2(a):

(i) All rights of each Pledgor to exercise the voting and other consensual rights it would otherwise be entitled to exercise pursuant to Section 5.2(a)(i) hereof shall immediately cease, and all such rights shall thereupon become vested in the Administrative Agent, which shall thereupon have the sole right to exercise such voting and other consensual rights.

(ii) All rights of each Pledgor to receive Distributions which it would otherwise be authorized to receive and retain pursuant to Section 5.2(a)(ii) hereof shall immediately cease and all such rights shall thereupon become vested in the Administrative Agent, which shall thereupon have the sole right to receive and hold as Pledged Collateral such Distributions.

(c) Each Pledgor shall, at its sole cost and expense, from time to time execute and deliver to the Administrative Agent instruments as the Administrative Agent may reasonably request in order to permit the Administrative Agent to exercise the voting and other rights which it may be entitled to exercise pursuant to Section 5.2(b)(i) hereof and to receive all Distributions which it may be entitled to receive under Section 5.2(b)(ii) hereof.

(d) All Distributions which are received by any Pledgor contrary to the provisions of Section 5.2(a)(ii) hereof shall be received in trust for the benefit of the Administrative Agent, shall be segregated from other funds of such Pledgor and shall forthwith be delivered to the Administrative Agent as Pledged Collateral in the same form as so received (with any necessary endorsement reasonably requested by the Administrative Agent).

SECTION 5.3. Certain Agreements of Pledgors as Issuers and Holders of Equity Interests.

(a) In the case of each Pledgor which is an issuer of Securities Collateral, such Pledgor agrees to be bound by the terms of this Agreement relating to the Securities Collateral issued by it and will comply with such terms insofar as such terms are applicable to it.

(b) In the case of each Pledgor which is a partner, shareholder or member, as the case may be, in a partnership, limited liability company or other entity, such Pledgor hereby consents to the extent required by the applicable Organization Document to the pledge by each other Pledgor, pursuant to the terms hereof, of the Pledged Securities in such partnership, limited liability company or other entity and, upon the occurrence and during the continuance of an Event of Default, to the transfer of such Pledged Securities to the Administrative Agent or its nominee and to the substitution of the Administrative Agent or its nominee as a substituted partner, shareholder or member in such partnership, limited liability company or other entity with all the rights, powers and duties of a general partner, limited partner, shareholder or member, as the case may be.

-19-

ARTICLE VI

CERTAIN PROVISIONS CONCERNING INTELLECTUAL

PROPERTY COLLATERAL

SECTION 6.1. Grant of Intellectual Property License. For the purpose of enabling the Administrative Agent, during the continuance of an Event of Default, to exercise rights and remedies under Article IX hereof at such time as the Administrative Agent shall be lawfully entitled to exercise such rights and remedies, and for no other purpose, each Pledgor hereby grants to the Administrative Agent, to the extent assignable, an irrevocable, non-exclusive license to use, assign, license or sublicense any of the Intellectual Property Collateral now owned or hereafter acquired by such Pledgor, wherever the same may be located. Such license shall include access to all media in which any of the licensed items may be recorded or stored and to all computer programs used for the compilation or printout hereof. Nothing in this Section 6.1 shall require Pledgors to grant any license that is prohibited by any requirement of law, or is prohibited by, or constitutes a breach or default under or results in the termination of or gives rise to any right of acceleration, modification or cancellation under any Contract (for as long as, such prohibition is not terminated or rendered unenforceable or otherwise deemed ineffective by the Uniform Commercial Code, any other requirement of law or principles of equity); provided, further, that such licenses to be granted hereunder with respect to Trademarks shall be subject to the maintenance of quality standards with respect to the goods and services on which such Trademarks are used sufficient to preserve the validity of such Trademarks.

SECTION 6.2. Protection of Administrative Agent’s Security. Except where the failure to do so could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, on a continuing basis, each Pledgor shall, at its sole cost and expense, (i) promptly following its becoming aware thereof, notify the Administrative Agent of any adverse determination in any proceeding in any federal, state or local court or administrative body or in the United States Patent and Trademark Office or the United States Copyright Office regarding any Material Intellectual Property Collateral, such Pledgor’s right to register such Material Intellectual Property Collateral or its right to keep and maintain such registration in full force and effect, (ii) maintain all Material Intellectual Property Collateral as presently used and operated, (iii) not permit to lapse or become abandoned any Material Intellectual Property Collateral, and not settle or compromise any pending or future litigation or administrative proceeding with respect to any such Material Intellectual Property Collateral, in either case except as shall be consistent with commercially reasonable business judgment, (iv) following such Pledgor obtaining knowledge thereof, promptly notify the Administrative Agent in writing of any event which may be reasonably expected to materially and adversely affect the value or utility of any Material Intellectual Property Collateral or the rights and remedies of the Administrative Agent in relation thereto including a levy or threat of levy or any legal process against any Material Intellectual Property Collateral, (v) not license any Intellectual Property Collateral other than licenses entered into by such Pledgor in, or incidental to, the ordinary course of business, or amend or permit the amendment of any of the licenses in a manner that materially and adversely affects the right to receive payments thereunder, or in any manner that would materially impair the value of any Intellectual Property Collateral or the Lien on and security interest in the Intellectual Property Collateral created therein hereby, without the consent

-20-

of the Administrative Agent, (vi) diligently keep adequate records respecting all Intellectual Property Collateral and (vii) furnish to the Administrative Agent from time to time upon the Administrative Agent’s reasonable request therefor, reasonably detailed statements and amended schedules further identifying and describing the United States federal registered and applied for Intellectual Property Collateral and such other materials evidencing or reports pertaining to any Intellectual Property Collateral.

SECTION 6.3. After-Acquired Property. If any Pledgor shall at any time after the date hereof (i) obtain any rights to any additional Intellectual Property Collateral or (ii) become entitled to the benefit of any additional Intellectual Property Collateral or any renewal or extension thereof, including any reissue, division, continuation, or continuation-in-part of any Intellectual Property Collateral, or any improvement on any Intellectual Property Collateral, or if any intent-to use trademark application is no longer subject to clause (vi) of the definition of “Excluded Property,” the provisions hereof shall automatically apply thereto and any such item enumerated in the preceding clause (i) or (ii) shall automatically constitute Intellectual Property Collateral as if such would have constituted Intellectual Property Collateral at the time of execution hereof and be subject to the Lien and security interest created by this Agreement without further action by any party. Each Pledgor shall promptly provide to the Administrative Agent written notice of any of the foregoing and confirm the attachment of the Lien and security interest created by this Agreement to any rights described in clauses (i) and (ii) above by execution of an instrument in form reasonably acceptable to the Administrative Agent and the filing of any instruments or statements as shall be reasonably necessary to create, preserve, protect or perfect the Administrative Agent’s security interest in such Intellectual Property Collateral. Further, each Pledgor authorizes the Administrative Agent to modify this Agreement by amending Schedules 9(a) and 9(b) to the Perfection Certificate to include any Intellectual Property Collateral that is registered, or whose registration has been applied for, with the United States Patent and Trademark Office or United States Copyright Office (or any successor office) of such Pledgor acquired or arising after the date hereof.

SECTION 6.4. Litigation. Except where the failure to do so could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, each Pledgor agrees to take all commercially reasonable actions necessary, whether by suit, proceeding or other action, to prevent the infringement, counterfeiting, unfair competition, dilution, diminution in value of or other damage to any of the Material Intellectual Property Collateral owned by such Pledgor.

SECTION 6.5. Permitted Disposal of Intellectual Property Collateral. Nothing in this Agreement prevents any Pledgor from disposing of, discontinuing the use or maintenance of, failing to pursue or otherwise allowing to lapse, terminate or put into the public domain any of its Intellectual Property Collateral to the extent permitted by the Credit Agreement if such Pledgor determines in its reasonable business judgment that such action is desirable in the conduct of its business.

-21-

ARTICLE VII

CERTAIN PROVISIONS CONCERNING RECEIVABLES

SECTION 7.1. Maintenance of Records. Each Pledgor shall keep and maintain at its own cost and expense complete records of each Receivable, in a manner consistent with prudent business practice, including records of all payments received, all credits granted thereon, all merchandise returned and all other documentation relating thereto. Each Pledgor shall, at such Pledgor’s sole cost and expense, upon the Administrative Agent’s demand made at any time after the occurrence and during the continuance of any Event of Default, deliver all tangible evidence of Receivables, including all documents evidencing Receivables and any books and records relating thereto to the Administrative Agent or to its representatives (copies of which evidence and books and records may be retained by such Pledgor). Upon the occurrence and during the continuance of any Event of Default, the Administrative Agent may transfer a full and complete copy of any Pledgor’s books, records, credit information, reports, memoranda and all other writings relating to the Receivables to and for the use by any person that has acquired or is contemplating acquisition of an interest in the Receivables or the Administrative Agent’s security interest therein without the consent of any Pledgor.

SECTION 7.2. Legend. After the occurrence and during the continuance of an Event of Default and upon the Administrative Agent’s request, each Pledgor shall legend, at the request of the Administrative Agent and in form and manner satisfactory to the Administrative Agent, the Receivables and the other books, records and documents of such Pledgor evidencing or pertaining to the Receivables with an appropriate reference to the fact that the Receivables have been assigned to the Administrative Agent for the benefit of the Secured Parties and that the Administrative Agent has a security interest therein.

ARTICLE VIII

TRANSFERS

SECTION 8.1. Transfers of Pledged Collateral. No Pledgor shall sell, convey, assign or otherwise dispose of, or grant any option with respect to, any of the Pledged Collateral pledged by it hereunder except as expressly permitted by the Credit Agreement and the other Loan Documents.

ARTICLE IX

REMEDIES

SECTION 9.1. Remedies. Upon the occurrence and during the continuance of any Event of Default, the Administrative Agent may from time to time exercise in respect of the Pledged Collateral, in addition to the other rights and remedies provided for herein or otherwise available to it, the following remedies:

(i) Personally, or by agents or attorneys, immediately take possession of the Pledged Collateral or any part thereof, from any Pledgor or any other person who then

-22-

has possession of any part thereof with or without notice or process of law, and for that purpose may enter upon any Pledgor’s premises where any of the Pledged Collateral is located, remove such Pledged Collateral, remain present at such premises to receive copies of all communications and remittances relating to the Pledged Collateral and use in connection with such removal and possession any and all services, supplies, aids and other facilities of any Pledgor;

(ii) Demand, sue for, collect or receive any money or property at any time payable or receivable in respect of the Pledged Collateral including instructing the obligor or obligors on any agreement, instrument or other obligation constituting part of the Pledged Collateral to make any payment required by the terms of such agreement, instrument or other obligation directly to the Administrative Agent, and in connection with any of the foregoing, compromise, settle, extend the time for payment and make other modifications with respect thereto; provided, however, that in the event that any such payments are made directly to any Pledgor, prior to receipt by any such obligor of such instruction, such Pledgor shall segregate all amounts received pursuant thereto in trust for the benefit of the Administrative Agent and shall promptly (but in no event later than one (1) Business Day after receipt thereof) pay such amounts to the Administrative Agent;

(iii) Sell, assign, grant a license to use or otherwise liquidate, or direct any Pledgor to sell, assign, grant a license to use or otherwise liquidate, any and all investments made in whole or in part with the Pledged Collateral or any part thereof, and take possession of the proceeds of any such sale, assignment, license or liquidation;

(iv) Take possession of the Pledged Collateral or any part thereof, by directing any Pledgor in writing to deliver the same to the Administrative Agent at any place or places so designated by the Administrative Agent, in which event such Pledgor shall at its own expense: (A) forthwith cause the same to be moved to the place or places designated by the Administrative Agent and therewith delivered to the Administrative Agent, (B) store and keep any Pledged Collateral so delivered to the Administrative Agent at such place or places pending further action by the Administrative Agent and (C) while the Pledged Collateral shall be so stored and kept, provide such security and maintenance services as shall be necessary to protect the same and to preserve and maintain them in good condition. Each Pledgor’s obligation to deliver the Pledged Collateral as contemplated in this Section 9.1(iv) is of the essence hereof. Upon application to a court of equity having jurisdiction, the Administrative Agent shall be entitled to a decree requiring specific performance by any Pledgor of such obligation;

(v) Withdraw all moneys, instruments, securities and other property in any bank, financial securities, deposit or other account of any Pledgor constituting Pledged Collateral for application to the Obligations as provided in Article X hereof;

(vi) Retain and apply the Distributions to the Obligations as provided in Article X hereof;

-23-

(vii) Exercise any and all rights as beneficial and legal owner of the Pledged Collateral, including perfecting assignment of and exercising any and all voting, consensual and other rights and powers with respect to any Pledged Collateral; and

(viii) Exercise all the rights and remedies of a secured party on default under the UCC, and the Administrative Agent may also, without notice except as specified in Section 9.2 hereof, sell, assign or grant a license to use the Pledged Collateral or any part thereof in one or more parcels at public or private sale, at any exchange, broker’s board or at any of the Administrative Agent’s offices or elsewhere, for cash, on credit or for future delivery, and at such price or prices and upon such other terms as the Administrative Agent may deem commercially reasonable. The Administrative Agent or any other Secured Party or any of their respective Affiliates may be the purchaser, licensee, assignee or recipient of the Pledged Collateral or any part thereof at any such sale and shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Pledged Collateral sold, assigned or licensed at such sale, to use and apply any of the Obligations owed to such person as a credit on account of the purchase price of the Pledged Collateral or any part thereof payable by such person at such sale. Each purchaser, assignee, licensee or recipient at any such sale shall acquire the property sold, assigned or licensed absolutely free from any claim or right on the part of any Pledgor, and each Pledgor hereby waives, to the fullest extent permitted by law, all rights of redemption, stay and/or appraisal which it now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted. The Administrative Agent shall not be obligated to make any sale of the Pledged Collateral or any part thereof regardless of notice of sale having been given. The Administrative Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. Each Pledgor hereby waives, to the fullest extent permitted by law, any claims against the Administrative Agent arising by reason of the fact that the price at which the Pledged Collateral or any part thereof may have been sold, assigned or licensed at such a private sale was less than the price which might have been obtained at a public sale, even if the Administrative Agent accepts the first offer received and does not offer such Pledged Collateral to more than one offeree.

SECTION 9.2. Notice of Sale. Each Pledgor acknowledges and agrees that, to the extent notice of sale or other disposition of the Pledged Collateral or any part thereof shall be required by law, ten (10) days’ prior notice to such Pledgor of the time and place of any public sale or of the time after which any private sale or other intended disposition is to take place shall be commercially reasonable notification of such matters. No notification need be given to any Pledgor if it has signed, after the occurrence of an Event of Default, a statement renouncing or modifying any right to notification of sale or other intended disposition.

SECTION 9.3. Waiver of Notice and Claims. Each Pledgor hereby waives, to the fullest extent permitted by applicable law, notice or judicial hearing in connection with the Administrative Agent’s taking possession or the Administrative Agent’s disposition of the Pledged Collateral or any part thereof, including any and all prior notice and hearing for any

-24-

prejudgment remedy or remedies and any such right which such Pledgor would otherwise have under law, and each Pledgor hereby further waives, to the fullest extent permitted by applicable law: (i) all damages occasioned by such taking of possession, (ii) all other requirements as to the time, place and terms of sale or other requirements with respect to the enforcement of the Administrative Agent’s rights hereunder and (iii) all rights of redemption, appraisal, valuation, stay, extension or moratorium now or hereafter in force under any applicable law. The Administrative Agent shall not be liable for any incorrect or improper payment made pursuant to this Article IX in the absence of gross negligence or willful misconduct on the part of the Administrative Agent. Any sale of, or the grant of options to purchase, or any other realization upon, any Pledged Collateral shall operate to divest all right, title, interest, claim and demand, either at law or in equity, of the applicable Pledgor therein and thereto, and shall be a perpetual bar both at law and in equity against such Pledgor and against any and all persons claiming or attempting to claim the Pledged Collateral so sold, optioned or realized upon, or any part thereof, from, through or under such Pledgor.

SECTION 9.4. Certain Sales of Pledged Collateral.

(a) Each Pledgor recognizes that, by reason of certain prohibitions contained in law, rules, regulations or orders of any Governmental Authority, the Administrative Agent may be compelled, with respect to any sale of all or any part of the Pledged Collateral, to limit purchasers to those who meet the requirements of such Governmental Authority. Each Pledgor acknowledges that any such sales may be at prices and on terms less favorable to the Administrative Agent than those obtainable through a public sale without such restrictions, and, notwithstanding such circumstances, agrees that any such restricted sale shall be deemed to have been made in a commercially reasonable manner and that, except as may be required by applicable law, the Administrative Agent shall have no obligation to engage in public sales.

(b) Each Pledgor recognizes that, by reason of certain prohibitions contained in the Securities Act, and applicable state securities laws, the Administrative Agent may be compelled, with respect to any sale of all or any part of the Securities Collateral and Investment Property, to limit purchasers to persons who will agree, among other things, to acquire such Securities Collateral or Investment Property for their own account, for investment and not with a view to the distribution or resale thereof. Each Pledgor acknowledges that any such private sales may be at prices and on terms less favorable to the Administrative Agent than those obtainable through a public sale without such restrictions (including a public offering made pursuant to a registration statement under the Securities Act), and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner and that the Administrative Agent shall have no obligation to engage in public sales and no obligation to delay the sale of any Securities Collateral or Investment Property for the period of time necessary to permit the issuer thereof to register it for a form of public sale requiring registration under the Securities Act or under applicable state securities laws, even if such issuer would agree to do so.

(c) Notwithstanding the foregoing, each Pledgor shall, upon the occurrence and during the continuance of any Event of Default, at the reasonable request of the Administrative Agent, for the benefit of the Administrative Agent, cause any registration,

-25-

qualification under or compliance with any Federal or state securities law or laws to be effected with respect to all or any part of the Securities Collateral as soon as practicable and at the sole cost and expense of the Pledgors. Each Pledgor will use its commercially reasonable efforts to cause such registration to be effected (and be kept effective) and will use its commercially reasonable efforts to cause such qualification and compliance to be effected (and be kept effective) as may be so requested and as would permit or facilitate the sale and distribution of such Securities Collateral including registration under the Securities Act (or any similar statute then in effect), qualifications under applicable blue sky or other state securities laws and compliance with all other requirements of any Governmental Authority. Each Pledgor shall use its commercially reasonable efforts to cause the Administrative Agent to be kept advised in writing as to the progress of each such registration, qualification or compliance and as to the completion thereof, shall furnish to the Administrative Agent such number of prospectuses, offering circulars or other documents incident thereto as the Administrative Agent from time to time may reasonably request, and shall indemnify and shall cause the issuer of the Securities Collateral to indemnify the Administrative Agent and all others participating in the distribution of such Securities Collateral against all claims, losses, damages and liabilities caused by any untrue statement (or alleged untrue statement) of a material fact contained therein (or in any related registration statement, notification or the like) or by any omission (or alleged omission) to state therein (or in any related registration statement, notification or the like) a material fact required to be stated therein or necessary to make the statements therein not misleading.

(d) If the Administrative Agent determines to exercise its right to sell any or all of the Securities Collateral or Investment Property, upon written request, the applicable Pledgor shall from time to time furnish to the Administrative Agent all such information as the Administrative Agent may reasonably request in order to determine the number of securities included in the Securities Collateral or Investment Property which may be sold by the Administrative Agent as exempt transactions under the Securities Act and the rules of the Securities and Exchange Commission thereunder, as the same are from time to time in effect.

(e) Each Pledgor further agrees that a breach of any of the covenants contained in this Section 9.4 will cause irreparable injury to the Administrative Agent and the other Secured Parties, that the Administrative Agent and the other Secured Parties have no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section 9.4 shall be specifically enforceable against such Pledgor, and such Pledgor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no Event of Default has occurred and is continuing.

SECTION 9.5. No Waiver; Cumulative Remedies.

(a) No failure on the part of the Administrative Agent to exercise, no course of dealing with respect to, and no delay on the part of the Administrative Agent in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power, privilege or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right, power, privilege or remedy; nor shall the Administrative Agent be required to look first to, enforce or exhaust any other security, collateral or guaranties. All rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies provided by law or otherwise available.

-26-

(b) In the event that the Administrative Agent shall have instituted any proceeding to enforce any right, power, privilege or remedy under this Agreement or any other Loan Document by foreclosure, sale, entry or otherwise, and such proceeding shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Administrative Agent, then and in every such case, the Pledgors, the Administrative Agent and each other Secured Party shall be restored to their respective former positions and rights hereunder with respect to the Pledged Collateral, and all rights, remedies, privileges and powers of the Administrative Agent and the other Secured Parties shall continue as if no such proceeding had been instituted.

SECTION 9.6. Certain Additional Actions Regarding Intellectual Property. If any Event of Default shall have occurred and be continuing, upon the written demand of the Administrative Agent, each Pledgor shall execute and deliver to the Administrative Agent an assignment or assignments of the registered Patents, Trademarks and/or Copyrights and Goodwill and such other documents as are necessary to carry out the intent and purposes hereof. Within five (5) Business Days of written notice thereafter from the Administrative Agent, each Pledgor shall use commercially reasonable efforts to make available to the Administrative Agent, to the extent within such Pledgor’s power and authority, such personnel in such Pledgor’s employ on the date of the Event of Default as the Administrative Agent may reasonably request to permit such Pledgor to continue, directly or indirectly, to produce, advertise and sell the products and services sold by such Pledgor under the registered Patents, Trademarks and/or Copyrights, and each Pledgor shall use commercially reasonable efforts to make such persons available to perform their prior functions on the Administrative Agent’s behalf.

ARTICLE X

APPLICATION OF PROCEEDS

SECTION 10.1. Application of Proceeds. The proceeds received by the Administrative Agent in respect of any sale of, collection from or other realization upon all or any part of the Pledged Collateral pursuant to the exercise by the Administrative Agent of its remedies shall be applied, together with any other sums then held by the Administrative Agent pursuant to this Agreement, in accordance with the Credit Agreement.

ARTICLE XI

MISCELLANEOUS

SECTION 11.1. Concerning Administrative Agent.

(a) The Administrative Agent has been appointed as Administrative Agent pursuant to the Credit Agreement. The actions of the Administrative Agent hereunder are subject to the provisions of the Credit Agreement. The Administrative Agent shall have the right hereunder to make demands, to give notices, to exercise or refrain from exercising any rights,

-27-

and to take or refrain from taking action (including the release or substitution of the Pledged Collateral), in accordance with this Agreement and the Credit Agreement. The Administrative Agent may employ agents and attorneys-in-fact in connection herewith and shall not be liable for any acts or omissions of any such agents or attorneys-in-fact selected by it in good faith. The Administrative Agent may resign and a successor Administrative Agent may be appointed in the manner provided in the Credit Agreement. Upon the acceptance of any appointment as the Administrative Agent by a successor Administrative Agent, that successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent under this Agreement, and the retiring Administrative Agent shall thereupon be discharged from its duties and obligations under this Agreement. After any retiring Administrative Agent’s resignation, the provisions hereof shall inure to its benefit as to any actions taken or omitted to be taken by it under this Agreement while it was the Administrative Agent.

(b) The Administrative Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Pledged Collateral in its possession if such Pledged Collateral is accorded treatment substantially equivalent to that which the Administrative Agent, in its individual capacity, generally accords its own property consisting of similar instruments or interests, it being understood that neither the Administrative Agent nor any of the Secured Parties shall have responsibility for (i) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relating to any Securities Collateral, whether or not the Administrative Agent or any other Secured Party has or is deemed to have knowledge of such matters or (ii) taking any necessary steps to preserve rights against any person with respect to any Pledged Collateral.

(c) The Administrative Agent shall be entitled to rely upon any written notice, statement, certificate, order or other document or any telephone message believed by it to be genuine and correct and to have been signed, sent or made by the proper person, and, with respect to all matters pertaining to this Agreement and its duties hereunder, upon advice of counsel selected by it.

(d) If any item of Pledged Collateral also constitutes collateral granted to the Administrative Agent under any other deed of trust, mortgage, security agreement, pledge or instrument of any type, in the event of any conflict between the provisions hereof and the provisions of such other deed of trust, mortgage, security agreement, pledge or instrument of any type in respect of such collateral, the provisions hereof shall control.

(e) The Administrative Agent may rely on advice of counsel as to whether any or all UCC financing statements of the Pledgors need to be amended as a result of any of the changes described in Section 6.02(g) of the Credit Agreement. If any Pledgor fails to provide information to the Administrative Agent about such changes on a timely basis, the Administrative Agent shall not be liable or responsible to any party for any failure to maintain a perfected security interest in such Pledgor’s property constituting Pledged Collateral, for which the Administrative Agent needed to have information relating to such changes. The Administrative Agent shall have no duty to inquire about such changes if any Pledgor does not inform the Administrative Agent of such changes, the parties acknowledging and agreeing that it would not be feasible or practical for the Administrative Agent to search for information on such changes if such information is not provided by any Pledgor.

-28-

SECTION 11.2. Intercreditor Agreement. Notwithstanding anything herein to the contrary, the Liens and security interests granted to the Administrative Agent pursuant to this Agreement and the exercise of any right or remedy by the Administrative Agent hereunder are subject to the terms of the Intercreditor Agreement. In the event of any conflict between the terms of the Intercreditor Agreement and the terms of this Agreement, the terms of the Intercreditor Agreement shall govern and control.

THIS SECURITY AGREEMENT IS SUBJECT TO THE PROVISIONS OF THE INTERCREDITOR AGREEMENT DATED AS OF MAY 7, 2010 (AS AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME), AMONG C.P. ATLAS ACQUISITION CORP. (TO BE MERGED WITH AND INTO AMERICAN RENAL HOLDINGS INC.), THE GRANTORS PARTY THERETO, BANK OF AMERICA, N.A., AS CREDIT AGREEMENT ADMINISTRATIVE AGENT, WILMINGTON TRUST FSB, AS SENIOR SECURED NOTES COLLATERAL AGENT AND EACH ADDITIONAL NOTES COLLATERAL AGENT FROM TIME TO TIME PARTY THERETO.

SECTION 11.3. Administrative Agent May Perform; Administrative Agent Appointed Attorney-in-Fact. If any Pledgor shall fail to perform any covenants contained in this Agreement or if any representation or warranty on the part of any Pledgor contained herein shall be breached, the Administrative Agent may (but shall not be obligated to) do the same or cause it to be done or remedy any such breach, and may expend funds for such purpose; provided, however, that the Administrative Agent shall in no event be bound to inquire into the validity of any tax, Lien, imposition or other obligation which such Pledgor fails to pay or perform as and when required hereby and which such Pledgor does not contest in accordance with the provisions of the Credit Agreement. Any and all amounts so expended by the Administrative Agent shall be paid by the Pledgors in accordance with the provisions of Section 11.05 of the Credit Agreement. Neither the provisions of this Section 11.3 nor any action taken by the Administrative Agent pursuant to the provisions of this Section 11.3 shall prevent any such failure to observe any covenant contained in this Agreement nor any breach of representation or warranty from constituting an Event of Default. Each Pledgor hereby appoints the Administrative Agent its attorney-in-fact, with full power and authority in the place and stead of such Pledgor and in the name of such Pledgor, or otherwise, from time to time to take any action and to execute any instrument consistent with the terms of the Credit Agreement, this Agreement and the other Collateral Documents which the Administrative Agent may deem necessary to accomplish the purposes hereof (but the Administrative Agent shall not be obligated to and shall have no liability to such Pledgor or any third party for failure to so do or take action). The foregoing grant of authority is a power of attorney coupled with an interest and such appointment shall be irrevocable for the term hereof. Each Pledgor hereby ratifies all that such attorney shall lawfully do or cause to be done by virtue hereof.

SECTION 11.4. Continuing Security Interest; Assignment. This Agreement shall create a continuing security interest in the Pledged Collateral and shall (i) be binding upon

-29-

the Pledgors, their respective successors and assigns and (ii) inure, together with the rights and remedies of the Administrative Agent hereunder, to the benefit of the Administrative Agent and the other Secured Parties and each of their respective successors, transferees and assigns. No other persons (including any other creditor of any Pledgor) shall have any interest herein or any right or benefit with respect hereto. Without limiting the generality of the foregoing clause (ii), any Secured Party may assign or otherwise transfer any indebtedness held by it secured by this Agreement to any other person, and such other person shall thereupon become vested with all the benefits in respect thereof granted to such Secured Party, herein or otherwise, subject however, to the provisions of the Credit Agreement and, in the case of a Secured Party that is a party to a Secured Hedging Agreement or a Secured Cash Management Agreements, such Secured Hedging Agreement or Secured Cash Management Agreement, as applicable. Each of the Pledgors agrees that its obligations hereunder and the security interest created hereunder shall continue to be effective or be reinstated, as applicable, if at any time payment, or any part thereof, of all or any part of the Obligations is rescinded or must otherwise be restored by the Secured Party upon the bankruptcy or reorganization of any Pledgor or otherwise.

SECTION 11.5. Termination; Release. When all the Obligations have been paid in full and the Commitments of the Lenders to make any Loan or to issue any Letter of Credit under the Credit Agreement shall have expired or been sooner terminated and all Letters of Credit have been terminated or cash collateralized in accordance with the provisions of the Credit Agreement, this Agreement shall terminate. Upon termination of this Agreement the Pledged Collateral shall be released from the Lien of this Agreement. Upon such release or any release of Pledged Collateral or any part thereof in accordance with the provisions of the Credit Agreement or the other Loan Documents, the Administrative Agent shall, upon the request and at the sole cost and expense of the Pledgors, assign, transfer and deliver to Pledgor, against receipt and without recourse to or warranty by the Administrative Agent except as to the fact that the Administrative Agent has not encumbered the released assets, such of the Pledged Collateral or any part thereof to be released (in the case of a release) as may be in possession of the Administrative Agent and as shall not have been sold or otherwise applied pursuant to the terms hereof, and, with respect to any other Pledged Collateral, proper documents and instruments (including UCC-3 termination financing statements or releases) acknowledging the termination hereof or the release of such Pledged Collateral, as the case may be.

SECTION 11.6. Modification in Writing. No amendment, modification, supplement, termination or waiver of or to any provision hereof, nor consent to any departure by any Pledgor therefrom, shall be effective unless the same shall be made in accordance with the terms of the Credit Agreement and unless in writing and signed by the Administrative Agent. Any amendment, modification or supplement of or to any provision hereof, any waiver of any provision hereof and any consent to any departure by any Pledgor from the terms of any provision hereof in each case shall be effective only in the specific instance and for the specific purpose for which made or given. Except where notice is specifically required by this Agreement or any other document evidencing the Obligations, no notice to or demand on any Pledgor in any case shall entitle any Pledgor to any other or further notice or demand in similar or other circumstances.

-30-

SECTION 11.7. Notices. Unless otherwise provided herein or in the Credit Agreement, any notice or other communication herein required or permitted to be given shall be given in the manner and become effective as set forth in the Credit Agreement, as to any Pledgor, addressed to it at the address of the Borrower set forth in the Credit Agreement and as to the Administrative Agent, addressed to it at the address set forth in the Credit Agreement, or in each case at such other address as shall be designated by such party in a written notice to the other party complying as to delivery with the terms of this Section 11.7.

SECTION 11.8. Governing Law, Consent to Jurisdiction and Service of Process; Waiver of Jury Trial. Sections 11.15 and 11.16 of the Credit Agreement are incorporated herein, mutatis mutandis, as if a part hereof.

SECTION 11.9. Severability of Provisions. Any provision hereof which is invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without invalidating the remaining provisions hereof or affecting the validity, legality or enforceability of such provision in any other jurisdiction.

SECTION 11.10. Execution in Counterparts. This Agreement and any amendments, waivers, consents or supplements hereto may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original, but all such counterparts together shall constitute one and the same agreement.

SECTION 11.11. Business Days. In the event any time period or any date provided in this Agreement ends or falls on a day other than a Business Day, then such time period shall be deemed to end and such date shall be deemed to fall on the next succeeding Business Day, and performance herein may be made on such Business Day, with the same force and effect as if made on such other day.

SECTION 11.12. No Credit for Payment of Taxes or Imposition. Such Pledgor shall not be entitled to any credit against the principal, premium, if any, or interest payable under the Credit Agreement, and such Pledgor shall not be entitled to any credit against any other sums which may become payable under the terms thereof or hereof, by reason of the payment of any Tax on the Pledged Collateral or any part thereof.

SECTION 11.13. No Claims Against Administrative Agent. Nothing contained in this Agreement shall constitute any consent or request by the Administrative Agent, express or implied, for the performance of any labor or services or the furnishing of any materials or other property in respect of the Pledged Collateral or any part thereof, nor as giving any Pledgor any right, power or authority to contract for or permit the performance of any labor or services or the furnishing of any materials or other property in such fashion as would permit the making of any claim against the Administrative Agent in respect thereof or any claim that any Lien based on the performance of such labor or services or the furnishing of any such materials or other property is prior to the Lien hereof.

-31-

SECTION 11.14. No Release. Nothing set forth in this Agreement or any other Loan Document, nor the exercise by the Administrative Agent of any of the rights or remedies hereunder, shall relieve any Pledgor from the performance of any term, covenant, condition or agreement on such Pledgor’s part to be performed or observed under or in respect of any of the Pledged Collateral or from any liability to any person under or in respect of any of the Pledged Collateral or shall impose any obligation on the Administrative Agent or any other Secured Party to perform or observe any such term, covenant, condition or agreement on such Pledgor’s part to be so performed or observed or shall impose any liability on the Administrative Agent or any other Secured Party for any act or omission on the part of such Pledgor relating thereto or for any breach of any representation or warranty on the part of such Pledgor contained in this Agreement, the Credit Agreement or the other Loan Documents, or under or in respect of the Pledged Collateral or made in connection herewith or therewith. Anything herein to the contrary notwithstanding, neither the Administrative Agent nor any other Secured Party shall have any obligation or liability under any contracts, agreements and other documents included in the Pledged Collateral by reason of this Agreement, nor shall the Administrative Agent or any other Secured Party be obligated to perform any of the obligations or duties of any Pledgor thereunder or to take any action to collect or enforce any such contract, agreement or other document included in the Pledged Collateral hereunder. The obligations of each Pledgor contained in this Section 11.14 shall survive the termination hereof and the discharge of such Pledgor’s other obligations under this Agreement, the Credit Agreement and the other Loan Documents.

SECTION 11.15. Obligations Absolute. All obligations of each Pledgor hereunder shall be absolute and unconditional irrespective of:

(i) any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or the like of any other Pledgor;

(ii) any lack of validity or enforceability of the Credit Agreement, any Secured Hedging Agreement, any Secured Cash Management Agreement or any other Loan Document, or any other agreement or instrument relating thereto;

(iii) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from the Credit Agreement, any Secured Hedging Agreement, Secured Cash Management Agreement or any other Loan Document or any other agreement or instrument relating thereto;

(iv) any pledge, exchange, release or non-perfection of any other collateral, or any release or amendment or waiver of or consent to any departure from any guarantee, for all or any of the Obligations;

(v) any exercise, non-exercise or waiver of any right, remedy, power or privilege under or in respect hereof, the Credit Agreement, any Secured Hedging Agreement, any Secured Cash Management Agreement or any other Loan Document except as specifically set forth in a waiver granted pursuant to the provisions of Section 11.4 hereof; or

-32-

(vi) any other circumstances which might otherwise constitute a defense (other than a defense of payment in full of the Obligations) available to, or a discharge of, any Pledgor.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]

-33-

IN WITNESS WHEREOF, each Pledgor and the Administrative Agent have caused this Agreement to be duly executed and delivered by their duly authorized officers as of the date first above written.

C.P. ATLAS ACQUISITION CORP. (which on the Closing Date shall be merged with and into AMERICAN RENAL HOLDINGS INC. with AMERICAN RENAL HOLDINGS INC. surviving such merger), as Pledgor
By:		/s/ Jared S. Hendricks
	Name:	Jared S. Hendricks
	Title:	Vice President
AMERICAN RENAL HOLDINGS INC., as Pledgor
By:		/s/ Joseph A. Carlucci
	Name:	Joseph A. Carlucci
	Title:	Chief Executive Officer
AMERICAN RENAL ASSOCIATES LLC, as Pledgor
	By: AMERICAN RENAL HOLDINGS INC.
By:		/s/ Joseph A. Carlucci
	Name:	Joseph A. Carlucci
	Title:	Chief Executive Officer

AMERICAN RENAL MANAGEMENT LLC
AKC HOLDING LLC
JKC HOLDING LLC
ARA-BOCA RATON HOLDING LLC
ARA-RHODE ISLAND DIALYSIS II LLC
ARA-OHIO HOLDINGS LLC
TEXAS-ARA LLC
ACUTE DIALYSIS SERVICES-ARA LLC, as Pledgors
	By: AMERICAN RENAL ASSOCIATES LLC
By:		/s/ Joseph A. Carlucci
	Name:	Joseph A. Carlucci
	Title:	Chief Executive Officer
AMERICAN RENAL TEXAS L.P.
AMERICAN RENAL TEXAS II, L.P., as Pledgors
	By: TEXAS-ARA LLC
By:		/s/ Joseph A. Carlucci
	Name:	Joseph A. Carlucci
	Title:	Chief Executive Officer
C.P. ATLAS INTERMEDIATE HOLDINGS, LLC, as Pledgor
By:		/s/ Jared S. Hendricks
	Name:	Jared S. Hendricks
	Title:	Vice President

-2-

BANK OF AMERICA, N.A.,
as Administrative Agent
By:		/s/ Mollie S. Canup
	Name:	Mollie S. Canup
	Title:	Vice President

-3-

EXHIBIT 1

[Form of]

ISSUER’S ACKNOWLEDGMENT

The undersigned hereby (i) acknowledges receipt of the Security Agreement (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement;” capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Security Agreement), dated as of May 7, 2010, made by C.P. ATLAS ACQUISITION CORP., a Delaware corporation (which on the Closing Date shall be merged with and into American Renal Holdings Inc., a Delaware corporation (the “Company”), with the Company surviving such merger as the borrower, the “Borrower”), the Guarantors party thereto and BANK OF AMERICA, N.A., as administrative agent (in such capacity and together with any successors in such capacity, the “Administrative Agent”), (ii) agrees promptly to note on its books the security interests granted to the Administrative Agent and confirmed under the Security Agreement, (iii) agrees that it will comply with instructions of the Administrative Agent with respect to the applicable Securities Collateral (including all Equity Interests of the undersigned) without further consent by the applicable Pledgor, (iv) agrees to notify the Administrative Agent upon obtaining knowledge of any interest in favor of any person in the applicable Securities Collateral that is adverse to the interest of the Administrative Agent therein and (v) waives any right or requirement at any time hereafter to receive a copy of the Security Agreement in connection with the registration of any Securities Collateral thereunder in the name of the Administrative Agent or its nominee or the exercise of voting rights by the Administrative Agent or its nominee.

[                                                                 ]
By:
	Name:
	Title:

EXHIBIT 2

[Form of]

SECURITIES PLEDGE AMENDMENT

This Securities Pledge Amendment, dated as of May 7, 2010, is delivered pursuant to Section 5.1 of the Security Agreement (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement;” capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Security Agreement), dated as of May 7, 2010, made by C.P. ATLAS ACQUISITION CORP., a Delaware corporation C.P. ATLAS ACQUISITION CORP., a Delaware corporation (which on the Closing Date shall be merged with and into American Renal Holdings Inc., a Delaware corporation (the “Company”), with the Company surviving such merger as the borrower, the “Borrower”), the Guarantors party thereto and BANK OF AMERICA, N.A., as Administrative Agent (in such capacity and together with any successors in such capacity, the “Administrative Agent”). The undersigned hereby agrees that this Securities Pledge Amendment may be attached to the Security Agreement and that the Pledged Securities and/or Intercompany Notes listed on this Securities Pledge Amendment shall be deemed to be and shall become part of the Pledged Collateral and shall secure all Obligations.

PLEDGED SECURITIES

ISSUER CLASS
OF STOCK
OR
INTERESTS PAR
VALUE CERTIFICATE
NO(S). NUMBER OF
SHARES
OR
INTERESTS PERCENTAGE OF
ALL ISSUED CAPITAL
OR OTHER EQUITY
INTERESTS OF ISSUER

INTERCOMPANY NOTES

ISSUER PRINCIPAL
AMOUNT DATE OF
ISSUANCE INTEREST
RATE MATURITY
DATE

[                                                                              ],
as Pledgor
By:
	Name:
	Title:

AGREED TO AND ACCEPTED:

BANK OF AMERICA, N.A., as Administrative Agent
By:
	Name:
	Title:

-2-

EXHIBIT 3

[Form of]

SECURITY AGREEMENT SUPPLEMENT

[Name of New Pledgor]

[Address of New Pledgor]

[Date]

Ladies and Gentlemen:

Reference is made to the Security Agreement (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement;” capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Security Agreement), dated as of May 7, 2010, made by C.P. ATLAS ACQUISITION CORP., a Delaware corporation (the “Borrower”), the Guarantors party thereto and BANK OF AMERICA, N.A., as administrative agent (in such capacity and together with any successors in such capacity, the “Administrative Agent”).

This Security Agreement Supplement supplements the Security Agreement and is delivered by the undersigned, [                    ] (the “New Pledgor”), pursuant to Section 3.5 of the Security Agreement. The New Pledgor hereby agrees to be bound as a Guarantor and as a Pledgor party to the Security Agreement by all of the terms, covenants and conditions set forth in the Security Agreement to the same extent that it would have been bound if it had been a signatory to the Security Agreement on the date of the Security Agreement. Without limiting the generality of the foregoing, the New Pledgor hereby grants and pledges to the Administrative Agent, as collateral security for the full, prompt and complete payment and performance when due (whether at stated maturity, by acceleration or otherwise) of the Obligations, a Lien on and security interest in, all of its right, title and interest in, to and under the Pledged Collateral and expressly assumes all obligations and liabilities of a Guarantor and Pledgor thereunder. The New Pledgor hereby makes each of the representations and warranties and agrees to each of the covenants applicable to the Pledgors contained in the Security Agreement.

Annexed hereto are supplements to schedules 1(a), 1(b), 1(c), 2, 3, 5, 6(a), 6(b), 7(a), 7(b), 8(a), 8(b), 8(c), 9, 10, 11 and 12 to the Perfection Certificate with respect to the New Pledgor. Such supplements shall be deemed to be part of the Security Agreement.

This Security Agreement Supplement and any amendments, waivers, consents or supplements hereto may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original, but all such counterparts together shall constitute one and the same agreement.

THIS SECURITY AGREEMENT SUPPLEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

-2-

IN WITNESS WHEREOF, the New Pledgor has caused this Security Agreement Supplement to be executed and delivered by its duly authorized officer as of the date first above written.

[NEW PLEDGOR]
By:
	Name:
	Title:

AGREED TO AND ACCEPTED:

BANK OF AMERICA, N.A.,
as Administrative Agent
By:
	Name:
	Title:

[Schedules to be attached]

-3-

EXHIBIT 4

[Form of]

Copyright Security Agreement

Copyright Security Agreement, dated as of [                    ], 20[    ], by [INSERT NAME OF PLEDGOR THAT OWNS ANY REGISTERED COPYRIGHTS] (“Pledgor”), in favor of BANK OF AMERICA, N.A., in its capacity as Administrative Agent pursuant to the Credit Agreement (in such capacity, the “Administrative Agent”).

W I T N E S S E T H:

WHEREAS, the Pledgor is party to a Security Agreement of even date herewith (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement”) in favor of the Administrative Agent pursuant to which the Pledgor is required to execute and deliver this Copyright Security Agreement;

NOW, THEREFORE, in consideration of the premises and to induce the Administrative Agent, for the benefit of the Secured Parties, to enter into the Credit Agreement, the Pledgor hereby agrees with the Administrative Agent as follows:

SECTION 1. Defined Terms. Unless otherwise defined herein, terms defined in the Security Agreement and used herein have the meaning given to them in the Security Agreement.

SECTION 2. Grant of Security Interest in Copyright Collateral. Pledgor hereby pledges and grants to the Administrative Agent for the benefit of the Secured Parties a lien on and security interest in and to all of its right, title and interest in, to and under all the following Pledged Collateral of such Pledgor:

(a) Copyright registrations of such Pledgor listed on Schedule I attached hereto; and

(b) all Proceeds of any and all of the foregoing (other than Excluded Property).

SECTION 3. Security Agreement. The security interest granted pursuant to this Copyright Security Agreement is granted in conjunction with the security interest granted to the Administrative Agent pursuant to the Security Agreement and Pledgor hereby acknowledges and affirms that the rights and remedies of the Administrative Agent with respect to the security interest in the Copyrights made and granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein. In the event that any provision of this Copyright Security Agreement is deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall control.

SECTION 4. Intercreditor Agreement. Notwithstanding anything herein to the contrary, the Liens and security interests granted to the Administrative Agent pursuant to this Agreement and the exercise of any right or remedy by the Administrative Agent hereunder are subject to the terms of the Intercreditor Agreement. In the event of any conflict between the terms of the Intercreditor Agreement and the terms of this Agreement, the terms of the Intercreditor Agreement shall govern and control.

SECTION 5. Termination. Upon the payment in full of the Obligations and termination of the Security Agreement, the Administrative Agent shall execute, acknowledge, and deliver to the Pledgors an instrument in writing in recordable form releasing the collateral pledge, grant, assignment, lien and security interest in the Copyrights under this Copyright Security Agreement.

SECTION 6. Counterparts. This Copyright Security Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Copyright Security Agreement by signing and delivering one or more counterparts.

SECTION 7. Governing Law. This Copyright Security Agreement and the transactions contemplated hereby, and all disputes between the parties under or relating to this Copyright Security Agreement or the facts or circumstances leading to its execution, whether in contract, tort or otherwise, shall be construed in accordance with and governed by the laws (including statutes of limitation) of the State of New York, without regard to conflicts of law principles that would require the application of the laws of another jurisdiction.

[signature page follows]

-2-

IN WITNESS WHEREOF, Pledgor has caused this Copyright Security Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.

Very truly yours,
[PLEDGOR]
By:
	Name:
	Title:

Accepted and Agreed:

BANK OF AMERICA, N.A.,
as Administrative Agent
By:
	Name:
	Title:

-3-

SCHEDULE I

to

COPYRIGHT SECURITY AGREEMENT

UNITED STATES COPYRIGHT REGISTRATIONS AND COPYRIGHT

APPLICATIONS

Copyright Registrations:

OWNER REGISTRATION NUMBER TITLE

Copyright Applications:

OWNER TITLE

-4-

EXHIBIT 5

[Form of]

Patent Security Agreement

Patent Security Agreement, dated as of [                    ], 20[    ], by [INSERT NAME OF PLEDGOR THAT OWNS ANY PATENTS] (“Pledgor”), in favor of BANK OF AMERICA, N.A., in its capacity as Administrative Agent pursuant to the Credit Agreement (in such capacity, the “Administrative Agent”).

W I T N E S S E T H:

WHEREAS, the Pledgor is party to a Security Agreement of even date herewith (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement”) in favor of the Administrative Agent pursuant to which the Pledgor is required to execute and deliver this Patent Security Agreement;

NOW, THEREFORE, in consideration of the premises and to induce the Administrative Agent, for the benefit of the Secured Parties, to enter into the Credit Agreement, the Pledgor hereby agrees with the Administrative Agent as follows:

SECTION 1. Defined Terms. Unless otherwise defined herein, terms defined in the Security Agreement and used herein have the meaning given to them in the Security Agreement.

SECTION 2. Grant of Security Interest in Patent Collateral. Pledgor hereby pledges and grants to the Administrative Agent for the benefit of the Secured Parties a lien on and security interest in and to all of its right, title and interest in, to and under all the following Pledged Collateral of such Pledgor:

(a) Patents and patent applications of such Pledgor listed on Schedule I attached hereto; and

(b) all Proceeds of any and all of the foregoing (other than Excluded Property).

SECTION 3. Security Agreement. The security interest granted pursuant to this Patent Security Agreement is granted in conjunction with the security interest granted to the Administrative Agent pursuant to the Security Agreement and Pledgor hereby acknowledges and affirms that the rights and remedies of the Administrative Agent with respect to the security interest in the Patents made and granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein. In the event that any provision of this Patent Security Agreement is deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall control.

SECTION 4. Intercreditor Agreement. Notwithstanding anything herein to the contrary, the Liens and security interests granted to the Administrative Agent pursuant to this Agreement and the exercise of any right or remedy by the Administrative Agent hereunder are subject to the terms of the Intercreditor Agreement. In the event of any conflict between the terms of the Intercreditor Agreement and the terms of this Agreement, the terms of the Intercreditor Agreement shall govern and control.

SECTION 5. Termination. Upon the payment in full of the Obligations and termination of the Security Agreement, the Administrative Agent shall execute, acknowledge, and deliver to the Pledgor an instrument in writing in recordable form releasing the collateral pledge, grant, assignment, lien and security interest in the Patents under this Patent Security Agreement.

SECTION 6. Counterparts. This Patent Security Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Patent Security Agreement by signing and delivering one or more counterparts.

SECTION 7. Governing Law. This Patent Security Agreement and the transactions contemplated hereby, and all disputes between the parties under or relating to this Patent Security Agreement or the facts or circumstances leading to its execution, whether in contract, tort or otherwise, shall be construed in accordance with and governed by the laws (including statutes of limitation) of the State of New York, without regard to conflicts of law principles that would require the application of the laws of another jurisdiction.

[signature page follows]

-2-

IN WITNESS WHEREOF, Pledgor has caused this Patent Security Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.

Very truly yours,
[PLEDGOR]
By:
	Name:
	Title:

Accepted and Agreed:

BANK OF AMERICA, N.A.,
as Administrative Agent
By:
	Name:
	Title:

-3-

SCHEDULE I

to

PATENT SECURITY AGREEMENT

UNITED STATES PATENTS AND PATENT APPLICATIONS

Patents:

OWNER REGISTRATION NUMBER NAME

Patent Applications:

OWNER APPLICATION NUMBER NAME

-4-

EXHIBIT 6

[Form of]

Trademark Security Agreement

Trademark Security Agreement, dated as of [                    ], 20[    ], by [INSERT NAME OF PLEDGOR THAT OWNS ANY REGISTERED OR APPLIED FOR TRADEMARKS] (“Pledgor”), in favor of BANK OF AMERICA, N.A., in its capacity as Administrative Agent pursuant to the Credit Agreement (in such capacity, the “Administrative Agent”).

W I T N E S S E T H:

WHEREAS, the Pledgor is party to a Security Agreement of even date herewith (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement”) in favor of the Administrative Agent pursuant to which the Pledgor is required to execute and deliver this Trademark Security Agreement;

NOW, THEREFORE, in consideration of the premises and to induce the Administrative Agent, for the benefit of the Secured Parties, to enter into the Credit Agreement, the Pledgor hereby agrees with the Administrative Agent as follows:

SECTION 1. Defined Terms. Unless otherwise defined herein, terms defined in the Security Agreement and used herein have the meaning given to them in the Security Agreement.

SECTION 2. Grant of Security Interest in Trademark Collateral. Pledgor hereby pledges and grants to the Administrative Agent for the benefit of the Secured Parties a lien on and security interest in and to all of its right, title and interest in, to and under all the following Pledged Collateral of such Pledgor:

(a) Trademark registrations and applications of such Pledgor listed on Schedule I attached hereto;

(b) all Goodwill associated with such Trademarks; and

(c) all Proceeds of any and all of the foregoing (other than Excluded Property).

SECTION 3. Security Agreement. The security interest granted pursuant to this Trademark Security Agreement is granted in conjunction with the security interest granted to the Administrative Agent pursuant to the Security Agreement and Pledgor hereby acknowledges and affirms that the rights and remedies of the Administrative Agent with respect to the security interest in the Trademarks made and granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein. In the event that any provision of this Trademark Security Agreement is deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall control.

SECTION 4. Intercreditor Agreement. Notwithstanding anything herein to the contrary, the Liens and security interests granted to the Administrative Agent pursuant to this Agreement and the exercise of any right or remedy by the Administrative Agent hereunder are subject to the terms of the Intercreditor Agreement. In the event of any conflict between the terms of the Intercreditor Agreement and the terms of this Agreement, the terms of the Intercreditor Agreement shall govern and control.

SECTION 5. Termination. Upon the payment in full of the Obligations and termination of the Security Agreement, the Administrative Agent shall execute, acknowledge, and deliver to the Pledgor an instrument in writing in recordable form releasing the collateral pledge, grant, assignment, lien and security interest in the Trademarks under this Trademark Security Agreement.

SECTION 6. Counterparts. This Trademark Security Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Trademark Security Agreement by signing and delivering one or more counterparts.

SECTION 7. Governing Law. This Trademark Security Agreement and the transactions contemplated hereby, and all disputes between the parties under or relating to this Trademark Security Agreement or the facts or circumstances leading to its execution, whether in contract, tort or otherwise, shall be construed in accordance with and governed by the laws (including statutes of limitation) of the State of New York, without regard to conflicts of law principles that would require the application of the laws of another jurisdiction.

[signature page follows]

-2-

IN WITNESS WHEREOF, Pledgor has caused this Trademark Security Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.

[PLEDGOR]
By:
	Name:
	Title:

Accepted and Agreed:

BANK OF AMERICA, N.A.,
as Administrative Agent
By:
	Name:
	Title:

-3-

SCHEDULE I

to

TRADEMARK SECURITY AGREEMENT

UNITED STATES TRADEMARK REGISTRATIONS AND TRADEMARK

APPLICATIONS

Trademark Registrations:

OWNER REGISTRATION NUMBER TRADEMARK

Trademark Applications:

OWNER APPLICATION NUMBER TRADEMARK

-4-

EXHIBIT H

EXHIBIT H-1

FORM OF

TAX STATUS CERTIFICATE

(For Non-Bank Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Reference is made to that certain Credit Agreement, dated as of May [    ], 2010 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), among C.P. ATLAS ACQUISITION CORP., a Delaware corporation (the “Borrower”), which merged with and into AMERICAN RENAL HOLDINGS INC. (the “Company”) on the Closing Date, upon and following which the Borrower became the Company, C.P. ATLAS INTERMEDIATE HOLDINGS, LLC, a Delaware limited liability company (“Holdings”), the Lenders from time to time party thereto, and BANK OF AMERICA, N.A., as Administrative Agent, L/C Issuer and Swing Line Lender. Capitalized terms used herein but not otherwise defined shall have the meaning given to such term in the Credit Agreement.

Pursuant to the provisions of Section 3.01(e) of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) it is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Code Section 871(h)(3)(B), (iv) it is not a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (v) no payments in connection with any Loan Document are effectively connected with the undersigned’s conduct of a U.S. trade or business.

The undersigned has furnished the Administrative Agent with a certification of its non-U.S. person status on Internal Revenue Service Form W-8BEN. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent in writing and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent a properly completed and currently effective certificate in either the calendar year in which payment is to be made to the undersigned, or in either of the two calendar years preceding such payment.

[Signature Page Follows]

J-1-1

Form of Tax Status Certificate

[Lender]
By:
	Name:
	Title:
[Address]

Dated:                     , 20[    ]

J-1-2

Form of Tax Status Certificate

EXHIBIT H-2

FORM OF

TAX STATUS CERTIFICATE

(For Non-Bank Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

Reference is made to that certain Credit Agreement, dated as of May [    ], 2010 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), among C.P. ATLAS ACQUISITION CORP., a Delaware corporation (the “Borrower”), which merged with and into AMERICAN RENAL HOLDINGS INC. (the “Company”) on the Closing Date, upon and following which the Borrower became the Company, C.P. ATLAS INTERMEDIATE HOLDINGS, LLC, a Delaware limited liability company (“Holdings”), the Lenders from time to time party thereto, and BANK OF AMERICA, N.A., as Administrative Agent, L/C Issuer and Swing Line Lender. Capitalized terms used herein but not otherwise defined shall have the meaning given to such term in the Credit Agreement.

Pursuant to the provisions of Section 3.01(e) of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) its partners/members are the sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such Loan(s)), (iii) neither the undersigned nor any of its partners/members is a bank within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its partners/members is a ten percent shareholder of the Borrower within the meaning of Code Section 871(h)(3)(B), (v) none of its partners/members is a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (vi) no payments in connection with any Loan Document are effectively connected with the undersigned’s or its partners/members’ conduct of a U.S. trade or business.

The undersigned has furnished the Administrative Agent and the Borrower with Internal Revenue Service Form W-8IMY accompanied by an Internal Revenue Service Form W-8BEN from each of its partners/members claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent in writing with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

[Signature Page Follows]

J-2-1

Form of Tax Status Certificate

[Lender]
By:
	Name:
	Title:
[Address]

Dated:             , 20[    ]

J-2-2

Form of Tax Status Certificate

EXHIBIT H-3

FORM OF TAX

STATUS CERTIFICATE

(For Non-Bank Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Reference is made to that certain Credit Agreement, dated as of May [    ], 2010 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), among C.P. ATLAS ACQUISITION CORP., a Delaware corporation (the “Borrower”), which merged with and into AMERICAN RENAL HOLDINGS INC. (the “Company”) on the Closing Date, upon and following which the Borrower became the Company, C.P. ATLAS INTERMEDIATE HOLDINGS, LLC, a Delaware limited liability company (“Holdings”), the Lenders from time to time party thereto, and BANK OF AMERICA, N.A., as Administrative Agent, L/C Issuer and Swing Line Lender. Capitalized terms used herein but not otherwise defined shall have the meaning given to such term in the Credit Agreement.

Pursuant to the provisions of Section 3.01(e) and Section 10.07(d) of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent share-holder of the Borrower within the meaning of Code Section 871(h)(3)(B), (iv) it is not a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (v) no payments in connection with any Loan Document are effectively connected with the undersigned’s conduct of a U.S. trade or business.

The undersigned has furnished its participating Lender with a certification of its non-U.S. person status on Internal Revenue Service Form W-8BEN. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

[Signature Page Follows]

J-3-1

Form of Tax Status Certificate

[Participant]
By:
	Name:
	Title:
[Address]

Dated:             , 20[    ]

J-3-2

Form of Tax Status Certificate

EXHIBIT H-4

FORM OF TAX

STATUS CERTIFICATE

(For Non-Bank Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)

Reference is made to that certain Credit Agreement, dated as of May [    ], 2010 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), among C.P. ATLAS ACQUISITION CORP., a Delaware corporation (the “Borrower”), which merged with and into AMERICAN RENAL HOLDINGS INC. (the “Company”) on the Closing Date, upon and following which the Borrower became the Company, C.P. ATLAS INTERMEDIATE HOLDINGS, LLC, a Delaware limited liability company (“Holdings”), the Lenders from time to time party thereto, and BANK OF AMERICA, N.A., as Administrative Agent, L/C Issuer and Swing Line Lender. Capitalized terms used herein but not otherwise defined shall have the meaning given to such term in the Credit Agreement.

Pursuant to the provisions of Section 3.01(e) of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its partners/members are the sole beneficial owners of such participation, (iii) neither the undersigned nor any of its partners/members is a bank within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its partners/members is a ten percent shareholder of the Borrower within the meaning of Code Section 871(h)(3)(B), (v) none of its partners/members is a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (vi) no payments in connection with any Loan Document are effectively connected with the undersigned’s or its partners/members’ conduct of a U.S. trade or business.

The undersigned has furnished its participating Lender with Internal Revenue Service Form W-8IMY accompanied by an Internal Revenue Service Form W-8BEN from each of its partners/members claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

[Signature Page Follows]

H - 1

[Participant]
By:
	Name:
	Title:
[Address]

Dated:             , 20[    ]

H - 2

EXHIBIT I

FORM OF PERFECTION CERTIFICATE

I - 1

Form of Perfection Certificate

PERFECTION CERTIFICATE

May 7, 2010

Reference is hereby made to (i) that certain Security Agreement dated as of May 7, 2010 (the “Credit Agreement Security Agreement”), among C.P. Atlas Acquisition Corp., a Delaware corporation (which on the Closing Date shall be merged with and into American Renal Holdings, Inc., a Delaware corporation (the “Company”), with the Company surviving such merger as the issuer, the “Issuer”) the Guarantors party thereto (collectively, the “Guarantors”) and Bank of America, N.A. as collateral agent (in such capacity, the “Credit Agreement Collateral Agent”), (ii) that certain Credit Agreement dated as of May 7, 2010 (the “Credit Agreement”) among the Issuer, certain other parties thereto and Bank of America, N.A, as Administrative Agent, Swing Line Lender and L/C Issuer, (iii) that certain Indenture dated as of May 7, 2010 ( the “Indenture”), relating to the Issuer’s 8.375% Senior Secured Notes due 2018 among the Issuer, the Guarantors and the Trustee thereunder, (iv) that certain Security Agreement related to the Indenture dated as of May 7, 2010 (the “Indenture Security Agreement” and, together with the Credit Agreement Security Agreement, the “Security Agreements”), among the Issuer, the Guarantors and the collateral agent thereunder (the “Indenture Collateral Agent” and together with the Credit Agreement Collateral Agent, the “Agents”). Capitalized terms used but not defined herein have the meanings assigned in the Credit Agreement and the Security Agreements, as applicable.

As used herein, the term “Companies” means Issuer and each of the Guarantors.

As of the date hereof, the undersigned hereby certify to the Agents as follows:

I. Names.

A. The exact legal name of each Company and Qualified Subsidiary, as such name appears in its respective certificate of incorporation or any other organizational document, is set forth in Schedule 1(a). Each Company and Qualified Subsidiary is (i) the type of entity disclosed next to its name in Schedule 1(a) and (ii) a registered organization except to the extent disclosed in Schedule 1(a). Also set forth in Schedule 1(a) is the organizational identification number, if any, of each Company and Qualified subsidiary that is a registered organization, the Federal Taxpayer Identification Number of each Company and Qualified Subsidiary and the jurisdiction of formation of each Company and Qualified Subsidiary.

B. Set forth in Schedule 1(b) hereto is a list of any other corporate or organizational names each Company and Qualified Subsidiary has had in the past five years, or any other organization to which each Company and Qualified Subsidiary became the successor by merger, consolidation, acquisition, change in form, nature or jurisdiction of organization or otherwise, together with the date of the relevant change. Except as set forth on Schedule 1(c), no Company or Qualified Subsidiary has changed its jurisdiction of organization at any time during the past four months.

J-3-1

Form of Tax Status Certificates

II. Current Locations. The chief executive office of each Company and Qualified Subsidiary is located at the address set forth in Schedule 2 hereto.

III. Extraordinary Transactions. Except for those purchases, acquisitions and other transactions described in Schedule 3 attached hereto, all of the Collateral has been originated by each Company and Qualified Subsidiary in the ordinary course of business or consists of goods which have been acquired by such Company or Qualified Subsidiary in the ordinary course of business from a person in the business of selling goods of that kind.

IV. Schedule of Filings. Attached hereto as Schedule 4 is a schedule of (i) the appropriate filing offices for the Uniform Commercial Code financing statements naming each Company as a debtor and each Agent as secured party to be filed on the Closing Date, (ii) the appropriate filing offices for the filings described in Schedule 8(a), (iii) the appropriate filing offices for the Mortgages and fixture filings relating to the Mortgaged Property set forth in Schedule 5 and (iv) any other actions required to create and perfect the security interests in the Collateral granted to each Agent pursuant to the applicable Security Agreements.

V. Real Property. Attached hereto as Schedule 5 is a list of all (i) real property to be encumbered by a Mortgage and fixture filing, which real property includes all real property owned by each Company as of the Closing Date having a cost or book value (whichever is greater) in excess of $2,000,000 (such real property, the “Mortgaged Property”) and (ii) addresses of each Mortgaged Property.

VI. Stock Ownership and Other Equity Interests. Attached hereto as Schedule 6(a)(i) and Schedule 6(a)(ii) is a true and correct list of all of the stock, partnership interests, limited liability company membership interests or other equity interest of each Company and its Subsidiaries (including, for the avoidance of doubt, the Qualified Subsidiaries and their respective Subsidiaries) and the record and beneficial owners (other than Strategic Investors) of such stock, partnership interests, membership interests or other equity interests setting forth the percentage of such equity interests pledged under the Security Agreements. Also set forth in Schedule 6(b) is each equity investment of each Company and Qualified Subsidiary that represents 50% or less of the equity of the entity in which such investment was made setting forth the percentage of such equity interests pledged under the Security Agreements.

VII. Instruments and Tangible Chattel Paper. Attached hereto as Schedule 7(a) is a true and correct list of all Intercompany Notes held by each Company and attached hereto as Schedule 7(b) is a true and correct list of all promissory notes, instruments (other than checks to be deposited in the ordinary course of business), tangible chattel paper, electronic chattel paper and other evidence of indebtedness held by each Company as of the date hereof in an amount in excess of $500,000.

VIII. Intellectual Property. (a) Attached hereto as Schedule 8(a) is a schedule setting forth each Company’s and Qualified Subsidiary’s Patents and Trademarks applied for or registered with the United States Patent and Trademark Office (the “USPTO”), including the name of the registered owner or applicant and the registration, application, or publication number, as applicable, of each registered or applied for Patent or Trademark owned by each Company and Qualified Subsidiary.

I - 2

Form of Perfection Certificate

(b) Attached hereto as Schedule 8(b) is a schedule setting forth each Company’s and Qualified Subsidiary’s United States Copyrights registered with the United States Copyright Office (the “USCO”), including the name of the registered owner and the registration number of each registered Copyright owned by each Company and Qualified Subsidiary.

(c) Attached hereto as Schedule 8(c) is a schedule setting forth all Patent Licenses, Trademark Licenses and Copyright Licenses (whether or not recorded with the USPTO or the USCO), in each case, under which a Company or Qualified Subsidiary is the exclusive licensee of a United States patent, trademark or copyright as applicable, including the relevant signatory parties to each license along with the date of execution thereof and, if applicable, a recordation number or other such evidence of recordation.

9. Commercial Tort Claims. Attached hereto as Schedule 9 is a true and correct list of all Commercial Tort Claims (as defined in each Security Agreement) in excess of $1,000,000 held by each Company, including a brief description thereof.

10. Deposit Accounts, Securities Accounts and Commodity Accounts. Attached hereto as Schedule 10 is a true and complete list of all Deposit Accounts, Securities Accounts and Commodity Accounts (other than Excluded Deposit Accounts) maintained by each Company, including the name of each institution where each such account is held, the name of each such account and the name of each entity that holds each account.

11. Letter-of-Credit Rights. Attached hereto as Schedule 11 is a true and correct list of all Letters of Credit in excess of $1,000,000 issued in favor of each Company, as beneficiary thereunder.

12. Other Collateral. Attached hereto as Schedule 12 is a true and correct list of each written agreement with any Governmental Authority, if any, to which such Company is a party that gives rise to receivables in favor of such Company in an aggregate amount that has exceeded, or is reasonably expected to exceed, $500,000 in any fiscal year.

[The Remainder of this Page has been intentionally left blank]

I - 3

Form of Perfection Certificate

IN WITNESS WHEREOF, we have hereunto signed this Perfection Certificate as of this              day of May, 2010.

AMERICAN RENAL HOLDINGS, INC.

By:

     Name:

     Title:

[Each of the Guarantors]

By:

     Name:

     Title:

I - 4

Form of Perfection Certificate

Schedule 1(a)

Legal Names, Etc.

Legal Name	Type of Entity	Registered Organization (Y/N)	Organizational Number	Federal Taxpayer Identification Number	Jurisdiction of Formation
C.P. Atlas Intermediate Holdings, LLC	LLC	Y	4801243	27-2170865	DE
C.P. Atlas Acquisition Corp.	Corporation	Y	4801254	27-2414193	DE
American Renal Holdings Inc.	Corporation	Y	3068790	04-3477845	DE
American Renal Associates LLC	LLC	Y	4055521	84-1694930	DE
American Renal Management LLC	LLC	Y	3166202	04-3527505	DE
AKC Holding LLC	LLC	Y	3953963	01-0833124	DE
JKC Holding LLC	LLC	Y	3955059	01-0833133	DE
ARA-Boca Raton Holding LLC	LLC	Y	3868887	55-0885438	DE
ARA-Ohio Holdings LLC	LLC	Y	3736877	88-0519793	DE
ARA-Rhode Island Dialysis II LLC	LLC	Y	3780279	05-0598781	DE
Texas-ARA LLC	LLC	Y	3216695	04-3537394	DE

American Renal Texas L.P.	LP	Y	13407410	04-3535002	TX
American Renal Texas II, L.P.	LP	Y	800556055	83-0438331	TX
Acute Dialysis Services-ARA LLC	LLC	Y	4431280	26-1148649	DE
ARA-Yuba City Dialysis LLC	LLC	Y	200034010027	06-1602517	CA
Kidney Center of Arvada LLC	LLC	Y	4392757	26-0673481	DE
Kidney Center of Lafayette LLC	LLC	Y	4392762	26-0673602	DE
Kidney Center of Lakewood LLC	LLC	Y	4392772	26-0673671	DE
Kidney Center of Longmont LLC	LLC	Y	4392774	26-0673763	DE
Kidney Center of Westminster LLC	LLC	Y	4392778	26-0673832	DE
Capitol Dialysis, LLC	LLC	Y	L05168	06-1593517	DC
ARA-Augusta, LLC	LLC	Y	0052215	36-4466284	GA
ARA-Augusta Clinic LLC	LLC	Y	0155609	26-0002956	GA
ARA-South Augusta Clinic LLC	LLC	Y	0155610	26-0002976	GA
Grovetown Dialysis Clinic, LLC	LLC	Y	4682295	26-4777788	DE
Louisville Dialysis Clinic, LLC	LLC	Y	4682297	26-4777847	DE
Waynesboro Dialysis Clinic, LLC	LLC	Y	4682298	26-4778024	DE

Dublin Dialysis Center, LLC	LLC	Y	4725041	27-0817599	DE
Atlantic Kidney Center LLC	LLC	Y	3953964	01-0833127	DE
Jupiter Kidney Center LLC	LLC	Y	3953971	01-0833136	DE
ARA-Aventura LLC	LLC	Y	L01000020151	06-1635994	FL
Miami-ARA LLC	LLC	Y	L01000001628	04-3548124	FL
ARA-Boca Raton Dialysis LLC	LLC	Y	3864896	11-3728333	DE
Delray Beach Dialysis Center LLC	LLC	Y	3953959	01-0833122	DE
ARA-Daytona Beach Dialysis LLC	LLC	Y	3664549	13-4264685	DE
ARA-Naples Dialysis Center LLC	LLC	Y	4041015	13-4310692	DE
ARA-Naples South Dialysis Center LLC	LLC	Y	4795368	27-2035849	DE
ARA-Orange Park LLC	LLC	Y	L01000017845	04-3579269	FL
ARA-Sebring Dialysis LLC	LLC	Y	L02000013610	13-4264684	FL
ARA-Sun City Dialysis LLC	LLC	Y	L01000007338	06-1619146	FL
Bradenton Dialysis Center LLC	LLC	Y	4173314	43-2106855	DE
Palmetto Dialysis Center LLC	LLC	Y	4408129	26-0722021	DE
ARA-Titusville Dialysis LLC	LLC	Y	L02000025577	05-0537651	FL

ARA-West Jacksonville LLC	LLC	Y	L01000019345	02-0538733	FL
Middleburg Dialysis LLC	LLC	Y	3935279	01-0833118	DE
Hilliard Dialysis Center LLC	LLC	Y	3953973	01-0833120	DE
Dialysis Care Center of Palm Coast LLC	LLC	Y	4347782	11-3815233	DE
Goldtree Kidney Center LLC	LLC	Y	4440223	26-1225415	DE
Western Community Dialysis Center, LLC	LLC	Y	4458061	26-1402857	DE
Southwest Jacksonville Dialysis Center LLC	LLC	Y	4490394	26-1767398	DE
Northwest Jacksonville Dialysis Center, LLC	LLC	Y	4506804	26-1983634	DE
Lehigh Acres Dialysis Center, LLC	LLC	Y	4596159	26-3299536	DE
Florida Dialysis Center of Orlando, LLC	LLC	Y	4723979	27-0799606	DE
ARA-N.W. Chicago LLC	LLC	Y	3724855	52-2413892	DE
ARA-Crystal Lake Dialysis LLC	LLC	Y	3724856	52-2413908	DE
ARA-South Barrington Dialysis LLC	LLC	Y	3724859	52-2413920	DE
Harvard-Woodstock Dialysis Center, LLC	LLC	Y	4782472	27-1777121	DE
New Orleans Kidney Center LLC	LLC	Y	4228277	06-1795600	DE
Freret Street Kidney Center LLC	LLC	Y	4708122	27-0519972	DE

ARA-Adelphi LLC	LLC	Y	W06503858	04-3581515	MD
Ellicott City Dialysis Center LLC	LLC	Y	4327099	83-0478289	DE
Universal Dialysis Center, LLC	LLC	Y	4754990	27-1346759	DE
Taunton Healthcare Clinic, LLC	LLC	Y	4749534	27-1274230	DE
Brockton Healthcare Clinic, LLC	LLC	Y	4749529	27-1274145	DE
ARA-Fall River Dialysis LLC	LLC	Y	3699132	16-1682392	DE
ARA-Springfield Dialysis LLC	LLC	Y	043571591	04-3571591	MA
ARA-Holyoke Dialysis LLC	LLC	Y	3614407	13-4264683	DE
Dialysis Center of Western Massachusetts LLC	LLC	Y	4398483	26-0673349	DE
Heritage Dialysis Center LLC	LLC	Y	4398481	26-0673134	DE
Waltham Dialysis LLC	LLC	Y	3925263	01-0833115	DE
Nephrology Center of Detroit, LLC	LLC	Y	4693398	27-0276649	DE
Metro St. Louis Dialysis – Florissant, LLC	LLC	Y	4268911	14-1984113	DE
Gateway St. Louis Dialysis, LLC	LLC	Y	4781752	27-1766821	DE
Woodland Park Dialysis Center, LLC	LLC	Y	4778822	27-1777182	DE
Mohawk Valley Dialysis Center, LLC	LLC	Y	N/A	27-0623715	NY

ARA-Columbus, LLC	LLC	Y	1243736	04-3581976	OH
ARA-Bexley LLC	LLC	Y	1270369	06-1637858	OH
ARA-North Columbus Dialysis LLC	LLC	Y	1304920	01-0671615	OH
ARA-South Columbus Dialysis LLC	LLC	Y	1304603	30-0101257	OH
ARA-South Central Ohio LLC	LLC	Y	3704624	13-4264686	DE
ARA-Chillicothe Dialysis LLC	LLC	Y	3709840	56-2402997	DE
ARA-Jackson Dialysis LLC	LLC	Y	3704639	13-4264688	DE
ARA-Piketon Dialysis LLC	LLC	Y	3709844	56-2403001	DE
Pickaway Dialysis Center LLC	LLC	Y	4227349	56-2614118	DE
Logan Dialysis Center LLC	LLC	Y	4470715	26-1538057	DE
Fairfield Kidney Center LLC	LLC	Y	4161842	33-1139040	DE
Kidney Care Centers of Zanesville Ohio, LLC	LLC	Y	4497941	26-1867893	DE
Kidney Care Centers of Cambridge Ohio, LLC	LLC	Y	4497939	26-1867830	DE
Kidney Care Centers of Coshocton Ohio, LLC	LLC	Y	4519030	26-2324188	DE
Boardman Dialysis Center LLC	LLC	Y	4618371	26-3842733	DE
Warren Dialysis Center LLC	LLC	Y	4618373	26-3842709	DE

Youngstown-Warren Home Dialysis, LLC	LLC	Y	4750939	27-1281093	DE
ARA-Hazleton LLC	LLC	Y	2970794	06-1602515	PA
Butler-ARA, LLC	LLC	Y	2918380	25-1867782	PA
Central Kittanning Dialysis Center LLC	LLC	Y	4228173	06-1795597	DE
ARA-Kittanning Dialysis LLC	LLC	Y	3665122	13-4264677	DE
ARA-Newcastle Dialysis LLC	LLC	Y	3720186	13-4268241	DE
ARA-Dialysis Unit at Ohio Valley Hospital, LLC	LLC	Y	4512367	26-2091152	DE
Langhorne Dialysis LLC	LLC	Y	4129326	11-3774987	DE
Bristol Dialysis LLC	LLC	Y	4147267	13-4331815	DE
Bensalem Dialysis Center LLC	LLC	Y	4294993	32-0194330	DE
Woodhaven Dialysis Center, LLC	LLC	Y	4671328	26-4568741	DE
ARA-Rhode Island Dialysis LLC	LLC	Y	3593907	46-0511315	DE
ARA-Providence Dialysis LLC	LLC	Y	3605548	05-0579441	DE
ARA-Pawtucket Dialysis LLC	LLC	Y	3605554	05-0579443	DE
ARA-Tiverton Dialysis LLC	LLC	Y	3605569	05-0579445	DE

ARA-Cranston Dialysis LLC	LLC	Y	3699131	16-1682389	DE
ARA-East Providence Dialysis LLC	LLC	Y	3745440	52-2421786	DE
ARA-Johnston Dialysis LLC	LLC	Y	3699134	16-1682390	DE
Dialysis Center of Wakefield LLC	LLC	Y	3983721	14-1931451	DE
Dialysis Center of Warwick LLC	LLC	Y	Cert. of Cancellation 3983727	14-1931457	DE
Dialysis Center of West Warwick LLC	LLC	Y	3983728	14-1931459	DE
Dialysis Center of Westerly LLC	LLC	Y	3983732	14-1931453	DE
Dialysis Center of Woonsocket LLC	LLC	Y	3955150	01-0833227	DE
Carolina Dialysis LLC	LLC	Y	4096098	13-4319575	DE
Spartanburg Dialysis LLC	LLC	Y	4588569	26-3195879	DE
North East Kidney Center, LLC	LLC	Y	4794203	27-2004525	DE
North Main Kidney Center, LLC	LLC	Y	4794202	27-2004562	DE
Beaumont-ARA Dialysis L.L.P.	LLP	Y	800347186	04-3537427	TX
Jasper-ARA Dialysis L.L.P.	LLP	Y	800206614	04-3537428	TX
Woodville Dialysis Center LLP	LLP	Y	800660148	33-1139041	TX
Bay City Dialysis Center, LLP	LLP	Y	801128898	27-0264226	TX

ARA-Forest Park Dialysis LLC	LLC	Y	S128313-6	34-2013422	VA
ARA-Mechanicsville Dialysis LLC	LLC	Y	S101418-4	26-0067522	VA
ARA-Richmond Dialysis LLC	LLC	Y	S087508-0	46-0511318	VA
ARA-South Laburnum Dialysis LLC	LLC	Y	S087592-4	13-4264678	VA
ARA-Milwaukee Dialysis LLC	LLC	Y	3805188	56-2461231	DE
Kenosha Kidney Dialysis LLC	LLC	Y	4185137	84-1713713	DE
Comprehensive Dialysis Care, LLC	LLC	Y	7895601	27-2042108	DE
Brazoria County Dialysis LLP	LLP	Y	801242673	27-2071319	TX

Schedule 1(b)

Prior Organizational Names

Company/Qualified Subsidiary	Prior Name	Date of Change
American Renal Holdings Inc.	American Renal Holdings LLC	Dec. 16, 2005
American Renal Associates LLC	American Renal Associates, Inc.	Dec. 31, 2007
Central Kittanning Dialysis Center LLC	ARA-Laburnum Dialysis Center LLC	Nov. 17, 2006

Schedule 1(c)

Changes in Jurisdiction

None.

Schedule 2

Chief Executive Offices

Company/Qualified Subsidiary	Address	County	State
C.P. Atlas Intermediate Holdings, LLC	c/o Centerbridge Capital Partners L.P. 375 Park Avenue, 12th Floor New York, NY 10152	New York	NY
C.P. Acquisition Corp.	c/o Centerbridge Capital Partners L.P. 375 Park Avenue, 12th Floor New York, NY 10152	New York	NY
American Renal Holdings Inc.	66 Cherry Hill Drive Beverly, MA 01915	Essex	MA
American Renal Associates LLC	66 Cherry Hill Drive Beverly, MA 01915	Essex	MA
American Renal Management LLC	66 Cherry Hill Drive Beverly, MA 01915	Essex	MA
AKC Holding LLC	66 Cherry Hill Drive Beverly, MA 01915	Essex	MA
JKC Holding LLC	66 Cherry Hill Drive Beverly, MA 01915	Essex	MA
ARA-Boca Raton Holding LLC	1905 Clint Moore Road Boca Raton, FL	Palm Beach	FL
ARA-Ohio Holdings LLC	66 Cherry Hill Drive Beverly, MA 01915	Essex	MA
ARA-Rhode Island Dialysis II LLC	66 Cherry Hill Drive Beverly, MA 01915	Essex	MA
Texas-ARA LLC	66 Cherry Hill Drive Beverly, MA 01915	Essex	MA
American Renal Texas L.P.	66 Cherry Hill Drive Beverly, MA 01915	Essex	MA
American Renal Texas II, L.P.	66 Cherry Hill Drive Beverly, MA 01915	Essex	MA
Acute Dialysis Services-ARA LLC	66 Cherry Hill Drive Beverly, MA 01915	Essex	MA
ARA-Yuba City Dialysis LLC	640 Plumas Street Yuba City, CA 95991-4434	Sutter	CA
Kidney Center of Arvada LLC	5265 Vance Street, Suite 100 Arvada, CO 80002	Jefferson	CO
Kidney Center of Lafayette LLC	2655 Crescent Drive, Suite C Lafayette, CO 80026	Boulder	CO

Company/Qualified Subsidiary	Address	County	State
Kidney Center of Lakewood LLC	6166 W. Alameda Avenue Lakewood, CO 80226	Denver	CO
Kidney Center of Longmont LLC	1960 Ken Pratt Blvd, Suite A Longmont, CO 80501	Boulder	CO
Kidney Center of Westminster LLC	8410 Decatur Street Westminster, CO 80031	Adams	CO
Capitol Dialysis, LLC	140 Q Street N. E., Suite 100, Washington, DC 20002	DC	DC
ARA-Augusta, LLC	66 Cherry Hill Drive Beverly, MA 01915	Essex	MA
ARA-Augusta Clinic LLC	1000 Telfair Street Augusta, GA 30901	Richmond	GA
ARA-South Augusta Clinic LLC	1649 Gordon Highway Augusta, GA 30906	Richmond	GA
Grovetown Dialysis Clinic, LLC	442 Park 20 West Drive Grovetown, GA 30813	Columbia	GA
Louisville Dialysis Clinic, LLC	1201 Peachtree Street Louisville, GA 30434	Jefferson	GA
Waynesboro Dialysis Clinic, LLC	163 South Liberty Street Waynesboro, GA 30830	Burke	GA
Dublin Dialysis Center, LLC	66 Cherry Hill Drive Beverly, MA 01915	Essex	MA
Atlantic Kidney Center LLC	4700 N. Congress Avenue, Suite 104, West Palm Beach, FL 33407	Clay	FL
Jupiter Kidney Center LLC	1701 Military Trail Suite 140 Jupiter, FL 33458	Palm Beach	FL
ARA-Aventura LLC	19010 N.E. 29th Avenue Aventura, FL 33180	Miami-Dade	FL
Miami-ARA LLC	100 N.W. 170th Street, Ste. 106 North Miami Beach, FL 33169	Miami-Dade	FL
ARA-Boca Raton Dialysis LLC	1905 Clint Moore Road Suite 211 Boca Raton, FL 33496-2659	Palm Beach	FL
Delray Beach Dialysis Center LLC	5130 Linton Boulevard Delray Beach, FL 33484	Palm Beach	FL
ARA-Daytona Beach Dialysis LLC	720 Clyde Morris Blvd. Daytona Beach, FL 32114	Volusia	FL
ARA-Naples Dialysis Center LLC	4529 Executive Drive Naples, FL 34119	Collier	FL

Company/Qualified Subsidiary	Address	County	State
ARA-Naples South Dialysis Center LLC	66 Cherry Hill Drive Beverly, MA 01915	Essex	MA
ARA-Orange Park LLC	2020 Kingsley Avenue, Suite B Orange Park, FL 32073	Clay	FL
ARA-Sebring Dialysis LLC	4245 Sun N Lake Blvd Sebring, FL 33872-2158	Highlands	FL
ARA-Sun City Dialysis LLC	952 Cypress Village Blvd. Sun City, FL 33573	Hillsborough	FL
Bradenton Dialysis Center LLC	5837 West 21st Avenue Bradenton, FL 34209	Manatee	FL
Palmetto Dialysis Center LLC	627-635 E. Street Palmetto, FL 34221	Manatee	FL
ARA-Titusville Dialysis LLC	801 Garden Street Titusville, FL 32796	Brevard	FL
ARA-West Jacksonville LLC	425 N. Lee Street, Ste.103 Jacksonville, FL 32204	Duval	FL
Middleburg Dialysis LLC	2070 Palmetto Street, Suite 9 Middleburg, FL 32068	Clay	FL
Hilliard Dialysis Center LLC	551858 US Highway 1, Suite 118 Hilliard, FL 32046	Nassau	FL
Dialysis Care Center of Palm Coast LLC	Roma Court Unit #2, 3 and 4 515 Palm Coast Parkway SW Palm Coast, FL 32137	Flagler	FL
Goldtree Kidney Center LLC	1407-A Goldtree Drive Port S. Lucie, FL 34952	St. Lucie	FL
Western Community Dialysis Center, LLC	11301 Okeechobee Blvd Royal Palm Beach, FL 33411	Palm Beach	FL
Southwest Jacksonville Dialysis Center LLC	Normandy Village Shopping Center 7764 Normandy Blvd, Ste 21 Jacksonville, FL 32221	Duval	FL
Northwest Jacksonville Dialysis Center, LLC	1725 Oakhurst Ave, Suite 100 Jacksonville, FL 32208	Duval	FL
Lehigh Acres Dialysis Center, LLC	3227 Lee Blvd., Unit 1 Lehigh Acres, FL 33971	Lee	FL
Florida Dialysis Center of Orlando, LLC	1711 35th Street, Units 109 & 110 Orlando, FL 32839	Orange	FL
ARA-N.W. Chicago LLC	66 Cherry Hill Drive Beverly, MA 01915	Essex	MA

Company/Qualified Subsidiary	Address	County	State
ARA-Crystal Lake Dialysis LLC	6298 Northwest Highway, Suite 300 Crystal Lake, IL 60014	McHenry	IL
ARA-South Barrington Dialysis LLC	33 W. Higgins Road, Suites 920-945 South Barrington, IL 60010	Lake	IL
Harvard-Woodstock Dialysis Center, LLC	66 Cherry Hill Drive Beverly, MA 01915	Essex	MA
New Orleans Kidney Center LLC	3434 Prytania Street New Orleans, LA 70115	Orleans	LA
Freret Street Kidney Center LLC	66 Cherry Hill Drive Beverly, MA 01915 (lease negotiation pending for local address)	Essex	MA
ARA-Adelphi LLC	1801 Metzerott Road Adelphi, MD 20783	Prince George’s	MD
Ellicott City Dialysis Center LLC	3000 North Ridge Road Ellicott City, MD 21043	Howard	MD
Universal Dialysis Center, LLC	3804 Bladensburg Road Cottage City, MD	Prince George’s	MD
Taunton Healthcare Clinic, LLC	Mill River Plaza One Washington Street Taunton, MA 02780	Bristol	MA
Brockton Healthcare Clinic, LLC	76 Campanelli Industrial Dr. Brockton, MA 02301	Plymouth	MA
ARA-Fall River Dialysis LLC	221 and 223 Weaver Street Fall River, MA 02720	Bristol	MA
ARA-Springfield Dialysis LLC	125 Liberty Street, Suite 101 Springfield, MA 01103	Hampden	MA
ARA-Holyoke Dialysis LLC	66 Cherry Hill Drive Beverly, MA 01915	Essex	MA
Dialysis Center of Western Massachusetts LLC	601 Memorial Drive Suite H Chicopee, MA 01020	Hampden	MA
Heritage Dialysis Center LLC	67 Cooper Street Agawam, MA 01001	Hampden	MA
Waltham Dialysis LLC	135 Beaver Street Suite 111 Waltham, MA 02452	Middlesex	MA
Nephrology Center of Detroit, LLC	20001 Livernois Avenue, Suite 500 Detroit, MI 48221	Wayne	MI

Company/Qualified Subsidiary	Address	County	State
Metro St. Louis Dialysis – Florissant, LLC	10160 West Florissant Avenue, St. Louis, MO 63136	St. Louis	MO
Gateway St. Louis Dialysis, LLC	66 Cherry Hill Drive Beverly, MA 01915	Essex	MA
Woodland Park Dialysis Center, LLC	66 Cherry Hill Drive Beverly, MA 01915	Essex	MA
Mohawk Valley Dialysis Center, LLC	115 Town Square Center Amsterdam, NY 12010	Montgomery	NY
ARA-Columbus, LLC	66 Cherry Hill Drive Beverly, MA 01915	Essex	MA
ARA-Bexley LLC	1805 East Main Street Columbus, Ohio 43205	Franklin	OH
ARA-North Columbus Dialysis LLC	5700 Karl Road Columbus, OH 43229	Franklin	OH
ARA-South Columbus Dialysis LLC	2046 Lockbourne Road Columbus, Ohio 43207	Franklin	OH
ARA-South Central Ohio LLC	66 Cherry Hill Drive Beverly, MA 01915	Essex	MA
ARA-Chillicothe Dialysis LLC	465 Shawnee Lane Chillicothe, OH 45601	Ross	OH
ARA-Jackson Dialysis LLC	66 Cherry Hill Drive Beverly, MA 01915	Essex	MA
ARA-Piketon Dialysis LLC	7143 Route 23 South Piketon, OH 45661	Pike	OH
Pickaway Dialysis Center LLC	1180 North Court Street Circleville, OH 43113	Pickaway	OH
Logan Dialysis Center LLC	12900 State Route 664 South Suite B7 Logan, OH 43138	Hocking	OH
Fairfield Kidney Center LLC	618 Pleasantville Road Lancaster, OH 43130	Fairfield	OH
Kidney Care Centers of Zanesville Ohio, LLC	3239 Maple Avenue Zanesville, OH 43701	Muskingum	OH
Kidney Care Centers of Cambridge Ohio, LLC	66 Cherry Hill Drive Beverly, MA 01915	Essex	MA
Kidney Care Centers of Coshocton Ohio, LLC	66 Cherry Hill Drive Beverly, MA 01915	Essex	MA

Company/Qualified Subsidiary	Address	County	State
Boardman Dialysis Center LLC	7153 Tiffany Blvd., Boardman, OH 44514	Mahoning	OH
Warren Dialysis Center LLC	8720 East Market Street, Suite 1A Howland, OH 44484	Trumbull	OH
Youngstown-Warren Home Dialysis, LLC	3622 Belmont Ave, Suite 21 Youngstown, OH 44505	Mahoning	OH
ARA-Hazleton LLC	128 Airport Road 2 Beltway Commons Hazle Township, PA 18201	Luzerne	PA
Butler-ARA, LLC	229 W. Diamond Street Butler, Pennsylvania 16001	Butler	PA
Central Kittanning Dialysis Center LLC	One Nolte Drive, Suite 720 Kittanning, PA 16201	Armstrong	PA
ARA-Kittanning Dialysis LLC	85 Glade Drive, Unit C Kittanning, PA 16201	Armstrong	PA
ARA-Newcastle Dialysis LLC	Cascade Galleria 100 South Jefferson Street, Suite 187 New Castle, PA 16101	Lawrence	PA
ARA-Dialysis Unit at Ohio Valley Hospital, LLC	27 Heckel Road, Suite 113 McKees Rocks, PA 15136	Allegheny	PA
Langhorne Dialysis LLC	880 Town Center Drive Langhorne, PA 19047	Bucks	PA
Bristol Dialysis LLC	1900 Frost Road, Keystone Park Bristol, PA 19007	Bucks	PA
Bensalem Dialysis Center LLC	1336 Bristol Avenue Units 12 & 13 Bensalem, PA 19020	Bucks	PA
Woodhaven Dialysis Center, LLC	1336 Bristol Pike, Suite B Bensalem, PA 19020	Bucks	PA
ARA-Rhode Island Dialysis LLC	66 Cherry Hill Drive Beverly, MA 01915	Essex	MA
ARA-Providence Dialysis LLC	9 Plenty Street Providence, R.I. 02907	Providence	RI
ARA-Pawtucket Dialysis LLC	201 Armistice Blvd. Pawtucket, RI 02860	Providence	RI
ARA-Tiverton Dialysis LLC	22 Hurst Lane Tiverton, RI 02878	Newport	RI
ARA-Cranston Dialysis LLC	49 Freeway Drive Cranston, RI 02920-7935	Providence	RI

Company/Qualified Subsidiary	Address	County	State
ARA-East Providence Dialysis LLC	318 Waterman Avenue East Providence, RI 02914	Providence	RI
ARA-Johnston Dialysis LLC	1526 Atwood Avenue Johnston, RI 02919	Providence	RI
Dialysis Center of Wakefield LLC	10 High Street, Suite C, D & E Wakefield, RI 02879	Washington	RI
Dialysis Center of Warwick LLC	66 Cherry Hill Drive Beverly, MA 01915	Essex	MA
Dialysis Center of West Warwick LLC	1775 Bald Hill Road Warwick, RI 02886	Kent	RI
Dialysis Center of Westerly LLC	1 Rhody Road Westerly, RI 02891	Washington	RI
Dialysis Center of Woonsocket LLC	2100 Diamond Hill Road Woonsocket, RI 02895	Providence	RI
Carolina Dialysis LLC	115 Interstate Park Spartanburg, SC 29303	Spartanburg	SC
Spartanburg Dialysis LLC	128 Dillon Drive Spartanburg, SC 29307	Spartanburg	SC
North East Kidney Center, LLC	66 Cherry Hill Drive Beverly, MA 01915	Essex	MA
North Main Kidney Center, LLC	66 Cherry Hill Drive Beverly, MA 01915	Essex	MA
Beaumont-ARA Dialysis L.L.P.	1085 South 23rd Street Beaumont, Texas 77707	Jefferson	TX
Jasper-ARA Dialysis L.L.P.	930 Marvin Hancock Drive Jasper, Texas 75951	Jasper	TX
Woodville Dialysis Center LLP	712 W. Bluff Street Pecan Plaza Woodville, TX 75979	Tyler	TX
Bay City Dialysis Center, LLP	1115 Avenue G Bay City, TX 77414	Matagorda	TX
ARA-Forest Park Dialysis LLC	1603 Santa Rosa Road Suite 1000 Richmond, VA 23229	Henrico	VA
ARA-Mechanicsville Dialysis LLC	8400 North Run Medical Drive, Suite 100 Mechanicsville, VA 23116	Hanover	VA

Company/Qualified Subsidiary	Address	County	State
ARA-Richmond Dialysis LLC	5320 Patterson Ave Richmond, VA 23226	Henrico	VA
ARA-South Laburnum Dialysis LLC	4817 S. Laburnum Ave. Richmond, VA 23231-2713	Henrico	VA
ARA-Milwaukee Dialysis LLC	4775 North Green Bay Avenue Milwaukee, WI 53209	Milwaukee	WI
Kenosha Kidney Dialysis LLC	6125 Green Bay Road Suite 200-300 Kenosha, WI 53142	Kenosha	WI
Comprehensive Dialysis Care, LLC	66 Cherry Hill Drive Beverly, MA 01915	Essex	MA
Brazoria County Dialysis LLP	66 Cherry Hill Drive Beverly, MA 01915	Essex	MA

Schedule 3

Extraordinary Transactions

None.

Schedule 4

Schedule of Filings

(i) Uniform Commercial Code Filings

Entity	Filing Office
C.P. Atlas Intermediate Holdings, LLC	Delaware Secretary of State
C.P. Atlas Acquisition Corp.	Delaware Secretary of State
American Renal Holdings Inc.	Delaware Secretary of State
American Renal Associates LLC	Delaware Secretary of State
American Renal Management LLC	Delaware Secretary of State
AKC Holding LLC	Delaware Secretary of State
JKC Holding LLC	Delaware Secretary of State
ARA-Boca Raton Holding LLC	Delaware Secretary of State
ARA-Ohio Holdings LLC	Delaware Secretary of State
ARA-Rhode Island Dialysis II LLC	Delaware Secretary of State
Texas-ARA LLC	Delaware Secretary of State
American Renal Texas L.P.	Texas Secretary of State
American Renal Texas II, L.P.	Texas Secretary of State
Acute Dialysis Services-ARA LLC	Delaware Secretary of State

(ii) Intellectual Property Filings

Entity	Filing Office
American Renal Associates LLC	United States Patent and Trademark Office

(iii) Mortgage and Fixture Filings

None.

4(iv) Other Actions Required to Create and Perfect Security Interests

Actions with respect to Pledged Securities

• The security interest in the Pledged Securities may be perfected by filing, and to the extent applicable under the UCC and to the extent certificated, the interest in the certificated Pledged Securities may be perfected by possession.

•

Actions with respect to Pledged Collateral

• Delivery of original promissory notes to the Credit Agreement Collateral Agent, endorsed (without recourse) in blank or accompanied by an endorsement executed in blank by a duly authorized officer of the applicable Company.

Other Actions

• None.

Schedule 5

Real Property

(i) None.

(ii) None.

Schedule 6

(a)(i) Certificated Equity Interests

Current Legal Entities Owned	Record Owner	Percent Pledged*
American Renal Holdings Inc.	C.P. Atlas Intermediate Holdings, LLC	100%

* For each equity interests in each Qualified Subsidiary listed herein, if, and for so long as, such equity interests constitute Excluded Property, the percent pledged shall be 0%.

(a)(ii) Uncertificated Equity Interests

Current Legal Entities Owned	Record Owner	Percent Pledged*
C.P. Atlas Intermediate Holdings, LLC	C.P. Atlas Holdings, Inc.	N/A
C.P. Atlas Acquisition Corp.	C.P. Atlas Intermediate Holdings, LLC	N/A
American Renal Associates LLC	American Renal Holdings Inc.	100%
American Renal Management LLC	American Renal Associates LLC	100%
AKC Holding LLC	American Renal Associates LLC	100%
JKC Holding LLC	American Renal Associates LLC	100%
ARA-Boca Raton Holding LLC	American Renal Associates LLC	100%
ARA-Ohio Holdings LLC	American Renal Associates LLC	100%
ARA-Rhode Island Dialysis II LLC	American Renal Associates LLC	100%
Texas-ARA LLC	American Renal Associates LLC	100%
American Renal Texas L.P.	Texas-ARA LLC (0.5%) American Renal Associates LLC (99.5%)	99.5% American Renal Associates LLC 0.5% Texas-ARA LLC
American Renal Texas II, L.P.	Texas-ARA LLC (0.5%) American Renal Associates LLC (99.5%)	99.5% American Renal Associates LLC 0.5% Texas-ARA LLC
Acute Dialysis Services-ARA LLC	American Renal Associates LLC	100%
ARA-Yuba City Dialysis LLC	American Renal Associates LLC	60%

Current Legal Entities Owned	Record Owner	Percent Pledged*
Kidney Center of Arvada LLC	American Renal Associates LLC	51%
Kidney Center of Lafayette LLC	American Renal Associates LLC	51%
Kidney Center of Lakewood LLC	American Renal Associates LLC	51%
Kidney Center of Longmont LLC	American Renal Associates LLC	51%
Kidney Center of Westminster LLC	American Renal Associates LLC	51%
Capitol Dialysis, LLC	American Renal Associates LLC	60%
ARA-Augusta, LLC	American Renal Associates LLC	51%
ARA-Augusta Clinic LLC	ARA-Augusta, LLC	N/A
ARA-South Augusta Clinic LLC	ARA-Augusta, LLC	N/A
Grovetown Dialysis Clinic, LLC	American Renal Associates LLC	51%
Louisville Dialysis Clinic, LLC	American Renal Associates LLC	51%
Waynesboro Dialysis Clinic, LLC	American Renal Associates LLC	51%
Dublin Dialysis Center, LLC	American Renal Associates LLC	100%
Atlantic Kidney Center LLC	AKC Holding, LLC	60%
Jupiter Kidney Center LLC	JKC Holding, LLC	51%
ARA-Aventura LLC	American Renal Associates LLC	60%
Miami-ARA LLC	American Renal Associates LLC	60%
ARA-Boca Raton Dialysis LLC	ARA-Boca Raton Holding, LLC	51%
Delray Beach Dialysis Center LLC	American Renal Associates LLC	51%
ARA-Daytona Beach Dialysis LLC	American Renal Associates LLC	60%
ARA-Naples Dialysis Center LLC	American Renal Associates LLC	51%
ARA-Naples South Dialysis Center LLC	American Renal Associates LLC	51%
ARA-Orange Park LLC	American Renal Associates LLC	60%
ARA-Sebring Dialysis LLC	American Renal Associates LLC	51%
ARA-Sun City Dialysis LLC	American Renal Associates LLC	60%
Bradenton Dialysis Center LLC	American Renal Associates LLC	51%
Palmetto Dialysis Center LLC	American Renal Associates LLC	51%

Current Legal Entities Owned	Record Owner	Percent Pledged*
ARA-Titusville Dialysis LLC	American Renal Associates LLC	60%
ARA-West Jacksonville LLC	American Renal Associates LLC	51%
Middleburg Dialysis LLC	American Renal Associates LLC	51%
Hilliard Dialysis Center LLC	American Renal Associates LLC	51%
Dialysis Care Center of Palm Coast LLC	American Renal Associates LLC	51%
Goldtree Kidney Center LLC	American Renal Associates LLC	51%
Western Community Dialysis Center, LLC	American Renal Associates LLC	51%
Southwest Jacksonville Dialysis Center LLC	American Renal Associates LLC	51%
Northwest Jacksonville Dialysis Center, LLC	American Renal Associates LLC	51%
Lehigh Acres Dialysis Center, LLC	American Renal Associates LLC	51%
Florida Dialysis Center of Orlando, LLC	American Renal Associates LLC	51%
ARA-N.W. Chicago LLC	American Renal Associates LLC	51%
ARA-Crystal Lake Dialysis LLC	ARA-N.W. Chicago LLC	N/A
ARA-South Barrington Dialysis LLC	ARA-N.W. Chicago LLC	N/A
Harvard-Woodstock Dialysis Center, LLC	ARA-N.W. Chicago LLC	N/A
New Orleans Kidney Center LLC	American Renal Associates LLC	51%
Freret Street Kidney Center LLC	American Renal Associates LLC	51%
ARA-Adelphi LLC	American Renal Associates LLC	51%
Ellicott City Dialysis Center LLC	American Renal Associates LLC	51%
Universal Dialysis Center, LLC	American Renal Associates LLC	51%
Taunton Healthcare Clinic, LLC	American Renal Associates LLC	100%
Brockton Healthcare Clinic, LLC	American Renal Associates LLC	100%
ARA-Fall River Dialysis LLC	American Renal Associates LLC	58.501%
ARA-Springfield Dialysis LLC	American Renal Associates LLC	59%
ARA-Holyoke Dialysis LLC	American Renal Associates LLC	51%

Current Legal Entities Owned	Record Owner	Percent Pledged*
Dialysis Center of Western Massachusetts LLC	American Renal Associates LLC	51%
Heritage Dialysis Center LLC	American Renal Associates LLC	51%
Waltham Dialysis LLC	American Renal Associates LLC	51%
Nephrology Center of Detroit, LLC	American Renal Associates LLC	51%
Metro St. Louis Dialysis – Florissant, LLC	American Renal Associates LLC	51%
Gateway St. Louis Dialysis, LLC	American Renal Associates LLC	51%
Woodland Park Dialysis Center, LLC	American Renal Associates LLC	51%
Mohawk Valley Dialysis Center, LLC	American Renal Associates LLC	51%
ARA-Columbus, LLC	American Renal Associates LLC	60%
ARA-Bexley LLC	ARA-Columbus LLC	N/A
ARA-North Columbus Dialysis LLC	ARA-Columbus LLC	N/A
ARA-South Columbus Dialysis LLC	ARA-Columbus LLC	N/A
ARA-South Central Ohio LLC	American Renal Associates LLC	51%
ARA-Chillicothe Dialysis LLC	ARA-South Central Ohio LLC	N/A
ARA-Jackson Dialysis LLC	ARA-South Central Ohio LLC	N/A
ARA-Piketon Dialysis LLC	ARA-South Central Ohio LLC	N/A
Pickaway Dialysis Center LLC	American Renal Associates LLC	51%
Logan Dialysis Center LLC	American Renal Associates LLC	51%
Fairfield Kidney Center LLC	American Renal Associates LLC	51%
Kidney Care Centers of Zanesville Ohio, LLC	American Renal Associates LLC	51%
Kidney Care Centers of Cambridge Ohio, LLC	Kidney Care Centers of Zanesville Ohio, LLC	N/A
Kidney Care Centers of Coshocton Ohio, LLC	Kidney Care Centers of Zanesville Ohio, LLC	N/A
Boardman Dialysis Center LLC	American Renal Associates LLC	51%
Warren Dialysis Center LLC	American Renal Associates LLC	51%

Current Legal Entities Owned	Record Owner	Percent Pledged*
Youngstown-Warren Home Dialysis, LLC	American Renal Associates LLC	51%
ARA-Hazleton LLC	American Renal Associates LLC	51%
Butler-ARA, LLC	American Renal Associates LLC	51%
Central Kittanning Dialysis Center LLC	American Renal Associates LLC	51%
ARA-Kittanning Dialysis LLC	American Renal Associates LLC	51%
ARA-Newcastle Dialysis LLC	American Renal Associates LLC	51%
ARA-Dialysis Unit at Ohio Valley Hospital, LLC	American Renal Associates LLC	51%
Langhorne Dialysis LLC	American Renal Associates LLC	51%
Bristol Dialysis LLC	American Renal Associates LLC	51%
Bensalem Dialysis Center LLC	American Renal Associates LLC	51%
Woodhaven Dialysis Center, LLC	American Renal Associates LLC	51%
ARA-Rhode Island Dialysis LLC	American Renal Associates LLC	85%
ARA-Providence Dialysis LLC	ARA-Rhode Island Dialysis LLC	N/A
ARA-Pawtucket Dialysis LLC	ARA-Rhode Island Dialysis LLC	N/A
ARA-Tiverton Dialysis LLC	ARA-Rhode Island Dialysis LLC	N/A
ARA-Cranston Dialysis LLC	American Renal Associates LLC	51%
ARA-East Providence Dialysis LLC	American Renal Associates LLC	54.825%
ARA-Johnston Dialysis LLC	American Renal Associates LLC	51%
Dialysis Center of Wakefield LLC	American Renal Associates LLC	51%
Dialysis Center of Warwick LLC	American Renal Associates LLC	66%
Dialysis Center of West Warwick LLC	American Renal Associates LLC	51%
Dialysis Center of Westerly LLC	American Renal Associates LLC	51%
Dialysis Center of Woonsocket LLC	American Renal Associates LLC	51%
Carolina Dialysis LLC	American Renal Associates LLC	51%
Spartanburg Dialysis LLC	American Renal Associates LLC	51%

Current Legal Entities Owned	Record Owner	Percent Pledged*
North East Kidney Center, LLC	American Renal Associates LLC	90%
North Main Kidney Center, LLC	American Renal Associates LLC	90%
Beaumont-ARA Dialysis L.L.P.	American Renal Texas L.P.	60%
Jasper-ARA Dialysis L.L.P.	American Renal Texas L.P.	60%
Woodville Dialysis Center LLP	American Renal Texas L.P.	60%
Bay City Dialysis Center, LLP	American Renal Texas L.P.	51%
ARA-Forest Park Dialysis LLC	American Renal Associates LLC	60%
ARA-Mechanicsville Dialysis LLC	American Renal Associates LLC	60%
ARA-Richmond Dialysis LLC	American Renal Associates LLC	75%
ARA-South Laburnum Dialysis LLC	American Renal Associates LLC	51%
ARA-Milwaukee Dialysis LLC	American Renal Associates LLC	51%
Kenosha Kidney Dialysis LLC	American Renal Associates LLC	51%
Comprehensive Dialysis Care, LLC	American Renal Associates LLC	100%
Brazoria County Dialysis LLP	American Renal Texas L.P.	51%

* For each equity interests in each Qualified Subsidiary listed herein, if, and for so long as, such equity interests constitute Excluded Property, the percent pledged shall be 0%.

(b) Other Equity Interests

None.

Schedule 7

Instruments and Tangible Chattel Paper

(a) Intercompany Notes

Promisee Entity	Promisor Entity	Principal Amount			Date of Issuance	Maturity
American Renal Associates LLC	ARA-Daytona Beach Dialysis LLC	$	300,000	*	March 19, 2010	August 19, 2011
American Renal Associates LLC	ARA-Daytona Beach Dialysis LLC	$	321,258		March 19, 2010	August 19, 2011
American Renal Associates LLC	ARA-Forest Park Dialysis LLC	$	300,000	*	March 19, 2010	December 19, 2012
American Renal Associates LLC	ARA-Forest Park Dialysis LLC	$	496,761		March 19, 2010	December 19, 2012
American Renal Associates LLC	ARA-Milwaukee Dialysis LLC	$	300,000	*	March 22, 2010	June 22, 2012
American Renal Associates LLC	ARA-Milwaukee Dialysis LLC	$	1,030,958		March 22, 2010	November 22, 2012
American Renal Associates LLC	ARA-Naples Dialysis Center LLC	$	300,000	*	March 15, 2010	September 15, 2012
American Renal Associates LLC	ARA-Naples Dialysis Center LLC	$	676,479		March 15, 2010	September 15, 2012
American Renal Associates LLC	ARA-New Castle Dialysis LLC	$	300,000	*	March 16, 2010	December 16, 2012
American Renal Associates LLC	ARA-New Castle Dialysis LLC	$	850,409		March 16, 2010	December 16, 2012
American Renal Associates LLC	ARA-Piketon Dialysis LLC	$	300,000	*	March 18, 2010	April 18, 2013
American Renal Associates LLC	ARA-Piketon Dialysis LLC	$	415,032		March 18, 2010	April 18, 2013
American Renal Associates LLC	ARA-South Laburnum Dialysis LLC	$	300,000	*	March 19, 2010	March 19, 2013
American Renal Associates LLC	ARA-South Laburnum Dialysis LLC	$	891,390		March 19, 2010	March 19, 2013
American Renal Associates LLC	ARA-Sun City Dialysis LLC	$	300,000	*	March 16, 2010	May 16, 2012
American Renal Associates LLC	ARA-Sun City Dialysis LLC	$	604,244		March 16, 2010	May 16, 2012
American Renal Associates LLC	ARA-Yuba City Dialysis LLC	$	300,000	*	March 15, 2010	February 15, 2011
American Renal Associates LLC	ARA-Yuba City Dialysis LLC	$	338,032		March 15, 2010	March 15, 2013
American Renal Associates LLC	Bensalem Dialysis Center LLC	$	300,000	*	March 18, 2010	April 18, 2013
American Renal Associates LLC	Bensalem Dialysis Center LLC	$	2,071,639		March 18, 2010	March 18, 2013
American Renal Associates LLC	Bradenton Dialysis Center LLC	$	300,000	*	March 16, 2010	March 16, 2013

Promisee Entity	Promisor Entity	Principal Amount			Date of Issuance	Maturity
American Renal Associates LLC	Bradenton Dialysis Center LLC	$	1,136,263		March 16, 2010	March 16, 2013
American Renal Associates LLC	Bristol Dialysis LLC	$	300,000	*	March 18, 2010	September 18, 2012
American Renal Associates LLC	Bristol Dialysis LLC	$	1,058,589		March 18, 2010	September 18, 2012
American Renal Associates LLC	Carolina Dialysis LLC	$	300,000	*	March 18, 2010	September 18, 2012
American Renal Associates LLC	Carolina Dialysis LLC	$	1,996,423		March 18, 2010	September 18, 2012
American Renal Associates LLC	Delray Beach Dialysis Center LLC	$	300,000	*	March 11, 2010	November 11, 2012
American Renal Associates LLC	Delray Beach Dialysis Center LLC	$	779,771		March 11, 2010	November 11, 2012
American Renal Associates LLC	Dialysis Center of Western Massachusetts LLC	$	300,000	*	March 19, 2010	July 19, 2013
American Renal Associates LLC	Dialysis Center of Western Massachusetts LLC	$	1,706,406		March 19, 2010	March 19, 2013
American Renal Associates LLC	Fairfield Kidney Center LLC	$	300,000	*	March 18, 2010	December 18, 2012
American Renal Associates LLC	Fairfield Kidney Center LLC	$	563,488		March 18, 2010	December 18, 2012
American Renal Associates LLC	Goldtree Kidney Center LLC	$	300,000	*	March 12, 2010	February 12, 2014
American Renal Associates LLC	Goldtree Kidney Center LLC	$	742,360		March 12, 2010	February 12, 2014
American Renal Associates LLC	Heritage Dialysis Center LLC	$	300,000	*	March 19, 2010	March 19, 2014
American Renal Associates LLC	Heritage Dialysis Center LLC	$	1,884,888		March 19, 2010	March 19, 2013
American Renal Associates LLC	Hilliard Dialysis Center LLC	$	300,000	*	March 19, 2010	March 19, 2012
American Renal Associates LLC	Hilliard Dialysis Center LLC	$	404,072		March 19, 2010	April 19, 2012
American Renal Associates LLC	Kidney Center of Arvada LLC	$	300,000	*	March 16, 2010	January 16, 2014
American Renal Associates LLC	Kidney Center of Arvada LLC	$	1,516,786		March 16, 2010	March 16, 2013
American Renal Associates LLC	Kidney Center of Lafayette LLC	$	300,000	*	March 16, 2010	December 16, 2013
American Renal Associates LLC	Kidney Center of Lafayette LLC	$	1,504,424		March 16, 2010	March 16, 2013
American Renal Associates LLC	Kidney Center of Lakewood LLC	$	300,000	*	March 16, 2010	December 16, 2013
American Renal Associates LLC	Kidney Center of Lakewood LLC	$	1,673,347		March 16, 2010	March 16, 2013
American Renal Associates LLC	Kidney Center of Longmont LLC	$	300,000	*	March 16, 2010	December 16, 2013
American Renal Associates LLC	Kidney Center of Longmont LLC	$	1,612,968		March 16, 2010	March 16, 2013

Promisee Entity	Promisor Entity	Principal Amount			Date of Issuance	Maturity
American Renal Associates LLC	Kidney Center of Westminster LLC	$	300,000	*	March 16, 2010	December 16, 2013
American Renal Associates LLC	Kidney Center of Westminster LLC	$	1,450,089		March 16, 2010	March 16, 2013
American Renal Associates LLC	Langhorne Dialysis LLC	$	300,000	*	March 18, 2010	October 18, 2012
American Renal Associates LLC	Langhorne Dialysis LLC	$	1,160,911		March 18, 2010	October 18, 2012
American Renal Associates LLC	Middleburg Dialysis LLC	$	300,000	*	March 19, 2010	November 19, 2011
American Renal Associates LLC	Middleburg Dialysis LLC	$	279,426		March 19, 2010	November 19, 2011
American Renal Associates LLC	New Orleans Kidney Center LLC	$	300,000	*	March 16, 2010	December 16, 2012
American Renal Associates LLC	New Orleans Kidney Center LLC	$	636,087		March 16, 2010	December 16, 2012
American Renal Associates LLC	Pickaway Dialysis Center LLC	$	300,000	*	March 18, 2010	October 18, 2012
American Renal Associates LLC	Pickaway Dialysis Center LLC	$	565,799		March 18, 2010	October 18, 2012
American Renal Associates LLC	Waltham Dialysis LLC	$	300,000	*	March 9, 2010	February 9, 2012
American Renal Associates LLC	Waltham Dialysis LLC	$	667,883		March 9, 2010	February 9, 2012
American Renal Associates LLC	Woodville Dialysis Center LLP	$	300,000	*	March 16, 2010	September 16, 2012
American Renal Associates LLC	Woodville Dialysis Center LLP	$	421,610		March 16, 2010	September 16, 2012
American Renal Associates LLC	ARA-Dialysis Unit at Ohio Valley Hospital, LLC	$	1,050,000		November 1, 2009	November 1, 2014
American Renal Associates LLC	Kidney Care Center of Zanesville Ohio, LLC	$	2,200,00		May 30, 2009	May 30, 2014
American Renal Associates LLC	Lehigh Acres Dialysis Center, LLC	$	1,250,000		January 31,2010	January 31, 2015
American Renal Associates LLC	Northwest Jacksonville Dialysis Center, LLC	$	1,300,000		October 31, 2009	October 31, 2014
American Renal Associates LLC	Southwest Jacksonville Dialysis Center LLC	$	900,000		October 31, 2009	October 31, 2014
American Renal Associates LLC	Western Community Dialysis Center, LLC	$	1,150,000		September 22, 2009	September 22, 2015

* Denotes the lesser of: (i) THREE HUNDRED THOUSAND DOLLARS ($300,000.00) or (ii) the aggregate principal amount of Revolving Loans then outstanding, together with interest on the unpaid principal amount outstanding from time to time thereunder at the applicable interest rates.

(b) Other Promissory Notes, Instruments, Tangible Chattel Paper, Electronic Chattel

Paper and Other Evidences of Debt

None.

Schedule 8(a)

Patents and Trademarks

UNITED STATES PATENTS:

None.

UNITED STATES TRADEMARKS:

Registrations:

Trademark	Reg. #		Appl. #		Owner
ARA		3,711,453		77673941	American Renal Associates LLC
AMERICANRENAL ASSOCIATES		3,774,101		77673955	American Renal Associates LLC
A		3,774,100		77673947	American Renal Associates LLC
AMERICANRENAL		3,776,872		77673890	American Renal Associates LLC

Applications:

None.

Schedule 8(b)

Copyrights

None.

Schedule 8(c)

Intellectual Property Licenses

None.

Schedule 9

Commercial Tort Claims

None.

Schedule 10

Deposit Accounts

Depositor	Bank	Account Number
Acute Dialysis Services-ARA LLC	Eastern Bank	600522007
American Renal Associates LLC	Eastern Bank	600257497
American Renal Associates LLC	Eastern Bank	600257893
American Renal Associates LLC	Eastern Bank	5600257497
American Renal Management LLC	Eastern Bank	600257505
American Renal Management LLC	Eastern Bank	5600257505
ARA-Boca Raton Holding LLC	Eastern Bank	600378681
ARA-Ohio Holdings LLC	Eastern Bank	600420160

Securities Accounts

Depositor	Bank	Account Number
American Renal Associates LLC	Eastern Bank Capital Markets	159000714

Commodities Accounts

None.

Schedule 11

Letter of Credit Rights

None.

Schedule 12

Other Collateral

None.

EXHIBIT J-1

OPINION MATTERS-COUNSEL TO LOAN PARTIES

(see attached)

J-1 - 1

Opinion Matters–Counsel to Loan Parties

May 7, 2010

Bank of America, N.A., as Administrative

Agent under the Credit Agreement, as hereinafter

defined (the “Administrative Agent”)

and

The Lenders listed on Schedule I hereto

Re:    Credit Agreement, dated as of May 7, 2010 (the “Credit Agreement”), among C.P. Atlas Intermediate Holdings, LLC, a Delaware limited liability company (“Holdings”), C.P. Atlas Acquisition Corp., a Delaware corporation (the “Borrower”; to be merged with and into American Renal Holdings Inc., a Delaware corporation (the “Company”)), the lending institutions identified in the Credit Agreement (the “Lenders”) and the Administrative Agent

Ladies and Gentlemen:

We have acted as counsel to Holdings, the Borrower, the Company, the subsidiaries of Holdings named on Part A of Schedule II attached hereto (the “Delaware Subsidiaries”) and the subsidiaries of Holdings named on Part B of Schedule II attached hereto (the “Texas Subsidiaries” and, together with the Delaware Subsidiaries, each a “Subsidiary Guarantor” and collectively, the “Subsidiary Guarantors”; Holdings, the Borrower, the Company and the Subsidiary Guarantors are referred to herein collectively as the “Credit Parties”) in connection with the preparation, execution and delivery of the following documents:

(i) the Credit Agreement;

(ii) the Guaranty;

(iii) the promissory note delivered to Wells Fargo Bank, National Association pursuant to the Credit Agreement on the date hereof;

-3- May 7, 2010

(iv) the Security Agreement;

(v) the Trademark Security Agreement in respect of United States Trademark registrations and applications, dated as of the date hereof, between American Renal Associates LLC (“ARA LLC”) and the Administrative Agent (the “Trademark Security Agreement”); and

(vi) the Intercreditor Agreement.

The documents described in the foregoing clauses (i) through (vi) are collectively referred to herein as the “Credit Documents”, and the documents described in the foregoing clauses (iv) and (v) are collectively referred to herein as the “Security Documents”. Unless otherwise indicated, capitalized terms used but not defined herein or in the schedules hereto shall have the respective meanings set forth in the Credit Agreement. This opinion is delivered to you pursuant to Section 4.01(a)(viii) of the Credit Agreement.

We have examined the following:

the Credit Agreement, signed by each Credit Party that is a party thereto and by the Administrative Agent and certain of the Lenders;

each other Credit Document, signed by each Credit Party that is a party thereto;

forms of the Notes to be delivered to the Lenders pursuant to the Credit Agreement after the date hereof; and

unfiled copies of the financing statements listed on Schedule III attached hereto (the “Delaware Financing Statements”), naming the Credit Parties indicated on such Schedule III as debtors and the Administrative Agent as secured party, which we understand will be filed in the Office of the Secretary of State of the State of Delaware (the “Delaware Filing Office”).

In addition, we have examined, and have relied as to matters of fact upon, the documents delivered to you at the closing, and upon originals, or duplicates or certified or conformed copies, of such corporate and limited liability company records, agreements, documents and other instruments and such certificates or comparable documents of public officials and of officers and representatives of the Credit Parties, and have made such other investigations, as we have deemed relevant and necessary in connection with the opinions

-4- May 7, 2010

hereinafter set forth. In such examination, we have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as duplicates or certified or conformed copies and the authenticity of the originals of such latter documents. In addition, we have relied as to certain matters of fact upon the representations made in the Credit Documents.

In addition, we have assumed that (1) the Credit Parties have rights in the Collateral existing on the date hereof and will have rights in property which becomes Collateral after the date hereof and (2) “value” (as defined in Section 1-201(44) of the Uniform Commercial Code as in effect on the date hereof in the State of New York (the “New York UCC”)) has been given by the Lenders to the Credit Parties for the security interests and other rights in the Collateral.

In rendering the opinion set forth in paragraph 5 below with respect to the forms of Notes, we have assumed that at the time of any execution and delivery of Notes after the date hereof, the Board of Directors of the Borrower (or any committee thereof acting pursuant to authority properly delegated to such committee by the Board of Directors) has not taken any action to rescind or otherwise reduce the prior authorization of the issuance of such Notes.

Based upon and subject to the foregoing, and subject to the qualifications and limitations set forth herein, we are of the opinion that:

Each of Holdings and the Borrower (a) has been duly incorporated or formed, as applicable.

Each of Holdings, the Borrower, the Company and each Delaware Subsidiary (a) is validly existing and in good standing as a corporation or limited liability company, as applicable, under the law of the State of Delaware, (b) has the corporate or limited liability company power and authority, as applicable, to execute and deliver each of the Credit Documents to which it is a party and to

-5- May 7, 2010

borrow and perform its obligations thereunder and to grant the security interests to be granted by it pursuant to the Security Documents to which it is a party and (c) has duly authorized, executed and delivered each Credit Document to which it is a party.

The execution and delivery by each Credit Party of the Credit Documents to which it is a party, the Borrower’s borrowings in accordance with the terms of the Credit Agreement and the performance of each such Credit Party’s payment obligations under the Credit Documents and the granting of the security interests to be granted by each such Credit Party pursuant to the Security Documents to which it is a party (a) will not result in any violation of (1) the certificate of incorporation or by-laws or the certificate of formation or limited liability company agreement of such Credit Party (other than the Texas Subsidiaries, as to which we express no opinion) or (2) assuming that proceeds of borrowings will be used in accordance with the terms of the Credit Agreement, any federal or New York statute, the Delaware General Corporation Law or the Delaware Limited Liability Company Act or any rule or regulation issued pursuant to any federal or New York statute, the Delaware General Corporation Law or the Delaware Limited Liability Company Act or any order known to us issued by any court or governmental agency or body and (b) will not breach or result in a default under or result in the creation of any lien upon or security interest in any Credit Party’s properties pursuant to the terms of any agreement or instrument identified on Schedule IV hereto.

No consent, approval, authorization, order, filing, registration or qualification of or with any federal or New York governmental agency or body or any Delaware governmental agency or body acting pursuant to the Delaware General Corporation Law or the Delaware Limited Liability Company Act is required for the execution and delivery by any Credit Party of the Credit Documents to which it is a party, the borrowings by the Borrower in accordance with the terms of the Credit Agreement or the performance by any Credit Party of its respective payment obligations under the Credit Documents or the granting of any security interests under the Security Documents, except filings required for the perfection of security interests granted pursuant to the Security Documents.

Assuming that each of the Credit Documents is a valid and legally binding obligation of each of the parties thereto, other than the Credit Parties, and assuming that (a) each of the Texas Subsidiaries is validly existing and in good standing under the laws of the jurisdiction in which it is organized and has duly authorized, executed and delivered the Credit Documents to which it is a party in accordance with its organizational documents, (b) execution, delivery and performance by each Credit Party of the Credit Documents to which it is a party do not violate the laws of the jurisdiction in which it is organized or any other applicable laws (excepting the law of the State of New York, the Delaware General Corporation Law, the Delaware Limited Liability Company Act and the federal laws of the United States) and (c) execution, delivery and performance by each Credit Party of the Credit Documents to which it is a party do not constitute

-6- May 7, 2010

a breach or violation of any agreement or instrument which is binding upon such Credit Party (except that we do not make the assumption in the foregoing clause (c) with respect to the agreements and instruments that are the subject of clause (b) of opinion paragraph 3 of this opinion letter), each Credit Document constitutes and each Note delivered to a Lender after the date hereof, assuming the due execution and delivery by the Credit Party which is the maker of such Note, will constitute the valid and legally binding obligation of each Credit Party which is a party thereto, enforceable against such Credit Party in accordance with its terms.

To our knowledge, there is no action, suit or proceeding now pending before or by any court, arbitrator or governmental agency, body or official of the United States or any state of the United States to which any Credit Party is a party or to which the business, assets or property of any Credit Party is subject, and no such action, suit or proceeding is threatened to which any Credit Party would be a party or to which the business, assets or property of any Credit Party would be subject, that in either case questions the validity of the Credit Documents.

No Credit Party is an “investment company” within the meaning of, and subject to regulation under, the Investment Company Act of 1940, as amended.

Assuming that the Borrower will comply with the provisions of the Credit Agreement relating to the use of proceeds, the execution and delivery of the Credit Agreement by the Borrower, the borrowings by the Borrower in accordance with the terms of the Credit Agreement and the making of the Loans under the Credit Agreement will not violate Regulation T, U or X of the Board of Governors of the Federal Reserve System.

The Security Agreement creates in favor of the Administrative Agent for the benefit of the Lenders a security interest in the Collateral described therein in which a security interest may be created under Article 9 of the New York UCC.

The Security Agreement creates in favor of the Administrative Agent for the benefit of the Lenders a security interest under the New York UCC in the investment property (as defined in Section 9-102 of the New York UCC) identified on Schedules 6(a)(i) and 6(a)(ii) to the Perfection Certificate, which includes pledged Equity Interests which are certificated and which are separately identified on Schedule 6(a)(i) to the Perfection Certificate (the “Certificated Pledged Securities”), and other pledged Equity Interests which are uncertificated.

The Administrative Agent will have a perfected security interest in the Certificated Pledged Securities for the benefit of the Lenders under the New York UCC upon delivery to the Administrative Agent for the benefit of the Lenders in the State of New York of the certificates representing the Certificated Pledged Securities in registered form, indorsed in blank by an effective indorsement or accompanied by undated powers with respect thereto duly indorsed in blank by an effective indorsement. Assuming neither the Administrative Agent nor any of the Lenders has notice of any adverse claim to the Certificated Pledged Securities, the Administrative Agent will acquire the security interest in the Certificated Pledged Securities for the benefit of the Lenders free of any adverse claim.

-7- May 7, 2010

The Administrative Agent will have a perfected security interest in that portion of the Collateral constituting instruments (as defined in Section 9-102 of the New York UCC) identified on Schedule 7 to the Perfection Certificate for the benefit of the Lenders under the New York UCC upon delivery of such instruments to the Administrative Agent for the benefit of the Lenders in the State of New York.

The Administrative Agent will have a perfected security interest for the benefit of the Lenders in that portion of the Collateral constituting the U.S. trademark registrations of ARA LLC listed, and correctly identified, on Schedule I to the Trademark Security Agreement, upon (a) the taking of all actions required under the law of the jurisdiction of organization of ARA LLC with respect to the perfection of a security interest in such intangible property and (b) the timely filing and recording of the Trademark Security Agreement, including Schedules thereto, in the United States Patent and Trademark Office, in the manner specified by such office and in accordance with its rules and regulations.

Although we express no opinion as to the law of the State of Delaware (other than the Delaware General Corporation Law and the Delaware Limited Liability Company Act), we have reviewed Article 9 of the Uniform Commercial Code in effect in the State of Delaware as set forth in the Commerce Clearing House, Inc. Secured Transactions Guide as supplemented through April 27, 2010 (the “Delaware UCC”) and, based solely on such review, we advise you that (a) the Delaware Financing Statements to be filed in the Delaware Filing Office are in appropriate form for filing in the Delaware Filing Office and (b) upon the filing of the Delaware Financing Statements in the Delaware Filing Office, the Administrative Agent will have a perfected security interest for the benefit of the Lenders in that portion of the Collateral in which a security interest is perfected by filing a financing statement in the Delaware Filing Office.

Our opinions in paragraphs 5, 9 and 10 above are subject to (i) the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, (ii) general equitable principles (whether considered in a

-8- May 7, 2010

proceeding in equity or at law) and (iii) an implied covenant of good faith and fair dealing. Our opinion in paragraph 5 above also is subject to the qualification that certain provisions of the Security Documents may not be enforceable in whole or in part, although the inclusion of such provisions does not render the Security Documents invalid, and the Security Documents and the law of the State of New York contain adequate remedial provisions for the practical realization of the rights and benefits afforded thereby.

Our opinions in paragraphs 9, 11 and 12, and our advice in the second preceding paragraph above, are limited to Article 9 of the New York UCC or the Delaware UCC, as the case may be, and our opinion in paragraph 10 is limited to Articles 8 and 9 of the New York UCC, and, therefore, those opinion and advice paragraphs do not address (i) collateral of a type not subject to Article 8 or 9, as the case may be, of the New York UCC or the Delaware UCC and (ii) what law governs perfection of the security interests granted in the collateral covered by this opinion letter.

We express no opinion and render no advice with respect to:

perfection of any security interest in (1) any collateral of a type represented by a certificate of title and (2) any collateral consisting of money or cash equivalents;

the effect of § 9-315(a)(2) of the applicable Uniform Commercial Code with respect to any proceeds of Collateral that are not identifiable;

perfection of any security interest whose priority is subject to Section 9-334 of the applicable Uniform Commercial Code;

except as provided in paragraph 11, the priority of any security interest;

the effect of Section 552 of the Bankruptcy Code (11 U.S.C. 552) (relating to property acquired by a pledgor after the commencement of a case under the United States Bankruptcy Code with respect to such pledgor) and Section 506(c) of the Bankruptcy Code (11 U.S.C. 506(c)) (relating to certain costs and expenses of a trustee in preserving or disposing of collateral);

any matters subject to any statute, judicial ruling or decree, and any administrative or governmental regulation of the United States of America or any state or other political

-9- May 7, 2010

subdivision thereof pertaining to the operation of hospitals and other health care facilities or the provision of health care services, including, but not limited to, the laws, regulations and policies of Medicare and Medicaid; the Health Insurance Portability and Accountability Act of 1996; the Balanced Budget Act of 1997; Titles XVIII and XIX of the Social Security Act, 42 U.S.C. § 1395 et seq. and § 1396 et seq.; the federal anti-kickback statute, 42 U.S.C. §1320a-7b(b); the civil monetary penalties law, 42 U.S.C. § 1320a-7a; the civil False Claims Act, 31 U.S.C. §§ 3729-3733; the Administrative False Claims Act, 42 U.S.C. § 1320a-7b(a); the “Stark” physician self-referral law, 42 U.S.C. § 1395nn, and similar state laws; the Emergency Medical Treatment and Active Labor Act; the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (P.L. 108-173); the Deficit Reduction Act of 2005; the American Recovery and Reinvestment Act of 2009; the Patient Protection and Affordable Care Act (PPACA) of 2010; federal, state and local licensing, certification and accreditation regulations; and state laws relating to Certificates of Need, and the rules and regulations promulgated thereunder (collectively, the “Health Care Laws”);

the effect of any provision of the Credit Documents that is intended to establish any standard other than a standard set forth in the New York UCC as the measure of the performance by any party thereto of such party’s obligations of good faith, diligence, reasonableness or care or of the fulfillment of the duties imposed on any secured party with respect to the maintenance, disposition or redemption of collateral, accounting for surplus proceeds of collateral or accepting collateral in discharge of liabilities;

the effect of any provision of the Credit Documents that is intended to permit modification thereof only by means of an agreement in writing signed by the parties thereto;

the effect of any provision of the Credit Documents insofar as it provides that any Person purchasing a participation from a Lender or other Person may exercise set-off or similar rights with respect to such participation or that any Lender or other Person may exercise set-off or similar rights other than in accordance with applicable law;

the effect of any provision of the Credit Documents imposing penalties or forfeitures;

the enforceability of any provision of the Credit Documents to the extent that such provision constitutes a waiver of illegality as a defense to performance of contract obligations; and

the effect of any provision of the Credit Documents relating to indemnification or exculpation in connection with violations of any securities laws or relating to indemnification, contribution or exculpation in connection with willful, reckless or criminal acts or gross negligence of the indemnified or exculpated Person or the Person receiving contribution.

In connection with the provisions of the Credit Documents whereby the parties submit to the jurisdiction of the courts of the United States of America located in the State of New York, we note the limitations of 28 U.S.C. §§ 1331 and 1332 on subject matter jurisdiction of the federal courts. In connection with the provisions of the Credit Documents which relate to forum

-10- May 7, 2010

selection (including, without limitation, any waiver of any objection to venue or any objection that a court is an inconvenient forum), we note that under NYCPLR § 510 a New York State court may have discretion to transfer the place of trial, and under 28 U.S.C. §1404(a) a United States district court has discretion to transfer an action from one federal court to another.

Insofar as the opinions expressed herein relate to or are dependent upon matters governed by laws other than those of the State of Delaware or the State of New York and the federal laws of the United States, we understand that you are relying upon the opinions of McDermott Will & Emery LLP with respect to certain matters of Texas law. We also understand you are relying upon the opinion of McDermott Will & Emery LLP with respect to certain matters relating to Health Care Laws.

We do not express any opinion herein concerning any law other than the law of the State of New York, the federal law of the United States, the Delaware General Corporation Law and the Delaware Limited Liability Company Act.

This opinion letter is rendered to you in connection with the above described transactions. This opinion letter may not be relied upon by you for any other purpose, or relied upon by, or furnished to, any other person, firm or corporation without our prior written consent; provided that this opinion may be furnished to, but may not be relied upon by, any person, firm or corporation to which you assign an interest in the Credit Agreement.

Very truly yours,

 /s/ SIMPSON THACHER & BARTLETT LLP

SIMPSON THACHER & BARTLETT LLP

SCHEDULE I

THE LENDERS

Bank of America, N.A.

Barclays Bank PLC

Wells Fargo Bank, National Association

SCHEDULE II

PART A

DELAWARE SUBSIDIARIES

American Renal Management LLC

American Renal Associates LLC

AKC Holding LLC

ARA-Boca Raton Holding LLC

ARA-Ohio Holdings LLC

JKC Holding LLC

ARA-Rhode Island Dialysis II LLC

Texas-ARA LLC

Acute Dialysis Services-ARA LLC

PART B

TEXAS SUBSIDIARIES

American Renal Texas L.P.

American Renal Texas II, L.P

SCHEDULE III

DELAWARE FINANCING STATEMENTS

The following financing statements on form UCC-1, naming the Person listed below as debtor and the Administrative Agent as secured party for the benefit of the Lenders, to be filed in the Delaware Filing Office:

Debtors:

C.P. Atlas Intermediate Holdings, LLC

C.P. Atlas Acquisition Corp.

American Renal Holdings Inc.

American Renal Management LLC

American Renal Associates LLC

AKC Holding LLC

ARA-Boca Raton Holding LLC

ARA-Ohio Holdings LLC

JKC Holding LLC

ARA-Rhode Island Dialysis II LLC

Texas-ARA LLC

Acute Dialysis Services-ARA LLC

SCHEDULE IV

AGREEMENTS

1. Purchase Agreement.

2. Senior Secured Notes Indenture.

EXHIBIT J-2

OPINION MATTERS-LOCAL COUNSEL TO LOAN PARTIES

(see attached)

J-2 - 1

Opinion Matters–Local Counsel to Loan Parties

May 7, 2010

To: Bank of America, N.A., as Administrative Agent

  under the Credit Agreement referred to below

Banc of America Securities LLC

Barclay Capital Inc.

Wells Fargo Securities, LLC

as Joint Lead Arrangers and Book Managers

The Lenders under the Credit Agreement referred to below

Re: American Renal Holdings, Inc.

Ladies and Gentlemen:

We have acted as special Texas counsel to American Renal Texas L.P., a Texas limited partnership (“TLP”) and American Renal Texas II, L.P., a Texas limited partnership (“TLP II” and together with TLP are collectively referred to herein as the “Credit Parties” and individually as a “Credit Party”), in connection with the execution and delivery of Subject Documents referred to below. This opinion is being delivered pursuant to Section 4.01(a)(ix) of the Credit Agreement dated as of May 7, 2010 (the “Credit Agreement”), by and among C.P. Atlas Acquisition Corp., a Delaware corporation (to be merged with and into American Renal Holdings Inc., a Delaware corporation (the “Borrower”)), the lenders party thereto in their capacities as lenders thereunder and Bank of America, N.A., as administrative agent (the “Administrative Agent”) and the other parties thereto. Terms not otherwise defined herein are used herein as defined in the Credit Agreement.

In our examination of the documents referred to below, we have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies, and the authenticity of the originals of such copies. As to any facts material to this opinion that we did not independently verify, we have, to the extent we deemed appropriate, without independent investigation, relied upon certificates, statements and representations of the Credit Parties and their officers and other representatives, and of public officials, including the facts set forth in the Officer’s Certificate referred to below.

May 7, 2010

Page 2

I. SCOPE OF REVIEW

In rendering the opinions set forth herein, we have examined and relied on originals or copies of the following, all (except as otherwise indicated) dated as of May 7, 2010, and all delivered pursuant to the Credit Agreement:

(a) the Guaranty;

(b) the Security Agreement;

(c) the Intercreditor Agreement;

(d) the Credit Agreement;

(e) with respect to each Credit Party, a certificate of the Secretary of State of Texas, certifying as to the Certificate of Limited Partnership of such Credit Party (collectively, the “Charters”);

(f) with respect to each Credit Party, a certificate of an authorized representative of such Credit Party certifying as to (i) the Charters, (ii) the Agreement of Limited Partnership of such Credit Party (collectively, together with the Charters, the “Organizational Documents”), (iii) resolutions adopted on May 7, 2010, by the general partner of such Credit Party, and (iv) the incumbency and specimen signatures of certain officers;

(g) with respect to each Credit Party, a certificate of the Secretary of State of Texas, dated as of a recent date, attesting to the existence of such Credit Party in such state and a Certificate of Good Standing from the Texas Comptroller of Accounts;

(h) a certificate (“Officer’s Certificate”) executed by the general partner of the Credit Parties as to various factual matters regarding our opinions below; and

(i) with respect to each Credit Party, an unfiled copy of a financing statement (individually a “UCC Financing Statement” and collectively the “UCC Financing Statements”) naming such Credit Party as debtor and the Administrative Agent as secured party, to be filed in office of the Secretary of State of Texas with respect to the security interests granted to the Administrative Agent pursuant to the Security Agreement (a copy of each UCC Financing Statement being attached as Annex I).

The documents referred to in clauses (a) through (c) above are herein collectively called the “Subject Documents”.

In rendering the opinions set forth herein, we have, with your consent, relied only upon the examination of the documents described above and have made no independent verification or investigation of the factual matters set forth therein. We did not participate in the negotiation or preparation of the documents and except as set forth herein have not advised the Credit Parties with respect to such documents or transactions contemplated therein.

May 7, 2010

Page 3

For purposes hereof, the following terms have the following meaning: (i) “Applicable Laws” means those laws, rules and regulations of the State of Texas which, in our experience, are normally applicable to transactions of the type contemplated by the Subject Documents, it being understood that the term Applicable Laws does not include any laws of the type mentioned in Parts IIIA(2) or IIIA(3) hereof, or any law, rule, regulation, ordinance, administrative decision or order of any municipality, county or similar political subdivision or any agency or instrumentality thereof; (ii) “Governmental Authority” means any executive, legislative, judicial, administrative or regulatory body of the State of Texas; and (iii) “Governmental Approval” means any consent, approval, license, authorization or validation of, or filing, recording or registration with, any Governmental Authority pursuant to the laws of the State of Texas to the extent specifically referred to herein.

As used herein, unless the context otherwise requires, (i) “UCC” means the Uniform Commercial Code, it being understood that the designation of a state before the UCC means the UCC as in effect in such state (i.e., the “Texas UCC” means the UCC as in effect in the State of Texas ); (ii) “Collateral” means any and all collateral in which a security interest has purportedly been granted to the Administrative Agent pursuant to the Security Agreement, including the Pledged Collateral (as defined in the Security Agreement); (iii) “UCC Collateral” means any or all Collateral in which a security interest can be granted under Article 9 of the UCC; and (iv) terms defined in the UCC are used herein as defined in the Texas UCC.

We are admitted to the Bar in the State of Texas. We express no opinion as to the laws of any jurisdiction other than the laws of the State of Texas. In this respect we call to your attention that the Subject Documents are governed by the laws of jurisdictions other than those described above and we express no opinion as to the effect of any such other laws on the opinions expressed herein.

Our opinions are also subject to the following assumptions and qualifications:

II. ASSUMPTIONS

A. We have assumed, with your permission, that:

(1) each of the Subject Documents constitutes the legal, valid and binding obligation of each party thereto, enforceable against such parties in accordance with its terms;

(2) the execution, delivery and performance by each Credit Party of any of its obligations under the Subject Documents to which it is a party does not and will not conflict with, contravene, violate or constitute a default under (A) any rule, law or regulation to which such Credit Party is subject (other than the Applicable Laws as to which we express our opinion in paragraph 3 herein), or (B) any judicial or administrative order or decree of any governmental authority; and

May 7, 2010

Page 4

(3) no authorization, consent or other approval of, notice to or filing with any court, governmental authority or regulatory body (other than the Governmental Approvals as to which we express our opinion in paragraph 4 herein) is required to authorize or is required in connection with the execution, delivery or performance by any Credit Party of any Subject Document to which it is a party or the transactions contemplated thereby.

B. We have assumed with your permission (i) as to each Credit Party, the address pertaining to it, is as set forth in Schedule 1 to the Officer’s Certificate, and (ii) the name of the Administrative Agent is Bank of America, N.A.

C. We have assumed with your permission that (i) value has been given pursuant to Section 9-203 of the applicable UCC, and (ii) each Credit Party has rights in the Collateral or the power to transfer rights in the Collateral to the Administrative Agent.

D. We have assumed with your permission that the description of the Collateral in the Security Agreement, to the extent that such description entails all-inclusive or general language rather than specifically identifying language to describe the personal property to be covered thereby, is sufficient to enable its identification.

E. We have assumed with your permission that none of the Credit Parties is a transmitting utility (as defined in UCC Section 9-102(80)), a trust or trustee, or a decedent’s estate.

III. QUALIFICATIONS

A. We express no opinion as to:

(1) the effect on the opinions herein stated of (a) the compliance or non-compliance of any party to the Subject Documents (other than the Credit Parties) with any federal, state, or other laws or regulations applicable to them, or, (b) the legal or regulatory status or the nature of the business of such parties; or

(2) compliance with, or any governmental or regulatory filing, approval, authorization, license or consent required by or under, any (a) federal or state environmental law, (b) federal or state antitrust law, (c) federal or state taxation law, (d) federal or state worker health or safety law, (e) federal or state patent, trademark or copyright statute, rule or regulation, (f) statutory or other requirement relating to the disposition of hazardous waste or environmental protection, (g) federal or state receivership or conservatorship law, (h) securities registration or antifraud provisions under any federal or state securities law, (i) federal or state labor or employment law, (j) federal or state employee benefits or pension law, (k) zoning, health, safety, building,

May 7, 2010

Page 5

environmental, permitting, land use or subdivision law, ordinance, code, rule or regulation, (l) labor, pension and employee benefit law, rule or regulation, (m) Federal Reserve margin regulations, (n) usury law.

B. We express no opinion as to:

(1) the creation or perfection of any security interest in any property excluded from the provisions of the UCC pursuant to Section 9-109 of the New York or Texas UCC;

(2) any Collateral that consists of consumer goods, farm products, agricultural liens, manufactured homes, fixtures, crops, timber, minerals (including oil and gas) before extraction, as-extracted collateral, accounts or general intangibles with respect to any governmental unit, an interest in a decedent’s estate, letter of credit rights, commercial tort claims, or items which are subject to a requirement of any jurisdiction which provides for a registration or certificate of title or a filing other than under the UCC;

(3) except for our opinion in paragraph 5, the perfection of any security interest in any of the UCC Collateral;

(4) the priority of your security interests in any of the Collateral (including the UCC Collateral);

(5) the extent to which any restriction on the right of any Credit Party to transfer or assign its interest in any UCC Collateral is rendered ineffective pursuant to Section 9-406 or 9-408 of any applicable UCC; or

(6) any actions that may be required to be taken periodically under the UCC or other applicable law in order for the effectiveness of the UCC Financing Statements, or the validity or perfection of any security interest, to be maintained.

C. We call to your attention that:

(1) the security interest of the Administrative Agent in any Collateral may be subject to the rights of account debtors in respect of such Collateral, claims and defenses of such account debtors and the terms of agreements with such account debtors; and

(2) the rights of the Credit Parties to assign receivables consisting of claims against any federal, state or local government or governmental agency (including, without limitation, the United States or any agency or department thereof) may be limited by the Federal Assignment of Claims Act, the Social Security Act, and corresponding or similar state or local statutes.

D. In the case of investment property:

(1) we express no opinion as to the perfection, priority, or enforceability of the security interest of the Administrative Agent in any securities issued by any person organized outside of the United States;

May 7, 2010

Page 6

(2) we call to your attention that in the case of the issuance of additional shares or other distributions in respect of Collateral consisting of securities, unless the Administrative Agent’s security interest therein has been perfected by the filing of a financing statement the security interest of the Administrative Agent therein will be perfected only to the extent the Administrative Agent has control (as defined in Section 8-106 of the applicable UCC) and/or other action appropriate to the nature of the distribution is taken, in either case, in accordance with the provisions of the UCC and other applicable law; and

(3) you should be aware that in the case of Collateral consisting of securities, the Administrative Agent or the Lenders may not be entitled to exercise voting rights with respect to such securities or to receive dividends or other distributions directly from the issuer thereof prior to becoming record holder of such securities, nor may such securities be sold or further transferred by the Administrative Agent or the Lenders without registration under the Securities Act of 1933, except pursuant to an exemption from registration contained in such act, and qualification or exemption under any applicable state securities or “blue sky” laws.

E. You should be aware that the security interest created by a Credit Party in proceeds of Collateral and the perfection of such security interest is limited to the extent set forth in Section 9-315 of the applicable UCC.

F. Our opinions below are subject to the qualification that the Subject Documents contain adequate remedial provisions for the practical realization of the rights and benefits afforded thereby.

IV. OPINIONS

Based upon the foregoing and subject to the assumptions, limitations, qualifications, exceptions and other limitations set forth herein, we are of the opinion that:

1. Based solely on the certificates of existence referred to in Part I, each of the Credit Parties is in existence and good standing under the laws of the State of Texas.

2. The execution and delivery of each of such Subject Documents to which it is a party and the consummation by each of the Credit Parties of the transactions contemplated thereby have been duly authorized by requisite limited partnership action on the part of each of the Credit Parties. Each of the Credit Parties has duly executed and delivered each of the Subject Documents to which it is party.

May 7, 2010

Page 7

3. The execution and delivery by each Credit Party of the Subject Documents to which it is a party and performance by each of the Credit Parties of their obligations under such Subject Documents, each in accordance with its terms, do not (a) conflict with the Organizational Documents of such Credit Party or (b) violate any provision of Applicable Law.

4. No Governmental Approval, which has not been obtained or taken and is not in full force and effect, is required to authorize or is required in connection with the execution, delivery or performance of any of the Subject Documents by any Credit Parties except (a) filings necessary to perfect Liens created by the Subject Documents in the Collateral, (b) as may be required to be made or obtained by you as a result of your involvement in the transactions contemplated by the Subject Documents, and (c) such as have been obtained or made and are in full force and effect.

5. The UCC Financing Statements are in proper form for filing in the Office of the Secretary of State of Texas, and upon the filing of the UCC Financing Statements of each Credit Party in such office, the security interests in the UCC Collateral granted by such Credit Party to the Administrative Agent for the benefit of the Secured Parties pursuant to the Security Agreement will be perfected to the extent that such security interests may be perfected under the Texas UCC by the filing of a financing statement in the office of the Secretary of State of Texas.

6. No taxes or other charges, including, without limitation, intangible or documentary stamp taxes, recording taxes, transfer taxes or similar charges, are payable to the State or to any jurisdiction therein on account of the execution and delivery of the Subject Documents or the creation of the indebtedness evidenced or secured by any of the Subject Documents or the recording or filing of the UCC Financing Statements, except for nominal filing or recording fees.

7. The choice of law provisions in the Subject Documents will be upheld and enforced by the courts of the State of Texas and Federal courts sitting in and applying the laws of the State of Texas.

This opinion is limited to the matters expressly set forth herein and no opinion is implied or may be inferred beyond the matters expressly so stated. This opinion is given as of the date hereof and we do not undertake any liability or responsibility to inform you of any change in circumstances occurring, or additional information becoming available to us, after the date hereof which might alter the opinions contained herein.

This opinion is rendered only to you and your successors and permitted transferees under the Credit Agreement, and is solely for your and their benefit. This opinion may not be relied upon by any other person or entity or for any other purpose or used, circulated, quoted or otherwise referred to for any other purpose, in each case without our prior written consent.

May 7, 2010

Page 8

Very truly yours,

/s/ McDermott Will & Emery LLP

McDermott Will & Emery LLP

Annex I UCC Financing Statements

May 7, 2010

Page 1

ANNEX I

UCC Financing Statements

UCC FINANCING STATEMENT

FOLLOW INSTRUCTIONS (front and back) CAREFULLY

A. NAME & PHONE OF CONTACT AT FILER [optional]
James P. Murphy (212) 701-3345
B. SEND ACKNOWLEDGMENT TO: (Name and Address)
	James P. Murphy
	Legal Assistant Cahill Gordon & Reindel LLP 80 Pine Street New York, NY 10005
		THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY

1. DEBTOR’S EXACT FULL LEGAL NAME - insert only one debtor name (1a or 1b) - do not abbreviate or combine names
OR	1a. ORGANIZATION’S NAME American Renal Texas L.P.
	1b. INDIVIDUAL’S LAST NAME			FIRST NAME	MIDDLE NAME		SUFFIX
1c. MAILING ADDRESS				CITY	STATE	POSTAL CODE	COUNTRY
	66 Cherry Hill Drive			Beverly	MA	01915	USA
1d. SEE INSTRUCTIONS		ADD’L INFO RE	1e. TYPE OF ORGANIZATION	1f. JURISDICTION OF ORGANIZATION	1g. ORGANIZATIONAL ID #, if any
		ORGANIZATION
		DEBTOR	Limited Partnership	Texas	13407410		¨  NONE
2. ADDITIONAL DEBTOR’S EXACT FULL LEGAL NAME - insert only one debtor name (2a or 2b) - do not abbreviate or combine names
OR	2a. ORGANIZATION’S NAME American Renal Texas LP.
	2b. INDIVIDUAL’S LAST NAME			FIRST NAME	MIDDLE NAME		SUFFIX
2c. MAILING ADDRESS				CITY	STATE	POSTAL CODE	COUNTRY
	66 Cherry Hill Drive			Beverly	MA	01915	USA
2d. SEE INSTRUCTIONS		ADD’L INFO RE	2e. TYPE OF ORGANIZATION	2f. JURISDICTION OF ORGANIZATION	2g. ORGANIZATIONAL ID #, if any
		ORGANIZATION
		DEBTOR	Limited Partnership	Texas	13407410		¨  NONE
3. SECURED PARTY’S NAME (or NAME OF TOTAL ASSIGNEE of ASSIGNOR S/P) - insert only one secured party name (3a or 3b)
OR	3a. ORGANIZATION’S NAME Bank of America, N.A., as Administrative Agent
	3b. INDIVIDUAL’S LAST NAME			FIRST NAME	MIDDLE NAME		SUFFIX
3c. MAILING ADDRESS				CITY	STATE	POSTAL CODE	COUNTRY
	101 S Tryon St., 15th Floor			Charlotte	NC	28255-0001	USA

4. This FINANCING STATEMENT covers the following collateral:

  All assets now owned or hereafter acquired by Debtor or in which Debtor otherwise has rights and all proceeds thereof.

5. ALTERNATIVE DESIGNATION [if applicable]: ¨LESSEE/LESSOR ¨CONSIGNEE/CONSIGNOR ¨BAILEE/BAILOR  ¨SELLER/BUYER  ¨AG. LIEN ¨NON-UCC FILING
6.¨	This FINANCING STATEMENT is to be filed [for record] (or recorded) in the REAL ESTATE RECORDS    Attach Addendum                                   [if applicable]	7. Check to REQUEST SEARCH REPORT(S) on Debtor(s)     [ADDITIONAL FEE]    [optional]       ¨All  Debtors¨Debtor 1  ¨Debtor 2
8. OPTIONAL FILER REFERENCE DATA
TO BE FILED WITH SECRETARY OF STATE OF TEXAS.          FILE FIRST - CREDIT AGREEMENT          [08060.672] [13]
FILING OFFICE COPY — UCC FINANCING STATEMENT (FORM UCC1) (REV. 05/22/02)

UCC FINANCING STATEMENT

FOLLOW INSTRUCTIONS (front and back) CAREFULLY

A. NAME & PHONE OF CONTACT AT FILER [optional]
James P. Murphy (212) 701-3345
B. SEND ACKNOWLEDGMENT TO: (Name and Address)
	James P. Murphy
	Legal Assistant Cahill Gordon & Reindel LLP 80 Pine Street New York, NY 10005
		THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY

1. DEBTOR’S EXACT FULL LEGAL NAME - insert only one debtor name (1a or 1b) - do not abbreviate or combine names
OR	1a. ORGANIZATION’S NAME American Renal Texas II, L.P.
	1b. INDIVIDUAL’S LAST NAME			FIRST NAME	MIDDLE NAME		SUFFIX
1c. MAILING ADDRESS				CITY	STATE	POSTAL CODE	COUNTRY
	66 Cherry Hill Drive			Beverly	MA	01915	USA
1d. SEE INSTRUCTIONS		ADD’L INFO RE	1e. TYPE OF ORGANIZATION	1f. JURISDICTION OF ORGANIZATION	1g. ORGANIZATIONAL ID #, if any
		ORGANIZATION
		DEBTOR	Limited Partnership	Texas	800556055		¨  NONE
2. ADDITIONAL DEBTOR’S EXACT FULL LEGAL NAME - insert only one debtor name (2a or 2b) - do not abbreviate or combine names
OR	2a. ORGANIZATION’S NAME
	2b. INDIVIDUAL’S LAST NAME			FIRST NAME	MIDDLE NAME		SUFFIX
2c. MAILING ADDRESS				CITY	STATE	POSTAL CODE	COUNTRY
2d. SEE INSTRUCTIONS		ADD’L INFO RE	2e. TYPE OF ORGANIZATION	2f. JURISDICTION OF ORGANIZATION	2g. ORGANIZATIONAL ID # if any
		ORGANIZATION
		DEBTOR					¨  NONE
3. SECURED PARTY’S NAME (or NAME OF TOTAL ASSIGNEE of ASSIGNOR S/P) - insert only one secured party name (3a or 3b)
OR	3a. ORGANIZATION’S NAME Bank of America, N.A., as Administrative Agent
	3b. INDIVIDUAL’S LAST NAME			FIRST NAME	MIDDLE NAME		SUFFIX
3c. MAILING ADDRESS				CITY	STATE	POSTAL CODE	COUNTRY
	101 S Tryon St., 15th Floor			Charlotte	NC	28255-0001	USA

4. This FINANCING STATEMENT covers the following collateral:

  All assets now owned or hereafter acquired by Debtor or in which Debtor otherwise has rights and all proceeds thereof.

5. ALTERNATIVE DESIGNATION [if applicable]: ¨LESSEE/LESSOR ¨CONSIGNEE/CONSIGNOR ¨BAILEE/BAILOR  ¨SELLER/BUYER ¨AG. LIEN ¨NON-UCC FILING
6.¨	This FINANCING STATEMENT is to be filed [for record] (or recorded) in the REAL ESTATE RECORDS    Attach Addendum                                   [if applicable]	7. Check to REQUEST SEARCH REPORT(S) on Debtor(s)     [ADDITIONAL FEE]        [optional]       ¨All Debtors¨Debtor 1   ¨Debtor  2
8. OPTIONAL FILER REFERENCE DATA
TO BE FILED WITH SECRETARY OF STATE OF TEXAS.          FILE FIRST - CREDIT AGREEMENT          [08060.670] [12]
FILING OFFICE COPY — UCC FINANCING STATEMENT (FORM UCC1) (REV. 05/22/02)

EXHIBIT K

[FORM OF]

SOLVENCY CERTIFICATE

This Solvency Certificate (this “Certificate”) is delivered pursuant to Section 4.01(a)(v) of the Credit Agreement, dated as of May 7, 2010 (as amended, supplemented, restated, replaced or otherwise modified from time to time, the “Credit Agreement”), among C.P. ATLAS ACQUISITION CORP., a Delaware corporation (the “Borrower”), which shall be merged with and into AMERICAN RENAL HOLDINGS INC. (the “Company”) on the Closing Date, upon and following which the Borrower shall be the Company, C.P. ATLAS INTERMEDIATE HOLDINGS, LLC, a Delaware limited liability company (“Holdings”), the Lenders from time to time party thereto, and BANK OF AMERICA, N.A., as Administrative Agent, L/C Issuer and Swing Line Lender. and each lender from time to time party thereto (collectively, the “Lenders” and individually, a “Lender”). Capitalized terms used herein without definition have the same meanings as in the Credit Agreement.

I hereby certify on behalf of the Loan Parties as follows:

1. I am the duly qualified and acting Chief Financial Officer of the Borrower and in such capacity am a senior financial officer with responsibility for the management of the financial affairs of the Borrower and the preparation of consolidated financial statements of the Borrower and its subsidiaries. In connection with the following certifications, I have reviewed the financial statements of the Borrower and its subsidiaries and have reviewed the Credit Agreement, the other Loan Documents and each other document relating to the Transaction. I am providing this certificate solely in my capacity as an officer of the Borrower.

2. The fair value of the property of the Company (as used herein “Company” means the Borrower and the Guarantors on a consolidated basis) is not as of the date hereof, nor will it be immediately after giving effect to the Transaction, less than the total amount of liabilities, including contingent liabilities, of the Company.

3. On the date hereof, and after giving effect to the Transaction, the present fair salable value of the assets of the Company is greater than the total amount of liabilities, including contingent liabilities, of the Company.

4. On the date hereof, the Company will be able to pay its debts and other liabilities as such debts and other liabilities become absolute and matured.

5. On the date hereof, the Company is not, and after giving effect to the Transaction will not be, left with property remaining in its hands constituting “unreasonably small capital” with which to conduct its business. I understand that “unreasonably small capital” depends upon the nature of the particular business or businesses conducted or to be conducted, and I have reached my conclusion based on the needs and anticipated needs for capital of the businesses conducted or anticipated to be conducted by the Company.

K - 1

[Form of] Solvency Certificate

For purposes of this certificate, the amount of contingent liabilities at any time shall be computed as the amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

IN WITNESS WHEREOF, I have hereunto set my hand this     th day of May 2010.

C.P. ATLAS ACQUISITION CORP. (which on the Closing Date shall be merged with and into AMERICAN RENAL HOLDINGS INC. with AMERICAN RENAL HOLDINGS INC. surviving such merger as the Borrower)
By:
	Name:
	Title:	Chief Financial Officer

K - 2

[Form of] Solvency Certificate

EXHIBIT L

[FORM OF]

INTERCREDITOR AGREEMENT

L-1

[Form of] Intercreditor Agreement

INTERCREDITOR AGREEMENT

dated as of May 7, 2010,

among

C.P. ATLAS ACQUISITION CORP.

(to be merged with and into AMERICAN RENAL HOLDINGS INC.),

the other GRANTORS party hereto,

BANK OF AMERICA, N.A.,

as Credit Agreement Administrative Agent,

and

WILMINGTON TRUST FSB,

as Senior Secured Notes Collateral Agent,

and

each ADDITIONAL COLLATERAL AGENT from time to time party hereto,

INTERCREDITOR AGREEMENT dated as of May 7, 2010 (as amended, supplemented or otherwise modified from time to time, this “Agreement”), among C.P. ATLAS ACQUISITION CORP., a Delaware corporation (which on the Closing Date shall be merged with and into AMERICAN RENAL HOLDINGS INC., a Delaware corporation (the “Company”), with the Company surviving such merger as the borrower, the “Borrower”), the other GRANTORS (as defined below) party hereto, BANK OF AMERICA, N.A., as collateral agent for the Credit Agreement Secured Parties (as defined below) (in such capacity, the “Credit Agreement Administrative Agent”), WILMINGTON TRUST FSB, as collateral agent for the Senior Secured Notes Secured Parties (as defined below) (in such capacity, the “Senior Secured Notes Collateral Agent”) and each ADDITIONAL COLLATERAL AGENT from time to time party hereto as collateral agent for any First Lien Obligations (as defined below) of any other Class (as defined below).

The parties hereto agree as follows:

ARTICLE I

Definitions

SECTION 1.01. Certain Defined Terms. As used in this Agreement, the following terms have the meanings specified below:

“Additional Collateral Agent” has the meaning assigned to the term in Article VII.

“Additional First Lien Obligations” means all obligations of the Borrower and the other Grantors that shall have been designated as such pursuant to Article VII.

“Additional First Lien Obligations Documents” means the indentures or other agreements under which Additional First Lien Obligations of any Series are issued or incurred and all other instruments, agreements and other documents evidencing or governing Additional First Lien Obligations of such Series or providing any guarantee, Lien or other right in respect thereof.

“Additional Secured Parties” means the holders of any Additional First Lien Obligations.

“Affiliate” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

“Agreement” has the meaning assigned to such term in the preamble hereto.

“Amend” means, in respect of any agreement, to amend, restate, supplement, waive or otherwise modify such agreement, in whole or in part. The terms “Amended” and “Amendment” shall have correlative meanings.

“Authorized Officer” means, with respect to any Person, the chief executive officer, the chief financial officer, principal accounting officer, any vice president, treasurer, general counsel, secretary or another executive officer of such Person.

“Bailee Collateral Agent” has the meaning assigned to such term in Section 4.01(a).

“Bankruptcy Code” means Title 11 of the United States Code, as amended.

“Bankruptcy Law” means the Bankruptcy Code and any similar Federal, state or foreign law for the relief of debtors.

“Borrower” has the meaning assigned to such term in the preamble hereto.

“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed.

“Class”, when used in reference to (a) any First Lien Obligations, refers to whether such First Lien Obligations are the Credit Agreement Obligations, the Senior Secured Notes Obligations or the Additional First Lien Obligations of any Series, (b) any Collateral Agent, refers to whether such Collateral Agent is the Credit Agreement Administrative Agent, the Senior Secured Notes Collateral Agent or the Additional Collateral Agent with respect to the Additional First Lien Obligations of any Series, (c) any Bailee Collateral Agent, refers to whether such Bailee Collateral Agent is the Credit Agreement Administrative Agent, the Senior Secured Notes Collateral Agent or the Additional Collateral Agent with respect to the Additional First Lien Obligations of any Series, (d) any Secured Parties, refers to whether such Secured Parties are the Credit Agreement Secured Parties, the Senior Secured Notes Secured Parties or the holders of the Additional First Lien Obligations of any Series, (e) any Secured Credit Documents, refers to whether such Secured Credit Documents are the Credit Agreement Documents, the Senior Secured Notes Documents or the Additional First Lien Obligations Documents with respect to Additional First Lien Obligations of any Series, and (f) any Security Documents, refers to whether such Security Documents are part of the Credit Agreement Documents, the Senior Secured Notes Documents or the Additional First Lien Obligations Documents with respect to Additional First Lien Obligations of any Series.

“Collateral” means all assets of the Borrower or any of the Grantors now or hereafter subject to a Lien securing any First Lien Obligation.

“Collateral Agent Joinder Agreement” means a supplement to this Agreement substantially in the form of Exhibit I.

“Collateral Agents” means the Credit Agreement Administrative Agent, the Senior Secured Notes Collateral Agent and each Additional Collateral Agent.

-2-

“Control” has the meaning assigned thereto in the definition of “Affiliate”.

“Controlled Shared Collateral” has the meaning assigned to such term in Section 4.01(a).

“Credit Agreement” means the Credit Agreement dated as of May 7, 2010 by and among the Borrower, the lenders party thereto in their capacities as lenders thereunder and Bank of America, N.A., as administrative agent, and one or more other financing arrangements (including, without limitation, any guarantee agreements and security documents), in each case as such agreements may be amended (including any amendment and restatement thereof), supplemented or otherwise modified from time to time, including any agreement extending the maturity of, refinancing, replacing, consolidating or otherwise restructuring all or any portion of the Indebtedness under any such agreement or any successor or replacement agreement and whether by the same or any other agent, lender or group of lenders and whether or not increasing the amount of Indebtedness that may be incurred thereunder; provided that any such amendment, supplement, modification, refinancing, consolidating or restructuring of Indebtedness under such agreement may only provide for the making of revolving loans and/or issuance of letters of credit; provided further that the collateral agent for any such other financing arrangement or agreement becomes a party hereto by executing and delivering a Collateral Agent Joinder Agreement.

“Credit Agreement Administrative Agent” has the meaning assigned to such term in the preamble hereto.

“Credit Agreement Collateral Agreement” has the meaning assigned to the term “Security Agreement” in the Credit Agreement.

“Credit Agreement Documents” has the meaning assigned to the term “Loan Documents” in the Credit Agreement.

“Credit Agreement Obligations” has the meaning assigned to the term “Obligations” in the Credit Agreement.

“Credit Agreement Secured Parties” has the meaning assigned to the term “Secured Parties” in the Credit Agreement.

“Discharge” means, with respect to First Lien Obligations of any Class, (a) payment in full in cash of the principal of and interest on (including interest accruing during the pendency of any Insolvency or Liquidation Proceeding, regardless of whether allowed or allowable in such Insolvency or Liquidation Proceeding), and premium, if any, on, all Indebtedness outstanding under Secured Credit Documents of such Class, (b) payment in full of all other First Lien Obligations of such Class that are due and payable or otherwise accrued and owing at or prior to the time such principal and interest are paid, (c) in the case of the Credit Agreement Obligations, cancellation of or the entry into arrangements reasonably satisfactory to the Credit Agreement Administrative Agent and each applicable issuing lender with respect to all letters of credit issued and outstanding under the Credit Agreement Documents and (d) termination or expiration of all commitments to lend under the Credit Agreement Documents.

-3-

“Event of Default” means an “Event of Default” (or similar event, however denominated) as defined in any Secured Credit Document.

“First Lien Obligations” means (a) all the Credit Agreement Obligations, (b) all the Senior Secured Notes Obligations and (c) all the Additional First Lien Obligations.

“Grantor Joinder Agreement” means a supplement to this Agreement substantially in the form of Exhibit II.

“Grantors” means, at any time, Holdings, the Borrower and each Subsidiary that, at such time, pursuant to Security Documents of any Class have granted a Lien on any of its assets to secure any First Lien Obligations of such Class.

“Holdings” means C.P. Atlas Intermediate Holdings, LLC, a Delaware limited liability company.

“Indebtedness” has the meaning assigned to such term in the Senior Secured Notes Indenture or in the Credit Agreement, as applicable.

“Impairment” has the meaning assigned to such term in Section 2.02.

“Insolvency or Liquidation Proceeding” means:

(a) any case commenced by or against the Borrower or any other Grantor under any Bankruptcy Law, any other proceeding for the reorganization, receivership, recapitalization or adjustment or marshalling of the assets or liabilities of the Borrower or any other Grantor, any receivership or assignment for the benefit of creditors relating to the Borrower or any other Grantor or its assets or any similar case or proceeding relative to the Borrower or any other Grantor or its creditors or its assets, as such, in each case whether or not voluntary;

(b) any liquidation, dissolution, marshalling of assets or liabilities, assignment for the benefit of creditors or other winding up of or relating to the Borrower or any other Grantor or its assets, in each case whether or not voluntary and whether or not involving bankruptcy or insolvency and whether or not in a court supervised proceeding; or

(c) any other proceeding of any type or nature in which substantially all claims of creditors of the Borrower or any other Grantor are determined and any payment or distribution is or may be made on account of such claims.

“Intervening Creditor” has the meaning assigned to such term in Section 2.02.

“Intervening Lien” has the meaning assigned to such term in Section 2.02.

“Lien” means, with respect to any asset, any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset.

-4-

“Pari Passu Lien Indebtedness” shall have the meaning assigned to such term in the Senior Secured Notes Indenture.

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, governmental authority or other entity.

“Priority Payment Lien Obligations” shall mean (a) Credit Agreement Obligations secured by Liens permitted by clause (25) of the definition of “Permitted Liens” in the Senior Secured Notes Indenture as in effect on the date hereof (or analogous clause of a successor or amended agreement permitted by the Credit Agreement) and (b) to the extent secured equally and ratably with the Credit Agreement Obligations referred to in the foregoing clause (a), Credit Agreement Obligations secured by Liens permitted by clause (18) or clause (21) of the definition of “Permitted Liens” in the Senior Secured Notes Indenture as in effect on the date hereof (or analogous clauses of a successor or amended agreement permitted by the Credit Agreement).

“Proceeds” has the meaning assigned to such term in Section 2.01(b).

“Refinance” means, in respect of any Indebtedness, to refinance, extend, renew, refund, repay, prepay, redeem, purchase, defease, retire, restructure or replace, or to issue other Indebtedness in exchange or replacement for, such Indebtedness, in whole or in part. “Refinanced” and “Refinancing” shall have correlative meanings.

“Related Secured Credit Documents” means, with respect to the Collateral Agent or Secured Parties of any Class, the Secured Credit Documents of such Class.

“Related Secured Parties” means, with respect to the Collateral Agent of any Class, the Secured Parties of such Class.

“Secured Credit Documents” means, collectively, (a) the Credit Agreement Documents, (b) the Senior Secured Notes Documents and (c) the Additional First Lien Obligations Documents.

“Secured Parties” means (a) the Credit Agreement Secured Parties, (b) the Senior Secured Notes Secured Parties and (c) the Additional Secured Parties.

“Security Documents” means (a) the Credit Agreement Collateral Agreement and the other Collateral Documents (as defined in the Credit Agreement), (b) the Senior Secured Notes Collateral Agreement and the other Senior Secured Notes Documents and (c) any other agreement entered into in favor of the Collateral Agent of any other Class for the purpose of securing the First Lien Obligations of such Class.

“Senior Secured Notes Collateral Agent” has the meaning assigned to such term in the preamble hereto.

“Senior Secured Notes Collateral Agreement” has the meaning assigned to the term “Security Agreement” in the Senior Secured Notes Indenture.

-5-

“Senior Secured Notes Documents” means the Senior Secured Notes Indenture, the Senior Secured Notes Collateral Agreement and all other instruments, agreements and other documents evidencing or governing the Senior Secured Notes Obligations or providing any Guarantee (as defined in the Senior Secured Notes Indenture), Lien (including any mortgage) or other right in respect thereof.

“Senior Secured Notes Indenture” means that certain Indenture, dated as of May 7, 2010, among the Borrower, the other Grantors party thereto, as guarantors, and Wilmington Trust FSB, as trustee and collateral agent, governing the Borrower’s 8.375% Senior Secured Notes due 2018, as the same may be amended, supplemented or otherwise modified from time to time, including any agreement extending the maturity of, refinancing, replacing, consolidating or otherwise restructuring all or any portion of the Indebtedness under such Senior Secured Notes Indenture or any successor or replacement Senior Secured Notes Indenture and whether by the same or any other Senior Secured Notes Trustee and whether or not increasing the amount of Indebtedness that may be incurred thereunder; provided that the collateral agent for any such other financing arrangement or Senior Secured Notes Indenture becomes a party hereto by executing and delivering a Collateral Agent Joinder Agreement.

“Senior Secured Notes Obligations” has the meaning assigned to the term “Notes Obligations” in the Senior Secured Notes Indenture.

“Senior Secured Notes Secured Parties” has the meaning assigned to the term “Secured Parties” in the Senior Secured Notes Indenture.

“Senior Secured Notes Trustee” means the trustee under the Senior Secured Notes Indenture.

“Series”, when used in reference to Additional First Lien Obligations, refers to such Additional First Lien Obligations as shall have been issued or incurred pursuant to the same indentures or other agreements and with respect to which the same Person acts as the Additional Collateral Agent.

“Shared Collateral” means, at any time, Collateral on which Collateral Agents or Secured Parties of any two or more Classes have at such time a valid and perfected Lien (including as a result of the agreements set forth in Section 4.01). If First Lien Obligations of more than two Classes are outstanding at any time, then any Collateral shall constitute Shared Collateral with respect to First Lien Obligations of any Class only if the Collateral Agent or Secured Parties of such Class have at such time a valid and perfected Lien on such Collateral.

“Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Borrower.

SECTION 1.02. Terms Generally. The definitions of terms herein shall apply

-6-

equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise, (a) any definition of or reference to any agreement, instrument, other document, statute or regulation herein shall be construed as referring to such agreement, instrument, other document, statute or regulation as from time to time amended, supplemented or otherwise modified, (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, but shall not be deemed to include the subsidiaries of such Person unless express reference is made to such subsidiaries, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections and Exhibits shall be construed to refer to Articles, and Sections of, and Exhibits to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

SECTION 1.03. Concerning the Credit Agreement Administrative Agent, the Senior Secured Notes Collateral Agent and Each Additional Collateral Agent.

(a) Each acknowledgement, agreement, consent and waiver (whether express or implied) in this Agreement made by the Credit Agreement Administrative Agent, whether on behalf of itself or any of its Related Secured Parties, is made in reliance on the authority granted to the Credit Agreement Administrative Agent pursuant to the authorization thereof under the Credit Agreement. It is understood and agreed that the Credit Agreement Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into whether any of its Related Secured Parties is in compliance with the terms of this Agreement, and no party hereto or any other Secured Party shall have any right of action whatsoever against the Credit Agreement Administrative Agent for any failure of any of its Related Secured Parties to comply with the terms hereof or for any of its Related Secured Parties taking any action contrary to the terms hereof.

(b) Each acknowledgement, agreement, consent and waiver (whether express or implied) in this Agreement made by the Senior Secured Notes Collateral Agent, whether on behalf of itself or any of its Related Secured Parties, is made in reliance on the authority granted to the Senior Secured Notes Collateral Agent pursuant to the authorization thereof under the Senior Secured Notes Indenture. It is understood and agreed that the Senior Secured Notes Collateral Agent shall not be responsible for or have any duty to ascertain or inquire into whether any of its Related Secured Parties is in compliance with the terms of this Agreement, and no party hereto or any other Secured Party shall have any right of action whatsoever against the Senior Secured Notes Collateral Agent for any failure of any of its Related Secured Parties to comply with the terms hereof or for any of its Related Secured Parties taking any action contrary to the terms hereof.

(c) Each acknowledgement, agreement, consent and waiver (whether express or implied) in this Agreement made by any Additional Collateral Agent, whether on behalf of itself or any of its Related Secured Parties, is made in reliance on the authority granted to such

-7-

Additional Collateral Agent pursuant to the authorization thereof under the Additional First Lien Obligations Documents relating to such Class of First Lien Obligations. It is understood and agreed that no Additional Collateral Agent shall be responsible for or have any duty to ascertain or inquire into whether any of its Related Secured Parties is in compliance with the terms of this Agreement, and no party hereto or any other Secured Party shall have any right of action whatsoever against the Additional Collateral Agent for any failure of any of its Related Secured Parties to comply with the terms hereof or for any of its Related Secured Parties taking any action contrary to the terms hereof.

ARTICLE II

Lien Priorities; Proceeds

SECTION 2.01. Relative Priorities.

(a) Notwithstanding the date, time, method, manner or order of grant, attachment or perfection of any Lien on any Shared Collateral securing any First Lien Obligation, and notwithstanding any provision of the Uniform Commercial Code of any jurisdiction, any other applicable law or any Secured Credit Document, or any other circumstance whatsoever (but, in each case, subject to Section 2.01(b) and Section 2.02), each Collateral Agent, for itself and on behalf of its Related Secured Parties, agrees that valid and perfected Liens on any Shared Collateral securing First Lien Obligations of any Class shall be of equal priority.

(b) Each Collateral Agent, for itself and on behalf of its Related Secured Parties, agrees that, notwithstanding (x) any provision of any Secured Credit Document to the contrary (but subject to Section 2.02) and (y) the date, time, method, manner or order of grant, attachment or perfection of any Lien on any Shared Collateral securing any First Lien Obligation, and notwithstanding any provision of the Uniform Commercial Code of any jurisdiction, any other applicable law or any Secured Credit Document, or any other circumstance whatsoever (but, in each case, subject to Section 2.02), if (i) such Collateral Agent or any of its Related Secured Parties takes any action to enforce rights or exercise remedies in respect of any Shared Collateral (including any such action referred to in Section 3.01(a)), (ii) any distribution is made in respect of any Shared Collateral in any Insolvency or Liquidation Proceeding of the Borrower or any other Grantor or (iii) such Collateral Agent or any of its Related Secured Parties receives any payment with respect to any Shared Collateral pursuant to any intercreditor agreement (other than this Agreement), then the proceeds of any sale, collection or other liquidation of any Shared Collateral obtained by such Collateral Agent or any of its Related Secured Parties on account of such enforcement of rights or exercise of remedies, and any such distributions or payments received by such Collateral Agent or any of its Related Secured Parties (all such proceeds, distributions and payments being collectively referred to as “Proceeds”), shall be applied as follows:

(i) FIRST, to the payment of all amounts owing to and all costs and expenses incurred by any Collateral Agent, the Credit Agreement Administrative Agent and the Senior Secured Notes Trustee (in their capacities as such), pursuant to the terms of any Secured Credit Document or in connection with any enforcement of rights or exercise of

-8-

remedies pursuant thereto, including all court costs and the reasonable fees and expenses of agents and legal counsel and, in each case, including all costs and expenses incurred in enforcing its rights to obtain such payment;

(ii) SECOND, to the payment in full of any Priority Payment Lien Obligations (including any post-petition interest with respect thereto, whether or not allowable in any Insolvency or Liquidation Proceeding) and the termination of any commitments thereunder;

(iii) THIRD, to the payment in full of all other First Lien Obligations of each Class secured by a valid and perfected Lien on such Shared Collateral at the time due and payable (the amounts so applied to be distributed, as among such Classes of First Lien Obligations, ratably in accordance with the amounts of the First Lien Obligations of each such Class on the date of such application); provided that amounts applied under this clause THIRD during any period when the First Lien Obligations of any such Class shall not be due and payable in full (other than contingent obligations not then due) shall be allocated to the First Lien Obligations of such Class as if such First Lien Obligations were at the time due and payable in full, and any amounts allocated to the payment of the First Lien Obligations of such Class that are not yet due and payable shall be transferred to, and held by, the Collateral Agent of such Class solely as collateral for the First Lien Obligations of such Class (and shall not constitute Shared Collateral for purposes hereof) until the date on which the First Lien Obligations of such Class shall have become due and payable in full (at which time such amounts shall be applied to the payment thereof); and

(iv) FOURTH, after payment in full of all the First Lien Obligations, to the Borrower and the other Grantors or their successors or assigns, as their interests may appear, or as a court of competent jurisdiction may direct.

(c) For the avoidance of doubt, any amounts to be distributed pursuant to this Section 2.01 shall be distributed by the applicable Collateral Agent to the following agents for further distribution to its Related Secured Parties: (i) in the case of any amount representing payment with respect to a Priority Payment Lien Obligation, to the Credit Agreement Administrative Agent, (ii) in the case of any amount representing payment with respect to a Credit Agreement Obligation, to the Credit Agreement Administrative Agent, (iii) in the case of any amount representing payment with respect to a Senior Secured Notes Obligation, to the Senior Secured Notes Trustee, (iv) in the case of any amount representing payment with respect to any Additional First Lien Obligation, to the applicable Additional Collateral Agent for the corresponding Additional First Lien Obligation Documents.

SECTION 2.02. Impairments. It is the intention of the parties hereto that the Secured Parties of any given Class of Pari Passu Lien Indebtedness (and not the Secured Parties of any other Class of Pari Passu Lien Indebtedness) bear the risk of any determination by a court of competent jurisdiction that (i) any First Lien Obligations of such Class of Pari Passu Lien Indebtedness are unenforceable under applicable law or are subordinated to any other obligations (other than to any Pari Passu Lien Indebtedness), (ii) the Secured Parties of such Class of Pari Passu Lien Indebtedness do not have a valid and perfected Lien on any of the Collateral securing

-9-

any First Lien Obligations of any other Class of Pari Passu Lien Indebtedness and/or (iii) any Person (other than any Collateral Agent or Secured Party) has a Lien on any Shared Collateral that is senior in priority to the Lien on such Shared Collateral securing First Lien Obligations of such Class of Pari Passu Lien Indebtedness, but junior to the Lien on such Shared Collateral securing any other class of Priority Payment Lien Obligations or Pari Passu Lien Indebtedness (any such Lien being referred to as an “Intervening Lien”, and any such Person being referred to as an “Intervening Creditor”) (any condition with respect to First Lien Obligations of such Class of Pari Passu Lien Indebtedness being referred to as an “Impairment” of such Class). In the event an Impairment exists with respect to First Lien Obligations of any Class of Pari Passu Lien Indebtedness, the results of such Impairment shall be borne solely by the Secured Parties of such Class of Pari Passu Lien Indebtedness, and the rights of the Secured Parties of such Class of Pari Passu Lien Indebtedness (including the right to receive distributions in respect of First Lien Obligations of such Class of Pari Passu Lien Indebtedness pursuant to Section 2.01(b)) set forth herein shall be modified to the extent necessary so that the results of such Impairment are borne solely by the Secured Parties of such Class. In furtherance of the foregoing, in the event First Lien Obligations of any Class of Pari Passu Lien Indebtedness shall be subject to an Impairment in the form of an Intervening Lien of any Intervening Creditor, the value of any Shared Collateral or Proceeds that are allocated to such Intervening Creditor shall be deducted solely from the Shared Collateral or Proceeds to be distributed in respect of First Lien Obligations of such Class.

SECTION 2.03. Payment Over. Each Collateral Agent, on behalf of itself and its Related Secured Parties, agrees that if such Collateral Agent or any of its Related Secured Parties shall at any time obtain possession of any Shared Collateral or receive any Proceeds (other than as a result of any application of Proceeds pursuant to Section 2.01(b)), (i) such Collateral Agent or its Related Secured Party, as the case may be, shall promptly inform each other Collateral Agent thereof, (ii) such Collateral Agent or its Related Secured Party shall hold such Shared Collateral or Proceeds in trust for the benefit of the Secured Parties of any Class entitled thereto pursuant to Section 2.01(b) and, with respect to any Shared Collateral constituting Controlled Shared Collateral, such Collateral Agent shall comply with the provisions of Section 4.01 and (iii) in the case of any such Proceeds, such Proceeds shall be applied in accordance with Section 2.01(b) as promptly as practicable.

SECTION 2.04. Determinations with Respect to Amounts of Obligations and Liens. Whenever the Collateral Agent of any Class shall be required, in connection with the exercise of its rights or the performance of its obligations hereunder, to determine the existence or amount of any First Lien Obligations of any other Class, or the Shared Collateral subject to any Lien securing the First Lien Obligations of any other Class (and whether such Lien constitutes a valid and perfected Lien), it may request that such information be furnished to it in writing by the Collateral Agent of such other Class and shall be entitled to make such determination on the basis of the information so furnished; provided that if, notwithstanding the request of the Collateral Agent of such Class, the Collateral Agent of such other Class shall fail or refuse reasonably promptly to provide the requested information, the Collateral Agent of such Class shall be entitled to make any such determination by such method as it may, in the exercise of its good faith judgment, determine, including by reliance upon a certificate of an Authorized Officer of the Borrower. Each Collateral Agent may rely conclusively, and shall be fully protected in so relying, on any determination made by it in accordance with the provisions of the

-10-

preceding sentence (or as otherwise directed by a court of competent jurisdiction) and shall have no liability to any Grantor, any Secured Party or any other Person as a result of such determination or any action taken or not taken pursuant thereto.

ARTICLE III

Rights and Remedies; Matters Relating to Shared Collateral

SECTION 3.01. Exercise of Rights and Remedies.

(a) Subject to paragraph (b) of this Section and Section 4.01(a), nothing in this Agreement shall affect the ability of any Collateral Agent or any of its Related Secured Parties (i) to enforce any rights and exercise any remedies with respect to any Shared Collateral available under any Related Secured Credit Documents or applicable law, including any right of set-off and any determinations regarding the release of Liens on, or any sale, transfer or other disposition of, any Shared Collateral, or any other rights or remedies available to a secured creditor under the Uniform Commercial Code of any jurisdiction, the Bankruptcy Code or any other Bankruptcy Law, or (ii) to commence any action or proceeding with respect to such rights or remedies (including any foreclosure action or proceeding or any Insolvency or Liquidation Proceeding). Subject to paragraph (b) of this Section and Section 4.01(a), any such exercise of rights and remedies by any Collateral Agent or any of its Related Secured Parties may be made in such order and in such manner as such Collateral Agent or its Related Secured Parties may, subject to the provisions of their Related Secured Credit Documents, determine in their sole discretion.

(b) Notwithstanding paragraph (a) of this Section:

(i) each Collateral Agent and its Related Secured Parties shall remain subject to, and bound by, all covenants or agreements made herein by or on behalf of such Collateral Agent or its Related Secured Parties;

(ii) each Collateral Agent agrees, on behalf of itself and its Related Secured Parties, that, prior to the commencement of any enforcement of rights or any exercise of remedies with respect to any Shared Collateral by such Collateral Agent or any of its Related Secured Parties, such Collateral Agent or its Related Secured Party, as the case may be, shall provide prior written notice thereof to each other Collateral Agent, such notice to be provided as far in advance of such commencement as reasonably practicable, and shall regularly inform each other Collateral Agent of developments in connection with such enforcement or exercise; and

(iii) subject to the terms and conditions of each Collateral Agent’s Related Secured Credit Documents, each Collateral Agent agrees, on behalf of itself and its Related Secured Parties, that such Collateral Agent and its Related Secured Parties, to the extent requested by the other Collateral Agent, shall cooperate in a commercially reasonable manner with each other Collateral Agent and its Related Secured Parties in any enforcement of rights or any exercise of remedies with respect to any Shared Collateral; provided however that nothing in this section shall require any Collateral Agent to cooperate with any other Collateral Agent if it has not received the appropriate or necessary consents, waivers, direction or indemnity from its Related Secured Parties.

-11-

SECTION 3.02. Prohibition on Contesting Liens. Each Collateral Agent agrees, on behalf of itself and its Related Secured Parties, that neither such Collateral Agent nor any of its Related Secured Parties will, and each hereby waives any right to, contest or support any other Person in contesting, in any proceeding (including any Insolvency or Liquidation Proceeding), the perfection, priority, validity, attachment or enforceability of a Lien held by or on behalf of any other Collateral Agent or any of its Related Secured Parties in all or any part of the Shared Collateral; provided that nothing in this Agreement shall be construed to prevent or impair the rights of any Collateral Agent or any of its Related Secured Parties to enforce this Agreement.

SECTION 3.03. Prohibition on Challenging this Agreement. Each Collateral Agent agrees, on behalf of itself and its Related Secured Parties, that neither such Collateral Agent nor any of its Related Secured Parties will attempt, directly or indirectly, whether by judicial proceedings or otherwise, to challenge the enforceability of any provision of this Agreement; provided that nothing in this Agreement shall be construed to prevent or impair the rights of any Collateral Agent or any of its Related Secured Parties to enforce this Agreement.

SECTION 3.04. Release of Liens. The parties hereto agree and acknowledge that the release of Liens on any Shared Collateral securing First Lien Obligations of any Class, whether in connection with a sale, transfer or other disposition of such Shared Collateral or otherwise, shall be governed by and subject to the Secured Credit Documents of such Class, and that nothing in this Agreement shall be deemed to amend or affect the terms of the Secured Credit Documents of such Class with respect thereto.

SECTION 3.05. Insurance and Condemnation Awards. So long as the Discharge of the Credit Agreement Obligations has not occurred, the Credit Agreement Administrative Agent and its Related Secured Parties shall have the exclusive right, subject to the rights of the Grantors under and solely to the extent provided in the Credit Agreement Documents, to settle and adjust claims in respect of Shared Collateral under policies of insurance covering Shared Collateral and to approve any award granted in any condemnation or similar proceeding, or any deed in lieu of condemnation, in respect of the Shared Collateral; provided that any Proceeds arising therefrom shall be subject to Article II.

ARTICLE IV

Collateral

SECTION 4.01. Bailment for Perfection of Security Interests.

(a) Each Collateral Agent agrees that if it shall at any time hold a Lien on any Shared Collateral that can be perfected by the possession or control of such Shared Collateral or of any deposit, securities or other account in which such Shared Collateral is held, and if such Shared Collateral or any such account is in fact in the possession or under the control of such Collateral Agent, or of agents or bailees of such Collateral Agent (such Shared Collateral being

-12-

referred to herein as the “Controlled Shared Collateral”), such Collateral Agent shall, solely for the purpose of perfecting the Liens of any other Collateral Agent granted on such Shared Collateral under its Related Secured Credit Documents and subject to the terms and conditions of this Article, also hold such Controlled Shared Collateral as gratuitous bailee and sub-agent for each such other Collateral Agent (any Collateral Agent that shall be holding any Controlled Shared Collateral as gratuitous bailee and sub-agent being referred to herein as the “Bailee Collateral Agent”). In furtherance of the foregoing, each Collateral Agent appoints each Bailee Collateral Agent as such Collateral Agent’s gratuitous bailee and sub-agent hereunder with respect to any Controlled Shared Collateral that such Bailee Collateral Agent possesses or controls at any time solely for the purpose of perfecting a Lien on such Controlled Shared Collateral. Notwithstanding anything herein to the contrary, it is understood and agreed that as of the date hereof and until such time as the Credit Agreement Obligations are Discharged, the Credit Agreement Administrative Agent shall have the sole right to give any instructions, directions and entitlement orders (including any blockage or withdrawal instructions) with respect to any deposit, securities or other accounts, or any funds or property contained thereinto and to exercise any other remedies under any control agreement entered into with respect to a deposit account, a securities account or any other account (whether or not the Senior Secured Notes Collateral Agent is also a party thereto); provided that any amounts withdrawn therefrom shall be subject to Article II. It is further understood and agreed that as of the date hereof and until such time as the Credit Agreement Obligations are Discharged, the Credit Agreement Administrative Agent shall be granted possession of all possessory Controlled Shared Collateral and, thereafter, possession shall be determined by Section 4.01(d).

(b) In furtherance of the foregoing, each Grantor hereby grants a security interest in the Controlled Shared Collateral to each Collateral Agent that possesses or controls Controlled Shared Collateral as permitted in Section 4.01(a) for the benefit of the Secured Parties under any other Class of First Lien Obligations which have been granted a Lien on the Controlled Shared Collateral possessed or controlled by such Collateral Agent.

(c) Subject to Section 4.01(a), for purposes of this Section, the Bailee Collateral Agent shall be entitled to deal with the applicable Controlled Shared Collateral in accordance with the terms of its Related Secured Credit Documents as if the Liens thereon of the Collateral Agent or Secured Parties of any other Class (and the agreements set forth in paragraph (a) of this Section) did not exist; provided that any Proceeds arising from any such Controlled Shared Collateral shall be subject to Article II. The obligations and responsibilities of any Bailee Collateral Agent to any other Collateral Agent or any of its Related Secured Parties under this Article shall be limited solely to holding or controlling the applicable Controlled Shared Collateral as gratuitous bailee and sub-agent in accordance with this Article. Without limiting the foregoing, (i) no Bailee Collateral Agent shall have any obligation or responsibility to ensure that any Controlled Shared Collateral is genuine or owned by any of the Grantors, (ii) no Bailee Collateral Agent shall, by reason of this Agreement, any other Security Document or any other document, have a fiduciary relationship or other implied duties in respect of any other Collateral Agent or any other Secured Party and (iii) without affecting the agreement of any Bailee Collateral Agent to act as a gratuitous bailee and sub-agent solely for the purpose set forth in paragraph (a) of this Section or the right of any other Collateral Agent to enforce the rights and exercise the remedies (in each case other than through such Bailee Collateral Agent) as set forth in Section 3.01 and subject to the proviso in Section 4.01(a), each Collateral Agent agrees that

-13-

such Collateral Agent shall not issue any instructions to any Bailee Collateral Agent, in its capacity as a gratuitous bailee and sub-agent of such Collateral Agent, with respect to the Controlled Shared Collateral or otherwise seek to exercise control over any Bailee Collateral Agent.

(d) The Bailee Collateral Agent of any Class shall, upon the Discharge of the First Lien Obligations of such Class, transfer the possession and control of the applicable Controlled Shared Collateral, together with any necessary endorsements but without recourse or warranty, (i) if First Lien Obligations of any other Class are outstanding at such time, to the Collateral Agent of such other Class (or, if First Lien Obligations of more than one other Class are outstanding at such time, to the Collateral Agent of the same Class as the Class of the First Lien Obligations the aggregate principal amount of which outstanding at such time exceeds the aggregate principal amount of the First Lien Obligations of any other Class outstanding at such time) and (ii) if no First Lien Obligations are outstanding at such time, to the applicable Grantor or as directed by a court of competent jurisdiction, in each case so as to allow such Person to obtain possession and control of such Controlled Shared Collateral. In connection with any transfer under clause (i) above by any Bailee Collateral Agent, such Bailee Collateral Agent agrees to take all actions in its power as shall be necessary or reasonably requested by the transferee Collateral Agent to permit the transferee Collateral Agent to obtain, for the benefit of its Related Secured Parties, a first priority security interest in the applicable Controlled Shared Collateral.

SECTION 4.02. Delivery of Documents. Promptly after the execution and delivery to any Collateral Agent by any Grantor of any Security Document (other than (a) any Security Document in effect on the date hereof and (b) any Additional First Lien Obligations Document referred to in paragraph (b) of Article VII, but including any amendment, amendment and restatement, waiver or other modification of any such Security Document or Additional First Lien Obligations Document), the Borrower shall deliver to each Collateral Agent party hereto at such time a copy of such Security Document.

ARTICLE V

Other Agreements

SECTION 5.01. Concerning Secured Credit Documents and Collateral.

(a) The Secured Credit Documents of any Class may be Amended, in whole or in part, in accordance with their terms, in each case without notice to or the consent of the Collateral Agent or any Secured Parties of any other Class; provided that nothing in this paragraph shall affect any limitation on any such Amendment that is set forth in the Secured Credit Documents of any such other Class.

(b) The Grantors agree that each Security Document (other than any Credit Agreement Document executed and delivered prior to the date hereof, without limitation of the applicability of this Agreement thereto) creating a Lien on any Shared Collateral securing any First Lien Obligations (i) shall contain a legend substantially in the form of Annex I, or similar provisions approved by the Credit Agreement Administrative Agent, which approval shall not be

-14-

unreasonably withheld, and (ii) shall provide that all powers, rights and remedies under such Security Document with respect to Shared Collateral may be exercised solely by the Collateral Agent of the applicable Class on behalf of the Secured Parties of such Class in accordance with the terms thereof, and that no other Secured Party of the applicable Class shall have any right individually to realize upon any of the Liens on Shared Collateral granted thereunder to secure First Lien Obligations of such Class.

(c) The Grantors agree that they shall not grant to any Person any Lien on any Shared Collateral securing First Lien Obligations of any Class other than through the Collateral Agent of such Class (it being understood that the foregoing shall not be deemed to prohibit grants of set-off rights to Secured Parties of any Class); provided that the foregoing shall not prohibit the granting of any Liens permitted by the terms of the Secured Credit Documents.

(d) The Grantors agree that they shall not, and shall not permit any Subsidiary to, grant or permit or suffer to exist any additional Liens on any asset or property to secure any Class of First Lien Obligations unless it has granted a Lien on such asset or property to secure each other Class of First Lien Obligations; provided that the foregoing shall not prohibit (i) any class of First Lien Obligations from being secured by Equity Interests (as defined in the Credit Agreement) that do not secure any other class of First Lien Obligations due to the Rule 3-16 Exception (as defined in the Senior Secured Notes Collateral Agreement) or (ii) the granting of any Liens permitted by the terms of the Secured Credit Documents.

SECTION 5.02. Refinancings. The First Lien Obligations of any Class may be Refinanced, in whole or in part, in each case, without notice to, or the consent of the Collateral Agent or Secured Party of any other Class, all without affecting the priorities provided for herein (including, without limitation, the priority in right of payment of the Priority Payment Lien Obligations) or the other provisions hereof; provided that nothing in this paragraph shall affect any limitation on any such Refinancing that is set forth in the Secured Credit Documents of any such other Class; and provided further that, if any obligations of the Grantors in respect of such Refinancing indebtedness shall be secured by Liens on any Shared Collateral, such obligations and the holders thereof shall be subject to and bound by the provisions of this Agreement and, if not already, the collateral agent under such obligations shall become a party hereto by executing and delivering a Collateral Agent Joinder Agreement.

SECTION 5.03. Reinstatement. If, in any Insolvency or Liquidation Proceeding or otherwise, all or part of any payment with respect to the First Lien Obligations of any Class previously made shall be rescinded for any reason whatsoever (including an order or judgment for disgorgement of a preference under the Bankruptcy Code, or any similar law), then the terms and conditions of Article II shall be fully applicable thereto until all the First Lien Obligations of such Class shall again have been paid in full in cash.

SECTION 5.04. Reorganization Modifications. In the event the First Lien Obligations of any Class are modified pursuant to applicable law, including Section 1129 of the Bankruptcy Code, any reference to the First Lien Obligations of such Class or the Secured Credit Documents of such Class shall refer to such obligations or such documents as so modified.

SECTION 5.05. Further Assurances. Each of the Collateral Agents and the

-15-

Grantors agrees that it will execute, or will cause to be executed, such reasonable further documents, agreements and instruments, and take all such reasonable further actions, as may be required under any applicable law, or which any Collateral Agent may reasonably request, to effectuate the terms of this Agreement.

ARTICLE VI

No Reliance; No Liability

SECTION 6.01. No Reliance; Information. Each Collateral Agent, on behalf of its Related Secured Parties, acknowledges that (a) its Related Secured Parties have, independently and without reliance upon any Collateral Agent or any Related Secured Parties, and based on such documents and information as they have deemed appropriate, made their own credit analysis and decision to enter into the Secured Credit Documents to which they are party and (b) its Related Secured Parties will, independently and without reliance upon any Collateral Agent or any of its Related Secured Parties, and based on such documents and information as they shall from time to time deem appropriate, continue to make their own credit decision in taking or not taking any action under this Agreement or any other Secured Credit Document. The Collateral Agent or Secured Parties of any Class shall have no duty to disclose to any Collateral Agent or any Secured Party of any other Class any information relating to the Borrower or any of the Grantors or their Subsidiaries, or any other circumstance bearing upon the risk of nonpayment of any of the First Lien Obligations, that is known or becomes known to any of them or any of their Affiliates. If the Collateral Agent or any Secured Party of any Class, in its sole discretion, undertakes at any time or from time to time to provide any such information to, as the case may be, the Collateral Agent or any Secured Party of any other Class, it shall be under no obligation (i) to make, and shall not be deemed to have made, any express or implied representation or warranty, including with respect to the accuracy, completeness, truthfulness or validity of the information so provided, (ii) to provide any additional information or to provide any such information on any subsequent occasion or (iii) to undertake any investigation.

SECTION 6.02. No Warranties or Liability.

(a) Each Collateral Agent, for itself and on behalf of its Related Secured Parties, acknowledges and agrees that no Collateral Agent or Secured Party of any other Class has made any express or implied representation or warranty, including with respect to the execution, validity, legality, completeness, collectability or enforceability of any of the Secured Credit Documents, the ownership of any Shared Collateral or the perfection or priority of any Liens thereon. The Collateral Agent and the Secured Parties of any Class will be entitled to manage and supervise their loans and other extensions of credit in the manner set forth in their Related Secured Credit Documents. No Collateral Agent shall, by reason of this Agreement, any other Security Document or any other document, have a fiduciary relationship or other implied duties in respect of any other Collateral Agent or any other Secured Party.

(b) No Collateral Agent or Secured Parties of any Class shall have any express or implied duty to the Collateral Agent or any Secured Party of any other Class to act or refrain from acting in a manner that allows, or results in, the occurrence or continuance of a default or an Event of Default under any Secured Credit Document (other than, in each case, this Agreement), regardless of any knowledge thereof that they may have or be charged with.

-16-

SECTION 6.03. Rights of Senior Secured Notes Collateral Agent.

Notwithstanding anything contained herein to the contrary, the Senior Secured Notes Collateral Agent shall be entitled to the same rights, protections, immunities and indemnities as set forth in the Senior Secured Notes Indenture as if the provisions setting forth those rights, protections, immunities and indemnities are fully set forth herein.

ARTICLE VII

Additional First Lien Obligations

The Borrower may from time to time, subject to any limitations contained in any Secured Credit Documents in effect at such time, designate additional indebtedness and related obligations that are, or are to be, secured by Liens on any assets of the Borrower or any of the Grantors that would, if such Liens were granted, constitute Shared Collateral as Additional First Lien Obligations by delivering to each Collateral Agent party hereto at such time a certificate of an Authorized Officer of the Borrower:

(a) describing the indebtedness and other obligations being designated as Additional First Lien Obligations, and including a statement of the maximum aggregate outstanding principal amount of such indebtedness as of the date of such certificate;

(b) setting forth the Additional First Lien Obligations Documents under which such Additional First Lien Obligations are issued or incurred or the Guarantees of or Liens securing such Additional First Lien Obligations are, or are to be, granted or created, and attaching copies of such Additional First Lien Obligations Documents as each Grantor has executed and delivered to the Person that serves as the collateral agent, collateral trustee or a similar representative for the holders of such Additional First Lien Obligations (such Person being referred to as the “Additional Collateral Agent”) with respect to such Additional First Lien Obligations on the closing date of such Additional First Lien Obligations, certified as being true and complete by an Authorized Officer of the Borrower;

(c) identifying the Person that serves as the Additional Collateral Agent;

(d) certifying that the incurrence of such Additional First Lien Obligations, the creation of the Liens securing such Additional First Lien Obligations and the designation of such Additional First Lien Obligations as “Additional First Lien Obligations” hereunder do not violate or result in a default under any provision of any Secured Credit Document of any Class in effect at such time;

(e) identifying such Additional First Lien Obligations as either Priority Payment Lien Obligations or Pari Passu Lien Indebtedness, and if identified as Priority Payment Lien Obligations, certifying that the designation of such Additional First Lien Obligations as Priority Payment Lien Obligations does not violate or result in a default under any provision of any Secured Credit Document of any Class in effect at such time;

-17-

(f) certifying that the Additional First Lien Obligations Documents (A) meet the requirements of Section 5.01(b) and (B) authorize the Additional Collateral Agent to become a party hereto by executing and delivering a Collateral Agent Joinder Agreement and provide that, upon such execution and delivery, such Additional First Lien Obligations and the holders thereof shall become subject to and bound by the provisions of this Agreement; and

(g) attaching a fully completed Collateral Agent Joinder Agreement executed and delivered by the Additional Collateral Agent.

Upon the delivery of such certificate and the related attachments as provided above and as so long as the statements made therein are true and correct as of the date of such certificate, the obligations designated in such notice shall become Additional First Lien Obligations for all purposes of this Agreement. Notwithstanding anything herein contained to the contrary, each Collateral Agent may conclusively rely on such certificate delivered by the Borrower, and upon its receipt of such certificate, each Collateral Agent shall execute the Collateral Agent Joinder Agreement evidencing its acknowledgment thereof, and shall incur no liability to any Person for such execution.

ARTICLE VIII

Miscellaneous

SECTION 8.01. Notices. All notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile, as follows:

(a) if to any Grantor, to it (or, in the case of any Grantor other than the Borrower, to it in care of the Borrower) at American Renal Holdings Inc., 66 Cherry Hill Drive, Beverly, MA 01915 (fax: (978) 232-4060); Attention: General Counsel;

(b) if to the Credit Agreement Administrative Agent, to it at Bank of America, N.A., 101 N. Tryon St., NC1-001-04-39, Charlotte, NC 28255-0001 (fax: 704-409-0857); Attention: Agency Management;

(c) if to the Senior Secured Notes Collateral Agent, to it at 50 South Sixth Street, Suite 1290, Minneapolis, MN 55402-1544 (fax: (612) 217-5651); Attention: American Renal Holdings Administrator; and

(d) if to any Additional Collateral Agent, to it at the address set forth in the applicable Collateral Agent Joinder Agreement.

Any party hereto may change its address or facsimile number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement

-18-

shall be deemed to have been given on the date of receipt (if a Business Day) and on the next Business Day thereafter (in all other cases) if delivered by hand or overnight courier service or sent by facsimile or on the date five Business Days after dispatch by certified or registered mail if mailed, in each case delivered, sent or mailed (properly addressed) to such party as provided in this Section or in accordance with the latest unrevoked direction from such party given in accordance with this Section. As agreed to in writing by any party hereto from time to time, notices and other communications to such party may also be delivered by e-mail to the e-mail address of a representative of such party provided from time to time by such party.

SECTION 8.02. Waivers; Amendment; Joinder Agreements.

(a) No failure or delay on the part of any party hereto in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the parties hereto are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by any party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on any party hereto in any case shall entitle such party to any other or further notice or demand in similar or other circumstances.

(b) Neither this Agreement nor any provision hereof may be waived, amended or otherwise modified except as contemplated by the Secured Credit Documents and then pursuant to an agreement or agreements in writing entered into by each Collateral Agent then party hereto; provided that no such agreement shall by its terms amend, modify or otherwise affect the rights or obligations of any Grantor without the Borrower’s prior written consent; provided further that (i) (A) this Agreement may be supplemented by a Collateral Agent Joinder Agreement, and an Additional Collateral Agent may become a party hereto, in accordance with Article VII and (B) this Agreement may be supplemented by a Grantor Joinder Agreement, and a Subsidiary may become a party hereto, in accordance with Section 8.12, and (ii) in connection with any Refinancing of First Lien Obligations of any Class, the Collateral Agents then party hereto shall enter (and are hereby authorized to enter without the consent of any other Secured Party), at the request of any Collateral Agent or the Borrower, into such amendments or modifications of this Agreement as are reasonably necessary to reflect such Refinancing and are reasonably satisfactory to each such Collateral Agent; provided that such Collateral Agent shall not be required to enter into such amendments or modifications unless it shall have received a certificate of an Authorized Officer of the Borrower, in form reasonably satisfactory to such Collateral Agent, certifying that such Refinancing and such amendment or modification are permitted hereunder.

SECTION 8.03. Parties in Interest. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, as well as the other Secured Parties, all of whom are intended to be bound by, and to be third party beneficiaries of, this Agreement. No other Person shall have or be entitled to assert rights or benefits hereunder.

-19-

SECTION 8.04. Effectiveness; Survival. This Agreement shall become effective when executed and delivered by the parties hereto. All covenants, agreements, representations and warranties made by any party in this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement. This Agreement shall continue in full force and effect notwithstanding the commencement of any Insolvency or Liquidation Proceeding against the Borrower or any of the Subsidiaries.

SECTION 8.05. Counterparts. This Agreement may be executed in counterparts, each of which shall constitute an original but all of which when taken together shall constitute a single contract. Delivery of an executed signature page to this Agreement by facsimile or other electronic transmission shall be as effective as delivery of a manually signed counterpart of this Agreement.

SECTION 8.06. Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 8.07. Governing Law; Jurisdiction; Consent to Service of Process.

(a) This Agreement shall be construed in accordance with and governed by the law of the State of New York.

(b) Each party hereto irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court of the State of New York sitting in the Borough of Manhattan, New York County and of the United States District Court of the Southern District of New York sitting in the Borough of Manhattan, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each party hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that any party hereto or any Secured Party may otherwise have to bring any action or proceeding relating to this Agreement against any party hereto or its properties in the courts of any jurisdiction.

(c) Each party hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (b) of this Section. Each party hereto irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

-20-

(d) Each party hereto irrevocably consents to service of process in the manner provided for notices in Section 8.01, such service to be effective upon receipt. Nothing in this Agreement will affect the right of any party hereto or any Secured Party to serve process in any other manner permitted by law.

SECTION 8.08. WAIVER OF JURY TRIAL. EACH PARTY HERETO WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

SECTION 8.09. Headings. Article and Section headings used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

SECTION 8.10. Conflicts. In the event of any conflict or inconsistency between the provisions of this Agreement and the provisions of any other Secured Credit Documents, the provisions of this Agreement shall control.

SECTION 8.11. Provisions Solely to Define Relative Rights. The provisions of this Agreement are and are intended solely for the purpose of defining the relative rights of the Secured Parties in relation to one another. Except as expressly provided in this Agreement, none of the Borrower, any other Grantor, any other Subsidiary or any other creditor of any of the foregoing shall have any rights or obligations hereunder, and none of the Borrower, any other Grantor or any other Subsidiary may rely on the terms hereof. Nothing in this Agreement is intended to or shall impair the obligations of the Borrower or any other Grantor, which are absolute and unconditional, to pay the First Lien Obligations as and when the same shall become due and payable in accordance with their terms. For the avoidance of doubt, nothing contained herein shall be construed to constitute a waiver or an amendment of any covenant of the Borrower or any other Grantor contained in any Secured Credit Document, which restricts the incurrence of any Indebtedness or the grant of any Lien.

SECTION 8.12. Additional Grantors. In the event any Subsidiary shall have granted a Lien on any of its assets to secure any First Lien Obligations, the Borrower shall cause such Subsidiary, if not already a party hereto, to become a party hereto as a “Grantor”. Upon the execution and delivery by any Subsidiary of a Grantor Joinder Agreement, any such Subsidiary shall become a party hereto and a Grantor hereunder with the same force and effect as if originally named as such herein. The execution and delivery of any such instrument shall not require the consent of any other party hereto. The rights and obligations of each party hereto shall remain in full force and effect notwithstanding the addition of any new Grantor as a party to this Agreement.

-21-

SECTION 8.13. Specific Performance. Each Collateral Agent, on behalf of itself and its Related Secured Parties, may demand specific performance of this Agreement. Each Collateral Agent, on behalf of itself and its Related Secured Parties, hereby irrevocably waives any defense based on the adequacy of a remedy at law and any other defense that might be asserted to bar the remedy of specific performance in any action which may be brought by the Secured Parties.

SECTION 8.14. Integration. This Agreement, together with the other Secured Credit Documents, represents the agreement of each of the Grantors and the Secured Parties with respect to the subject matter hereof and there are no promises, undertakings, representations or warranties by any Grantor, any Collateral Agent or any other Secured Party relative to the subject matter hereof not expressly set forth or referred to herein or in the other Secured Credit Documents.

[signature page follows]

-22-

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

C.P. ATLAS ACQUISITION CORP.
(which on the Closing Date shall be merged with and into AMERICAN RENAL HOLDINGS INC. with AMERICAN RENAL HOLDINGS INC. surviving such merger as the Borrower)
By:	/s/ Jared S. Hendricks
	Name:	Jared S. Hendricks
	Title:	Vice President
C.P. ATLAS INTERMEDIATE HOLDINGS, LLC
By:	/s/ Jared S. Hendricks
	Name:	Jared S. Hendricks
	Title:	Co-President
AMERICAN RENAL ASSOCIATES LLC
By:	AMERICAN RENAL HOLDINGS INC.
By:	/s/ Joseph A. Carlucci
	Name:	Joseph A. Carlucci
	Title:	Chief Executive Officer
AMERICAN RENAL MANAGEMENT LLC AKC HOLDING LLC JKC HOLDING LLC ARA-BOCA RATON HOLDING LLC ARA-OHIO HOLDINGS LLC ARA-RHODE ISLAND DIALYSIS II LLC TEXAS-ARA LLC ACUTE DIALYSIS SERVICES-ARA LLC
By:	AMERICAN RENAL ASSOCIATES LLC
By:	/s/ Joseph A. Carlucci
	Name:	Joseph A. Carlucci
	Title:	Chief Executive Officer

AMERICAN RENAL TEXAS L.P. AMERICAN RENAL TEXAS II, L.P.
By:	TEXAS-ARA LLC
By:	/s/ Joseph A. Carlucci
	Name:	Joseph A. Carlucci
	Title:	Chief Executive Officer
BANK OF AMERICA, N.A., as Credit Agreement Administrative Agent
By:	/s/ Mollie S. Canup
	Name:	Mollie S. Canup
	Title:	Vice President
WILMINGTON TRUST FSB, as Senior Secured Notes Collateral Agent
By:	/s/ Jane Schweiger
	Name:	Jane Schweiger
	Title:	Vice President

EX-10.3

Exhibit 10.3

SECURITY AGREEMENT

By

C.P. ATLAS ACQUISITION CORP.

(to be merged with and into AMERICAN RENAL HOLDINGS INC.),

as Borrower

and

THE GUARANTORS PARTY HERETO

and

BANK OF AMERICA, N.A.,

as Administrative Agent

Dated as of May 7, 2010

TABLE OF CONTENTS

		Page
PREAMBLE			1
RECITALS			1
AGREEMENT			2
ARTICLE I DEFINITIONS AND INTERPRETATION
SECTION 1.1.	Definitions		2
SECTION 1.2.	Interpretation		8
ARTICLE II GRANT OF SECURITY AND OBLIGATIONS
SECTION 2.1.	Grant of Security Interest		8
SECTION 2.2.	Filings		10
ARTICLE III PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES; USE OF PLEDGED COLLATERAL
SECTION 3.1.	Delivery of Certificated Securities Collateral		10
SECTION 3.2.	Perfection of Uncertificated Securities Collateral		11
SECTION 3.3.	Financing Statements and Other Filings; Maintenance of Perfected Security Interest		11
SECTION 3.4.	Other Actions		11
SECTION 3.5.	Joinder of Additional Guarantors		15
SECTION 3.6.	Supplements; Further Assurances		15
ARTICLE IV REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 4.1.	Title		15
SECTION 4.2.	Validity of Security Interest		16
SECTION 4.3.	Defense of Claims; Transferability of Pledged Collateral		16
SECTION 4.4.	Other Financing Statements		16
SECTION 4.5.	Location of Inventory and Equipment.		17
SECTION 4.6.	Due Authorization and Issuance		17

-i-

		Page
SECTION 4.7.	Consents, etc.		17
SECTION 4.8.	Pledged Collateral		17
SECTION 4.9.	Insurance		17
ARTICLE V CERTAIN PROVISIONS CONCERNING SECURITIES COLLATERAL
SECTION 5.1.	Pledge of Additional Securities Collateral		17
SECTION 5.2.	Voting Rights; Distributions; etc.		18
SECTION 5.3.	Certain Agreements of Pledgors as Issuers and Holders of Equity Interests		19
ARTICLE VI CERTAIN PROVISIONS CONCERNING INTELLECTUAL PROPERTY COLLATERAL
SECTION 6.1.	Grant of Intellectual Property License		20
SECTION 6.2.	Protection of Administrative Agent’s Security		20
SECTION 6.3.	After-Acquired Property		21
SECTION 6.4.	Litigation		21
SECTION 6.5.	Permitted Disposal of Intellectual Property Collateral		21
ARTICLE VII CERTAIN PROVISIONS CONCERNING RECEIVABLES
SECTION 7.1.	Maintenance of Records		22
SECTION 7.2.	Legend		22
ARTICLE VIII TRANSFERS
SECTION 8.1.	Transfers of Pledged Collateral		22
ARTICLE IX REMEDIES
SECTION 9.1.	Remedies		22
SECTION 9.2.	Notice of Sale		24
SECTION 9.3.	Waiver of Notice and Claims		24
SECTION 9.4.	Certain Sales of Pledged Collateral		25
SECTION 9.5.	No Waiver; Cumulative Remedies		26
SECTION 9.6.	Certain Additional Actions Regarding Intellectual Property		27

-ii-

		Page
ARTICLE X APPLICATION OF PROCEEDS
SECTION 10.1.	Application of Proceeds		27
ARTICLE XI MISCELLANEOUS
SECTION 11.1.	Concerning Administrative Agent		27
SECTION 11.2.	Intercreditor Agreement		29
SECTION 11.3.	Administrative Agent May Perform; Administrative Agent Appointed Attorney-in-Fact		29
SECTION 11.4.	Continuing Security Interest; Assignment		29
SECTION 11.5.	Termination; Release		30
SECTION 11.6.	Modification in Writing		30
SECTION 11.7.	Notices		31
SECTION 11.8.	Governing Law, Consent to Jurisdiction and Service of Process; Waiver of Jury Trial		31
SECTION 11.9.	Severability of Provisions		31
SECTION 11.10.	Execution in Counterparts		31
SECTION 11.11.	Business Days		31
SECTION 11.12.	No Credit for Payment of Taxes or Imposition		31
SECTION 11.13.	No Claims Against Administrative Agent		31
SECTION 11.14.	No Release		32
SECTION 11.15.	Obligations Absolute		32
SIGNATURES			S-1

-iii-

EXHIBIT 1 EXHIBIT 2 EXHIBIT 3 EXHIBIT 4 EXHIBIT 5 EXHIBIT 6 Form of Issuer’s Acknowledgment Form of Securities Pledge Amendment Form of Security Agreement Supplement Form of Copyright Security Agreement Form of Patent Security Agreement Form of Trademark Security Agreement

-iv-

SECURITY AGREEMENT

This SECURITY AGREEMENT dated as of May 7, 2010 (as amended, amended and restated, supplemented or otherwise modified from time to time in accordance with the provisions hereof and the Credit Agreement (as defined below), this “Agreement”) made by C.P. ATLAS ACQUISITION CORP., a Delaware corporation (which on the Closing Date shall be merged with and into AMERICAN RENAL HOLDINGS INC., a Delaware corporation (the “Company”), with the Company surviving such merger as the borrower, the “Borrower”), and the Guarantors from to time to time party hereto (the “Guarantors”), as pledgors, assignors and debtors (the Borrower, together with the Guarantors, in such capacities and together with any successors in such capacities, the “Pledgors,” and each, a “Pledgor”), in favor of BANK OF AMERICA, N.A., in its capacity as Administrative Agent pursuant to the Credit Agreement, as pledgee, assignee and secured party (in such capacities and together with any successors in such capacities, the “Administrative Agent”).

R E C I T A L S :

A. The Borrower, the Guarantors, the Administrative Agent and the lending institutions party to the Credit Agreement (as defined below) have, in connection with the execution and delivery of this Agreement, entered into that certain credit agreement, dated as of May 7, 2010 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”).

B. Each Guarantor has, pursuant to the Guaranty, unconditionally guaranteed the Obligations.

C. The Borrower and each Guarantor will receive substantial benefits from the extensions of credit to be made to the Borrower under the Credit Agreement and the other Loan Documents and each is, therefore, willing to enter into this Agreement.

D. This Agreement is given by each Pledgor in favor of the Administrative Agent for the benefit of the Secured Parties to secure the payment and performance of all of the Obligations.

E. It is a condition to (i) the obligations of the Lenders to make the Loans under the Credit Agreement, (ii) the obligations of the L/C Issuer to issue Letters of Credit and (iii) the performance of the obligations of the Secured Parties under Secured Hedging Agreements and Secured Cash Management Agreements that each Pledgor execute and deliver the applicable Loan Documents, including this Agreement.

F. In order to secure the obligations under the Senior Secured Notes (as hereinafter defined), the Pledgors have granted to the Notes Collateral Agent (as hereinafter defined) for the benefit of the holders of the Senior Secured Notes and certain other secured parties, a first priority security interest (subject to certain priorities upon realization of any value from the Pledged Collateral as set forth in the Intercreditor Agreement).

A G R E E M E N T :

NOW THEREFORE, in consideration of the foregoing premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Pledgor and the Administrative Agent hereby agree as follows:

ARTICLE I

DEFINITIONS AND INTERPRETATION

SECTION 1.1. Definitions.

(a) Unless otherwise defined herein or in the Credit Agreement, capitalized terms used herein that are defined in the UCC shall have the meanings assigned to them in the UCC; provided that in any event, the following terms shall have the meanings assigned to them in the UCC:

“Accounts”; “Bank”; “Chattel Paper”; “Commercial Tort Claim”; “Commodity Account”; “Commodity Contract”; “Commodity Intermediary”; “Documents”; “Electronic Chattel Paper”; “Entitlement Order”; “Equipment”; “Financial Asset”; “Fixtures”; “General Intangibles”, “Goods”, “Inventory”; “Letter-of-Credit Rights”; “Letters of Credit”; “Money”; “Payment Intangibles”; “Proceeds”; “ Records”; “Securities Account”; “Securities Intermediary”; “Security Entitlement”; “Supporting Obligations”; and “Tangible Chattel Paper.”

(b) Terms used but not otherwise defined herein that are defined in the Credit Agreement shall have the meanings given to them in the Credit Agreement.

(c) The following terms shall have the following meanings:

“Account Debtor” shall mean each person who is obligated on a Receivable or Supporting Obligation related thereto.

“Agreement” shall have the meaning assigned to such term in the Preamble hereof.

“Borrower” shall have the meaning assigned to such term in the Preamble hereof.

“Collateral Support” shall mean all property (real or personal) assigned, hypothecated or otherwise securing any Pledged Collateral and shall include any security agreement or other agreement granting a lien or security interest in such real or personal property.

“Commodity Account Control Agreement” shall mean a control agreement in a form that is reasonably satisfactory to the Administrative Agent establishing the Administrative Agent’s Control with respect to any Commodity Account.

-2-

“Contracts” shall mean, collectively, with respect to each Pledgor, the Related Documents, all sale, service, performance, equipment or property lease contracts, agreements and grants and all other contracts, agreements or grants (in each case, whether written or oral, or third party or intercompany), between such Pledgor and any third party, and all assignments, amendments, restatements, supplements, extensions, renewals, replacements or modifications thereof.

“Control” shall mean (i) in the case of each Deposit Account, “control,” as such term is defined in Section 9-104 of the UCC, (ii) in the case of any Security Entitlement, “control,” as such term is defined in Section 8-106 of the UCC, and (iii) in the case of any Commodity Contract, “control,” as such term is defined in Section 9-106 of the UCC.

“Control Agreements” shall mean, collectively, the Deposit Account Control Agreements, the Securities Account Control Agreements and the Commodity Account Control Agreements.

“Copyright Security Agreement” shall mean an agreement substantially in the form of Exhibit 4 hereto.

“Copyrights” shall mean, collectively, with respect to each Pledgor, all copyrights (whether statutory or common law, whether established or registered in the United States or any other country or any political subdivision thereof, whether registered or unregistered and whether published or unpublished) and all copyright registrations and applications made by such Pledgor, in each case, whether now owned or hereafter created or acquired by or assigned to such Pledgor, together with any and all (i) rights and privileges arising under applicable law with respect to such Pledgor’s use of such copyrights, (ii) reissues, renewals, continuations and extensions thereof and amendments thereto, (iii) income, fees, royalties, damages, claims and payments now or hereafter due and/or payable with respect thereto, including damages and payments for past, present or future infringements thereof, (iv) rights corresponding thereto throughout the world and (v) rights to sue for past, present or future infringements thereof.

“Credit Agreement” shall have the meaning assigned to such term in Recital A hereof.

“Deposit Account Control Agreement” shall mean a control agreement in a form that is reasonably satisfactory to the Administrative Agent establishing the Administrative Agent’s Control with respect to any Deposit Account.

“Deposit Accounts” shall mean, collectively, with respect to each Pledgor, (i) all “deposit accounts” as such term is defined in the UCC and all accounts and sub-accounts relating to any of the foregoing accounts and (ii) all cash, funds, checks, notes and instruments from time to time on deposit in any of the accounts or sub-accounts described in clause (i) of this definition.

“Distributions” shall mean, collectively, with respect to each Pledgor, all dividends, cash, options, warrants, rights, instruments, distributions, returns of capital or principal, income, interest, profits and other property, interests (debt or equity) or proceeds, including as a result of a split, revision, reclassification or other like change of the Pledged Securities, from time to time received, receivable or otherwise distributed to such Pledgor in respect of or in exchange for any or all of the Pledged Securities or Intercompany Notes.

-3-

“Excluded Deposit Accounts” means (1) any deposit accounts specially and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of the Borrower’s or any Guarantor’s employees, (2) any Deposit Account of any Pledgor into which proceeds from any receivables in respect of participation in federal and state healthcare programs, including the Medicare or Medicaid programs, are paid into, so long as the balance of such Deposit Account is swept at the end of each Business Day into a Deposit Account subject to a Control Agreement and (3) any deposit account specially and exclusively used to hold cash deposits required to be held in escrow, and which by terms of the agreement creating the escrow obligations shall not be subject to any other Liens.

“Excluded Property” means:

(i) any rights or interests in any permit, license, lease or contract entered into by the Borrower or any Guarantor (A) that prohibits, or requires the consent of any Person other than the Borrower and its Affiliates which has not been obtained as a condition to, the creation by the Borrower or the applicable Guarantor of a Lien on any right, title or interest in such permit, license, lease or contract or (B) to the extent that any requirement of law applicable thereto prohibits the creation of a Lien thereon, but only, with respect to the prohibition in clauses (A) and (B), to the extent, and for as long as, such prohibition is not terminated or rendered unenforceable or otherwise deemed ineffective by the Uniform Commercial Code, any other requirement of law or principles of equity;

(ii) the Equity Interests of and other assets of Persons that are not Wholly Owned Subsidiaries to the extent and for so long as the granting of security interests in such Equity Interests and assets would be prohibited by a shareholders agreement or similar contract governing such Persons to the extent, and for as long as, such prohibition is not terminated or rendered unenforceable or otherwise deemed ineffective by the Uniform Commercial Code, any other requirement of law or principles of equity;

(iii) property owned by the Borrower or any Guarantor that is subject to a Lien permitted by Section 7.01(i) of the Credit Agreement if the contractual obligation pursuant to which such Lien is granted (or in the document providing for such Lien) prohibits or requires the consent of any Person other than the Borrower and its Affiliates which has not been obtained as a condition to the creation of any other Lien on such item of property;

(iv) motor vehicles and other assets subject to certificates of title to the extent a Lien thereon cannot be perfected by the filing of UCC financing statements in the grantor’s jurisdiction of organization;

(v) any Equity Interests consisting of voting stock in any CFC directly owned by the Borrower or any Guarantor in excess of 66% of the outstanding voting stock of such CFC;

-4-

(vi) any “intent-to-use” application for registration of a trademark filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. Section 1051, prior to the filing of a “Statement of Use” pursuant to Section 1(d) of the Lanham Act or an “Amendment to Allege Use” pursuant to Section 1(c) of the Lanham Act with respect thereto, solely to the extent, if any, that, and solely during the period, if any, in which, the grant of a security interest therein would impair the validity or enforceability of any registration that issues from such intent-to-use application under applicable federal law;

(vii) Excluded Deposit Accounts; and

(viii) those assets as to which the Administrative Agent and the Borrower reasonably agree that the cost of obtaining such a security interest or perfection thereof is excessive in relation to the benefit to the lenders under the Credit Agreement of the security to be afforded thereby.

;provided, however, that Excluded Property shall not include any Proceeds, substitutions or replacements of any Excluded Property referred to in clauses (i) through (viii) (unless such Proceeds, substitutions or replacements would constitute Excluded Property referred to in clauses (i) through (viii)).

“Goodwill” shall mean, collectively, with respect to each Pledgor, the goodwill connected with such Pledgor’s business including all goodwill connected with (i) the use of and symbolized by any Trademark owned by such Pledgor and (ii) all know-how, trade secrets, customer and supplier lists, proprietary information, inventions, methods, procedures, formulae, descriptions, compositions, technical data, drawings, specifications, nameplates, catalogs, confidential information and the right to limit the use or disclosure thereof by any person, pricing and cost information, business and marketing plans and proposals and such other assets which relate to such goodwill.

“Guarantors” shall have the meaning assigned to such term in the Preamble hereof.

“Instruments” shall mean, collectively, with respect to each Pledgor, all “instruments,” as such term is defined in Article 9, rather than Article 3, of the UCC, and shall include all promissory notes, drafts, bills of exchange or acceptances.

“Intellectual Property Collateral” shall mean, collectively, the Patents, Trademarks, Copyrights, Intellectual Property Licenses and Goodwill.

“Intellectual Property Licenses” shall mean, collectively, with respect to each Pledgor, all written license agreements with, and covenants not to sue, any other party with respect to any Patent, Trademark or Copyright or any other patent, trademark or copyright, whether such Pledgor is a licensor or licensee under any such license agreement, together with any and all (i) renewals, extensions, supplements and continuations thereof, (ii) income, fees, royalties, damages, claims and payments now and hereafter due and/or payable thereunder and with respect thereto including damages and payments for past, present or future infringements or violations thereof, (iii) rights to sue for past, present and future infringements or violations thereof and (iv) other rights to use, exploit or practice any or all of the Patents, Trademarks or Copyrights or any other patent, trademark or copyright.

-5-

“Intercompany Notes” shall mean, with respect to each Pledgor, all intercompany notes described in Schedule 8 to the Perfection Certificate and intercompany notes hereafter acquired by such Pledgor and all certificates, instruments or agreements evidencing such intercompany notes, and all assignments, amendments, restatements, supplements, extensions, renewals, replacements or modifications thereof to the extent permitted pursuant to the terms hereof, and in each case, required to be pledged hereunder.

“Intercreditor Agreement” means that certain intercreditor agreement dated the Closing Date (as amended, modified, supplemented or restated and in effect from time to time in accordance with the terms thereof and the Credit Agreement), among the Borrower, the Administrative Agent and the Notes Collateral Agent, and acknowledged by the Pledgors.

“Investment Property” shall mean a security, whether certificated or uncertificated, Security Entitlement, Securities Account, Commodity Contract or Commodity Account, excluding, however, the Securities Collateral.

“Material Intellectual Property Collateral” shall mean any Intellectual Property Collateral that is material (i) to the use and operation of the Pledged Collateral or Mortgaged Property or (ii) to the business, results of operations or financial condition of any Pledgor.

“Mortgaged Property” shall have the meaning assigned to such term in the Mortgages.

“Notes Collateral Agent” shall mean Wilmington Trust FSB, as collateral agent with respect to the obligations under the Senior Secured Notes.

“Patent Security Agreement” shall mean an agreement substantially in the form of Exhibit 5 hereto.

“Patents” shall mean, collectively, with respect to each Pledgor, all patents issued or assigned to, and all patent applications and registrations made by, such Pledgor (whether established or registered or recorded in the United States or any other country or any political subdivision thereof), together with any and all (i) rights and privileges arising under applicable law with respect to such Pledgor’s use of any patents, (ii) inventions and improvements described and claimed therein, (iii) reissues, divisions, continuations, renewals, extensions and continuations-in-part thereof and amendments thereto, (iv) income, fees, royalties, damages, claims and payments now or hereafter due and/or payable thereunder and with respect thereto including damages and payments for past, present or future infringements thereof, (v) rights corresponding thereto throughout the world and (vi) rights to sue for past, present or future infringements thereof.

“Perfection Certificate” shall mean that certain perfection certificate dated May 7, 2010, executed and delivered by each Pledgor in favor of the Administrative Agent for the benefit of the Secured Parties, and each other Perfection Certificate (which shall be in form and

-6-

substance reasonably acceptable to the Administrative Agent) executed and delivered by the applicable Guarantor in favor of the Administrative Agent for the benefit of the Secured Parties contemporaneously with the execution and delivery of each Security Agreement Supplement executed in accordance with Section 3.5 hereof, in each case, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time.

“Permitted Liens” shall have the meaning assigned to such term in Section 3.3 hereof.

“Pledge Amendment” shall have the meaning assigned to such term in Section 5.1 hereof.

“Pledged Collateral” shall have the meaning assigned to such term in Section 2.1 hereof.

“Pledged Securities” shall mean, collectively, with respect to each Pledgor, (i) all issued and outstanding Equity Interests of each issuer set forth on Schedules 7(a) and 7(b) to the Perfection Certificate as being owned by such Pledgor and all options, warrants, rights, agreements and additional Equity Interests of whatever class of any such issuer acquired by such Pledgor (including by issuance), together with all rights, privileges, authority and powers of such Pledgor relating to such Equity Interests in each such issuer or under any Organization Document of each such issuer, and the certificates, instruments and agreements representing such Equity Interests and any and all interest of such Pledgor in the entries on the books of any financial intermediary pertaining to such Equity Interests, (ii) all Equity Interests of any issuer, which Equity Interests are hereafter acquired by such Pledgor (including by issuance) and all options, warrants, rights, agreements and additional Equity Interests of whatever class of any such issuer acquired by such Pledgor (including by issuance), together with all rights, privileges, authority and powers of such Pledgor relating to such Equity Interests or under any Organization Document of any such issuer, and the certificates, instruments and agreements representing such Equity Interests and any and all interest of such Pledgor in the entries on the books of any financial intermediary pertaining to such Equity Interests, from time to time acquired by such Pledgor in any manner, and (iii) all Equity Interests issued in respect of the Equity Interests referred to in clause (i) or (ii) upon any consolidation or merger of any issuer of such Equity Interests, and in the case of clauses (i), (ii) and (iii), required to be pledged hereunder.

“Pledgor” shall have the meaning assigned to such term in the Preamble hereof.

“Receivables” shall mean all (i) Accounts, (ii) Chattel Paper, (iii) Payment Intangibles, (iv) General Intangibles, (v) Instruments and (vi) all other rights to payment, whether or not earned by performance, for goods or other property sold, leased, licensed, assigned or otherwise disposed of, or services rendered or to be rendered, regardless of how classified under the UCC together with all of Pledgors’ rights, if any, in any goods or other property giving rise to such right to payment and all Collateral Support and Supporting Obligations related thereto and all Records relating thereto.

-7-

“Securities Account Control Agreement” shall mean a control agreement in a form that is reasonably satisfactory to the Administrative Agent establishing the Administrative Agent’s Control with respect to any Securities Account.

“Securities Collateral” shall mean, collectively, the Pledged Securities, the Intercompany Notes and the Distributions.

“Security Agreement Supplement” shall mean an agreement substantially in the form of Exhibit 3 hereto.

“Trademark Security Agreement” shall mean an agreement substantially in the form of Exhibit 6 hereto.

“Trademarks” shall mean, collectively, with respect to each Pledgor, all trademarks (including service marks), slogans, logos, certification marks, trade dress, uniform resource locators (URLs), domain names, corporate names and trade names, whether registered or unregistered, owned by or assigned to such Pledgor and all registrations and applications for the foregoing (whether statutory or common law and whether established or registered in the United States or any other country or any political subdivision thereof), together with any and all (i) rights and privileges arising under applicable law with respect to such Pledgor’s use of any trademarks, (ii) reissues, continuations, extensions and renewals thereof and amendments thereto, (iii) income, fees, royalties, damages and payments now and hereafter due and/or payable thereunder and with respect thereto, including damages, claims and payments for past, present or future infringements thereof, (iv) rights corresponding thereto throughout the world and (v) rights to sue for past, present and future infringements thereof.

“UCC” shall mean the Uniform Commercial Code as in effect from time to time in the State of New York; provided, however, that, at any time, if by reason of mandatory provisions of law, any or all of the perfection or priority of the Administrative Agent’s and the Secured Parties’ security interest in any item or portion of the Pledged Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial Code as in effect, at such time, in such other jurisdiction for purposes of the provisions hereof relating to such perfection or priority and for purposes of definitions relating to such provisions.

“Voting Equity Interests” of any Person shall mean all classes of Equity Interests of such Person entitled to vote.

SECTION 1.2. Interpretation. The rules of interpretation specified in the Credit Agreement (including Section 1.02 thereof) shall be applicable to this Agreement.

ARTICLE II

GRANT OF SECURITY AND OBLIGATIONS

SECTION 2.1. Grant of Security Interest. As collateral security for the payment and performance in full of all the Obligations, each Pledgor hereby pledges and grants

-8-

to the Administrative Agent for the benefit of the Secured Parties, a lien on and security interest in all of the right, title and interest of such Pledgor in, to and under the following property, wherever located, and whether now existing or hereafter arising or acquired from time to time (collectively, the “Pledged Collateral”):

(i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii)

all Accounts; all Equipment, Goods, Inventory and Fixtures; all Documents, Instruments and Chattel Paper; all Letters of Credit and Letter-of-Credit Rights; all Securities Collateral; all Investment Property; all Intellectual Property Collateral; the Commercial Tort Claims described on Schedule 10 to the Perfection Certificate; all General Intangibles; all Money and all Deposit Accounts; all Supporting Obligations; all books and records relating to the Pledged Collateral; and

(xiii)

to the extent not covered by clauses (i) through (xii) of this sentence, all other personal property of such Pledgor, whether tangible or intangible, and all Proceeds and products of each of the foregoing and all accessions to, substitutions and replacements for, and rents, profits and products of, each of the foregoing, and any and all Proceeds of any insurance, indemnity, warranty or guaranty payable to such Pledgor from time to time with respect to any of the foregoing.

Notwithstanding anything to the contrary contained in clauses (i) through (xiii) above, the security interest created by this Agreement shall not extend to, and the term “Pledged Collateral” shall not include, any Excluded Property, and from and after the Closing Date, no Pledgor shall permit to become effective in any document creating, governing or providing for any permit, license or agreement a provision that would prohibit the creation of a Lien on such permit, license or agreement in favor of the Administrative Agent unless such Pledgor believes, in its reasonable judgment, that such prohibition is usual and customary in transactions of such type.

-9-

SECTION 2.2. Filings.

(a) Each Pledgor hereby irrevocably authorizes the Administrative Agent at any time and from time to time to file in any relevant jurisdiction any financing statements (including fixture filings) and amendments thereto that contain the information required by Article 9 of the Uniform Commercial Code of each applicable jurisdiction for the filing of any financing statement or amendment relating to the Pledged Collateral, including (i) whether such Pledgor is an organization, the type of organization and any organizational identification number issued to such Pledgor, (ii) any financing or continuation statements or other documents without the signature of such Pledgor where permitted by law, including the filing of a financing statement describing the Pledged Collateral as “all assets now owned or hereafter acquired by the Pledgor or in which Pledgor otherwise has rights” and (iii) in the case of a financing statement filed as a fixture filing, a sufficient description of the real property to which such Pledged Collateral relates. Each Pledgor agrees to provide all information described in the immediately preceding sentence to the Administrative Agent promptly upon reasonable request by the Administrative Agent.

(b) Each Pledgor hereby ratifies its authorization for the Administrative Agent to file in any relevant jurisdiction any financing statements relating to the Pledged Collateral if filed prior to the date hereof.

(c) Each Pledgor hereby further authorizes the Administrative Agent to make filings with the United States Patent and Trademark Office or United States Copyright Office (or any successor office), including this Agreement, the Copyright Security Agreement, the Patent Security Agreement and the Trademark Security Agreement, or other documents for the purpose of perfecting, confirming, continuing, enforcing or protecting the security interest granted by such Pledgor hereunder in Intellectual Property Collateral that is registered, or whose registration has been applied for, with the United States Patent and Trademark Office or United States Copyright Office (or any successor office), and naming such Pledgor, as debtor, and the Administrative Agent, as secured party.

ARTICLE III

PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES;

USE OF PLEDGED COLLATERAL

SECTION 3.1. Delivery of Certificated Securities Collateral. Each Pledgor represents and warrants that all certificates or instruments representing or evidencing the Securities Collateral in existence on the date hereof have been delivered to the Administrative Agent in suitable form for transfer by delivery or accompanied by duly executed instruments of transfer or assignment in blank and that the Administrative Agent will have a perfected first priority security interest therein upon completion of the filings and other actions specified on Schedule 4 to the Perfection Certificate. Each Pledgor hereby agrees that all certificates or instruments representing or evidencing Securities Collateral acquired by such Pledgor after the date hereof shall promptly (but in any event within fifteen days after receipt thereof by such Pledgor, or such longer period as the Administrative Agent may agree to in its sole discretion) be delivered to and held by or on behalf of the Administrative Agent pursuant hereto. All

-10-

certificated Securities Collateral shall be in suitable form for transfer by delivery or shall be accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance reasonably satisfactory to the Administrative Agent. The Administrative Agent shall have the right, at any time upon the occurrence and during the continuance of any Event of Default, to endorse, assign or otherwise transfer to or to register in the name of the Administrative Agent or any of its nominees or endorse for negotiation any or all of the Securities Collateral, without any indication that such Securities Collateral is subject to the security interest hereunder. In addition, upon the occurrence and during the continuance of an Event of Default, the Administrative Agent shall have the right at any time to exchange certificates representing or evidencing Securities Collateral for certificates of smaller or larger denominations.

SECTION 3.2. Perfection of Uncertificated Securities Collateral. Each Pledgor represents and warrants that the Administrative Agent has a perfected first priority security interest in all uncertificated Pledged Securities pledged by it hereunder that are in existence on the date hereof. Each Pledgor hereby agrees that if any of the Pledged Securities of a Wholly Owned Subsidiary that constitute “Securities” as defined in Section 8-102(a)(15) of the UCC are at any time not evidenced by certificates of ownership, then each applicable Pledgor shall, to the extent permitted by applicable law, cause the issuer to execute and deliver to the Administrative Agent an acknowledgment of the pledge of such Pledged Securities substantially in the form of Exhibit 1 hereto or such other form that is reasonably satisfactory to the Administrative Agent.

SECTION 3.3. Financing Statements and Other Filings; Maintenance of Perfected Security Interest. Each Pledgor represents and warrants that all financing statements, agreements, instruments and other documents necessary to perfect the security interest granted by it to the Administrative Agent on the date hereof in respect of the Pledged Collateral have been delivered to the Administrative Agent in completed and duly executed form for filing in each governmental, municipal or other office specified in Schedule 4 to the Perfection Certificate. Each Pledgor agrees that at the sole cost and expense of the Pledgors, such Pledgor will, at the request of the Admninistrative Agent, maintain the security interest created by this Agreement in the Pledged Collateral as a perfected first priority security interest subject only to Liens permitted under Section 7.01 of the Credit Agreement (“Permitted Liens”).

SECTION 3.4. Other Actions. In order to further ensure the attachment, perfection and priority of, and the ability of the Administrative Agent to enforce, the Administrative Agent’s security interest in the Pledged Collateral, each Pledgor represents and warrants (as to itself) as follows and agrees, in each case at such Pledgor’s own expense, to take the following actions with respect to the following Pledged Collateral:

(a) Instruments and Tangible Chattel Paper. As of the date hereof, no amounts payable in excess of $500,000 (or solely with respect to intercompany Indebtedness of the Pledgors, no amounts payable) under or in connection with any of the Pledged Collateral are evidenced by any Instrument or Tangible Chattel Paper, other than such Instruments and Tangible Chattel Paper listed in Schedule 8 to the Perfection Certificate. Each Instrument and each item of Tangible Chattel Paper listed in Schedule 8

-11-

to the Perfection Certificate has been properly endorsed, assigned and delivered to the Administrative Agent, accompanied by instruments of transfer or assignment duly executed in blank. If any amount then payable under or in connection with any of the Pledged Collateral shall be evidenced by any Instrument or Tangible Chattel Paper, and such amount, together with all amounts payable evidenced by any Instrument or Tangible Chattel Paper not previously delivered to the Administrative Agent, exceeds $500,000 in the aggregate for all Pledgors (provided that solely with respect to intercompany Indebtedness of the Pledgors, such minimum threshold shall not apply), the Pledgor acquiring such Instrument or Tangible Chattel Paper shall promptly (but in any event within 15 days after receipt thereof or such longer period as the Administrative Agent may agree to in its sole discretion) endorse, assign and deliver the same to the Administrative Agent, accompanied by such instruments of transfer or assignment duly executed in blank as the Administrative Agent may from time to time reasonably request.

(b) Deposit Accounts. As of the date hereof, no Pledgor has any Deposit Accounts other than Excluded Deposit Accounts and those accounts listed in Schedule 11 to the Perfection Certificate. The Administrative Agent has a security interest in each such Deposit Account (other than Excluded Deposit Accounts), which security interest, when required by Section 6.17 of the Credit Agreement, will be perfected by Control. No Pledgor shall hereafter establish and maintain any Deposit Account unless (1) it shall have given the Administrative Agent 10 days’ prior written notice of its intention to establish such new Deposit Account with a Bank and (2) such Bank and such Pledgor shall have duly executed and delivered to the Administrative Agent a Deposit Account Control Agreement with respect to such Deposit Account. The Administrative Agent agrees with each Pledgor that the Administrative Agent shall not give any instructions directing the disposition of funds from time to time credited to any Deposit Account or withhold any withdrawal rights from such Pledgor with respect to funds from time to time credited to any Deposit Account unless an Event of Default has occurred and is continuing, and notice shall have been given by the Administrative Agent to the Borrower of its intent to exercise such rights. Each Pledgor agrees that once the Administrative Agent sends an instruction or notice to a Bank exercising its Control over any Deposit Account (other than Excluded Deposit Accounts) (with a copy of such instruction or notice to the Borrower) such Pledgor shall not give any instructions or orders with respect to such Deposit Account including, without limitation, instructions for distribution or transfer of any funds in such Deposit Account. No Pledgor shall grant Control of any Deposit Account to any person other than the Administrative Agent and the Notes Collateral Agent.

(c) Securities Accounts and Commodity Accounts. (i) As of the date hereof, no Pledgor has any Securities Accounts or Commodity Accounts other than those listed in Schedule 11 to the Perfection Certificate. The Administrative Agent has a security interest in each such Securities Account and Commodity Account, which security interest, when required by Section 6.17 of the Credit Agreement, will be perfected by Control. No Pledgor shall hereafter establish and maintain any Securities Account or Commodity Account with any Securities Intermediary or Commodity Intermediary unless (1) it shall have given the Administrative Agent 10 days’ prior written notice of its

-12-

intention to establish such new Securities Account or Commodity Account with such Securities Intermediary or Commodity Intermediary and (2) such Securities Intermediary or Commodity Intermediary, as the case may be, and such Pledgor shall have duly executed and delivered a Control Agreement with respect to such Securities Account or Commodity Account, as the case may be. Each Pledgor shall accept any cash and Investment Property in trust for the benefit of the Administrative Agent and within one (1) Business Day of actual receipt thereof, deposit any and all cash and Investment Property received by it into a Deposit Account or Securities Account subject to Administrative Agent’s Control. The Administrative Agent agrees with each Pledgor that the Administrative Agent shall not give any Entitlement Orders or instructions or directions to any issuer of uncertificated securities, Securities Intermediary or Commodity Intermediary, and shall not withhold its consent to the exercise of any withdrawal or dealing rights by such Pledgor, unless an Event of Default has occurred and is continuing or, after giving effect to any such investment and withdrawal rights, would occur, and notice shall have been given by the Administrative Agent to the Borrower of its intent to exercise such rights. Each Pledgor agrees that once the Administrative Agent sends an instruction or notice to a Securities Intermediary or Commodity Intermediary exercising its Control over any Securities Account and Commodity Account (with a copy of such instruction or notice to the Borrower) such Pledgor shall not give any instructions or orders with respect to such Securities Account and Commodity Account including, without limitation, instructions for investment, distribution or transfer of any Investment Property or Financial Asset maintained in such Securities Account or Commodity Account. No Pledgor shall grant Control over any Investment Property to any person other than the Administrative Agent and the Notes Collateral Agent.

(ii) As between the Administrative Agent and the Pledgors, the Pledgors shall bear the investment risk with respect to the Investment Property and Pledged Securities, and the risk of loss of, damage to, or the destruction of the Investment Property and Pledged Securities, whether in the possession of, or maintained as a Security Entitlement or deposit by, or subject to the Control of, the Administrative Agent, a Securities Intermediary, a Commodity Intermediary, any Pledgor or any other person.

(d) Electronic Chattel Paper and Transferable Records. As of the date hereof, no amount under or in connection with any of the Pledged Collateral is evidenced by any Electronic Chattel Paper or any “transferable record” (as that term is defined in Section 201 of the Federal Electronic Signatures in Global and National Commerce Act, or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction) other than such Electronic Chattel Paper and transferable records, (i) listed in Schedule 8 to the Perfection Certificate or (ii) whose value does not exceed $500,000 in the aggregate for all Pledgors. If any amount payable under or in connection with any of the Pledged Collateral shall be evidenced by any Electronic Chattel Paper or any transferable record, the Pledgor acquiring such Electronic Chattel Paper or transferable record shall promptly notify the Administrative Agent thereof and shall take such action as the Administrative Agent may reasonably request to vest in the Administrative Agent control of such Electronic Chattel Paper under Section 9-105 of the UCC or control under

-13-

Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or, as the case may be, Section 16 of the Uniform Electronic Transactions Act, as so in effect in such jurisdiction, or such transferable record. The requirement in the preceding sentence shall not apply to the extent that such amount, together with all amounts payable evidenced by Electronic Chattel Paper or any transferable record in which the Administrative Agent has not been vested control within the meaning of the statutes described in the immediately preceding sentence, does not exceed $500,000 in the aggregate for all Pledgors. The Administrative Agent agrees with such Pledgor that the Administrative Agent will arrange, pursuant to procedures reasonably satisfactory to the Administrative Agent and so long as such procedures will not result in the Administrative Agent’s loss of control, for the Pledgor to make alterations to the Electronic Chattel Paper or transferable record permitted under Section 9-105 of the UCC or, as the case may be, Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or Section 16 of the Uniform Electronic Transactions Act for a party in control to allow without loss of control, unless an Event of Default has occurred and is continuing or would occur after taking into account any action by such Pledgor with respect to such Electronic Chattel Paper or transferable record.

(e) Letter-of-Credit Rights. If any Pledgor is at any time a beneficiary under a Letter of Credit now or hereafter issued in favor of such Pledgor that is not a Supporting Obligation, such Pledgor shall promptly notify the Administrative Agent thereof and such Pledgor shall, at the request of the Administrative Agent, pursuant to an agreement in form and substance reasonably satisfactory to the Administrative Agent, either (i) use commercially reasonable efforts to arrange for the issuer and any confirmer of such Letter of Credit to consent to an assignment to the Administrative Agent of the proceeds of any drawing under the Letter of Credit or (ii) use commercially reasonable efforts to arrange for the Administrative Agent to become the transferee beneficiary of such Letter of Credit, with the Administrative Agent agreeing, in each case, that the proceeds of any drawing under the Letter of Credit are to be paid to the applicable Pledgor unless an Event of Default has occurred and is continuing. The actions in the preceding sentence shall not be required to the extent that the amount of any such Letter of Credit, together with the aggregate amount of all other Letters of Credit for which the actions described above in clauses (i) and (ii) have not been taken, does not exceed $500,000 in the aggregate for all Pledgors.

(f) Commercial Tort Claims. As of the date hereof, each Pledgor hereby represents and warrants that it holds no Commercial Tort Claims other than those listed in Schedule 10 to the Perfection Certificate. If any Pledgor shall at any time hold or acquire a Commercial Tort Claim, such Pledgor shall promptly (but in any event within 15 days or such longer period as the Administrative Agent may agree, in its sole discretion) notify the Administrative Agent in writing signed by such Pledgor of the brief details thereof and grant to the Administrative Agent in such writing a security interest therein and in the Proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to the Administrative Agent. The requirement in the preceding sentence shall not apply to the extent that the amount of such Commercial Tort Claim, together with the amount of all other Commercial Tort Claims held by any Pledgor in which the Administrative Agent does not have a security interest, does not exceed $500,000 in the aggregate for all Pledgors.

-14-

SECTION 3.5. Joinder of Additional Guarantors. The Pledgors shall cause each Subsidiary of the Borrower which, from time to time, after the date hereof shall be required to pledge any assets to the Administrative Agent for the benefit of the Secured Parties pursuant to the provisions of the Credit Agreement, to execute and deliver to the Administrative Agent a Joinder Agreement substantially in the form of Exhibit 3 hereto, within thirty (30) days of the date on which it was acquired or created and, upon such execution and delivery, such Subsidiary shall constitute a “Guarantor” and a “Pledgor” for all purposes hereunder with the same force and effect as if originally named as a Guarantor and Pledgor herein. The execution and delivery of such Joinder Agreement shall not require the consent of any Pledgor hereunder. The rights and obligations of each Pledgor hereunder shall remain in full force and effect notwithstanding the addition of any new Guarantor and Pledgor as a party to this Agreement.

SECTION 3.6. Supplements; Further Assurances. Each Pledgor shall take such further actions, and execute and/or deliver to the Administrative Agent such additional financing statements, amendments, assignments, agreements, supplements, powers and instruments, as may be necessary or as the Administrative Agent may reasonably request in order to create, perfect, preserve and protect the security interest in the Pledged Collateral as provided herein and the rights and interests granted to the Administrative Agent hereunder, to carry into effect the purposes hereof or better to assure and confirm the validity, enforceability and priority of the Administrative Agent’s security interest in the Pledged Collateral or permit the Administrative Agent to exercise and enforce its rights, powers and remedies hereunder with respect to any Pledged Collateral, including the filing of financing statements, continuation statements and other documents (including this Agreement) under the Uniform Commercial Code (or other similar laws) in effect in any jurisdiction with respect to the security interest created hereby and the execution and delivery of Control Agreements, all in form reasonably satisfactory to the Administrative Agent and in such offices (including the United States Patent and Trademark Office and the United States Copyright Office) wherever required by law to perfect, continue and maintain the validity, enforceability and priority of the security interest in the Pledged Collateral as provided herein and to preserve the other rights and interests granted to the Administrative Agent hereunder, as against third parties, with respect to the Pledged Collateral. If an Event of Default has occurred and is continuing, the Administrative Agent may institute and maintain, in its own name or in the name of any Pledgor, such suits and proceedings as the Administrative Agent may be advised by counsel shall be necessary or expedient to prevent any impairment of the security interest in or the perfection thereof in the Pledged Collateral. All of the foregoing shall be at the sole cost and expense of the Pledgors.

ARTICLE IV

REPRESENTATIONS, WARRANTIES AND COVENANTS

Each Pledgor represents, warrants and covenants as follows:

SECTION 4.1. Title. Except for the security interest granted to the Administrative Agent for the benefit of the Secured Parties pursuant to this Agreement and

-15-

Permitted Liens, such Pledgor owns and has rights in each item of Pledged Collateral pledged by it hereunder, free and clear of any and all Liens or claims of others, except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or as proposed to be conducted or to utilize such properties for their intended purposes or where the failure to do so could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. In addition, no Liens or claims exist on the Securities Collateral, other than Permitted Collateral Liens.

SECTION 4.2. Validity of Security Interest. The security interest in and Lien on the Pledged Collateral granted to the Administrative Agent for the benefit of the Secured Parties hereunder constitutes (a) a legal and valid security interest in all the Pledged Collateral securing the payment and performance of the Obligations, and (b) upon completion of the filings and other actions described in Schedule 4 to the Perfection Certificate (to the extent required to be listed on the schedules to the Perfection Certificate as of the date this representation is made or deemed made), (i) will constitute a perfected security interest in all the Pledged Collateral in which a security interest may be perfected in the United States by filing, recording or registering a financing statement or analogous document in the United States (or any political subdivision thereof) and its territories and possessions pursuant to the UCC or other applicable law in such jurisdictions and (ii) will constitute a perfected security interest in all Pledged Collateral in which a security interest may be perfected in the United States upon the timely receipt and recording of the Patent Security Agreement, Copyright Security Agreement or Trademark Security Agreement with the United States Patent and Trademark Office and the United States Copyright Office, as applicable. The security interest and Lien granted to the Administrative Agent for the benefit of the Secured Parties pursuant to this Agreement in and on the Pledged Collateral is and shall be prior to all other Liens on the Pledged Collateral except for Permitted Liens.

SECTION 4.3. Defense of Claims; Transferability of Pledged Collateral. Each Pledgor shall, at its own cost and expense, take any and all commercially reasonable actions necessary to defend title to the Pledged Collateral pledged by it hereunder and the security interest therein and Lien thereon granted to the Administrative Agent except with respect to such Pledged Collateral that such Pledgor determines in its reasonable business judgment is no longer necessary or beneficial to the conduct of such Pledgor’s business, and the priority thereof against any Lien not other than Permitted Liens, at its own cost and expense, subject to the rights of such Pledgor under Section 9.10 of the Credit Agreement and corresponding provisions of the Loan Documents to obtain a release of the Liens created under the Loan Documents.

SECTION 4.4. Other Financing Statements. It has not filed, nor authorized any third party to file, any valid or effective financing statement (or similar statement, instrument of registration or public notice under the law of any jurisdiction) covering or purporting to cover any interest of any kind in the Pledged Collateral, except such as have been filed in favor of the Administrative Agent pursuant to this Agreement or in favor of any holder of a Permitted Lien with respect to such Permitted Lien. No Pledgor shall execute, authorize or permit to be filed in any public office any financing statement (or similar statement, instrument of registration or public notice under the law of any jurisdiction) relating to any Pledged Collateral, except financing statements and other statements and instruments filed or to be filed in respect of and covering the security interests granted by such Pledgor to the holder of the Permitted Liens.

-16-

SECTION 4.5. Location of Inventory and Equipment. It shall not move any Equipment or Inventory (other than Equipment or Inventory sold, leased or disposed of in accordance with the Credit Agreement) to any location, other than any location that is listed in the relevant Schedules to the Perfection Certificate or at such other locations as such Pledgor may determine from time to time, provided that such Pledgor shall give written notice to the Administrative Agent (in the form of a certificate of a Responsible Officer) specifying any such other location within 30 days after the date on which any Equipment or Inventory is moved to such location; provided that in no event shall any Equipment or Inventory be moved to any location outside of the continental United States.

SECTION 4.6. Due Authorization and Issuance. All of the Pledged Securities existing on the date hereof have been, and to the extent any Pledged Securities are hereafter issued, such Pledged Securities will be, upon such issuance, duly authorized, validly issued and fully paid and non-assessable to the extent applicable.

SECTION 4.7. Consents, etc. In the event that the Administrative Agent desires to exercise any remedies, voting or consensual rights or attorney-in-fact powers set forth in this Agreement and determines it necessary to obtain any approvals or consents of any Governmental Authority or any other person therefor, then, upon the reasonable request of the Administrative Agent, such Pledgor agrees to use its best efforts to assist and aid the Administrative Agent to obtain as soon as practicable any necessary approvals or consents for the exercise of any such remedies, rights and powers.

SECTION 4.8. Pledged Collateral. All information set forth herein, including the schedules hereto, and all information contained in any documents, schedules and lists heretofore delivered to any Secured Party, including the Perfection Certificate and the schedules thereto, in connection with this Agreement, in each case, relating to the Pledged Collateral, is accurate and complete in all material respects.

SECTION 4.9. Insurance. In the event that the proceeds of any insurance claim are paid to any Pledgor after the Administrative Agent has exercised its right to foreclose after an Event of Default and after notice thereof is given to the Pledgors by the Administrative Agent, such proceeds shall be held in trust for the benefit of the Administrative Agent and promptly after receipt thereof shall be paid to the Administrative Agent upon demand for application in accordance with the Credit Agreement.

ARTICLE V

CERTAIN PROVISIONS CONCERNING SECURITIES COLLATERAL

SECTION 5.1. Pledge of Additional Securities Collateral. Each Pledgor shall, upon obtaining any Pledged Securities or Intercompany Notes of any person which are to be pledged pursuant to this Agreement, accept the same in trust for the benefit of the Administrative Agent and promptly (but in any event within fifteen days after receipt thereof, or

-17-

such longer period as the Administrative Agent may agree to in its sole discretion) deliver to the Administrative Agent a pledge amendment, duly executed by such Pledgor, in substantially the form of Exhibit 2 hereto (each, a “Pledge Amendment”), and the certificates and other documents required under Section 3.1 and Section 3.2 hereof in respect of the additional Pledged Securities or Intercompany Notes which are to be pledged pursuant to this Agreement, and confirming the attachment of the Lien hereby created on and in respect of such additional Pledged Securities or Intercompany Notes. Each Pledgor hereby authorizes the Administrative Agent to attach each Pledge Amendment to this Agreement and agrees that all Pledged Securities or Intercompany Notes listed on any Pledge Amendment delivered to the Administrative Agent shall for all purposes hereunder be considered Pledged Collateral.

SECTION 5.2. Voting Rights; Distributions; etc.

(a) Unless and until an Event of Default shall have occurred and is continuing and the Administrative Agent shall have notified the Pledgors that their rights under this Section 5.2(a) are being suspended:

(i) Each Pledgor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Securities Collateral or any part thereof for any purpose not inconsistent with the terms or purposes hereof, the Credit Agreement or any other document evidencing the Obligations; provided, however, that no Pledgor shall in any event exercise such rights in any manner which could reasonably be expected to have a Material Adverse Effect.

(ii) Each Pledgor shall be entitled to receive and retain, and to utilize free and clear of the Lien hereof, any and all Distributions, but only if and to the extent made in accordance with the provisions of the Credit Agreement, the other Loan Documents and applicable law; provided, however, that any and all such Distributions consisting of rights or interests in the form of securities shall be forthwith delivered to the Administrative Agent to hold as Pledged Collateral and shall, if received by any Pledgor, be received in trust for the benefit of the Administrative Agent, be segregated from the other property or funds of such Pledgor and be promptly delivered to the Administrative Agent as Pledged Collateral in the same form as so received (with any necessary endorsement reasonably requested by the Administrative Agent).

(iii) So long as no Event of Default shall have occurred and be continuing, the Administrative Agent shall be deemed without further action or formality to have granted to each Pledgor all necessary consents relating to voting rights and shall, if necessary, upon written request of any Pledgor and at the sole cost and expense of the Pledgors, from time to time execute and deliver (or cause to be executed and delivered) to such Pledgor all such instruments as such Pledgor may reasonably request in order to permit such Pledgor to exercise the voting and other rights which it is entitled to exercise pursuant to Section 5.2(a)(i) hereof and to receive the Distributions which it is authorized to receive and retain pursuant to Section 5.2(a)(ii) hereof.

-18-

(b) Upon the occurrence and during the continuance of any Event of Default, after the Administrative Agent shall have notified the Pledgors of the suspension of their rights under Section 5.2(a):

(i) All rights of each Pledgor to exercise the voting and other consensual rights it would otherwise be entitled to exercise pursuant to Section 5.2(a)(i) hereof shall immediately cease, and all such rights shall thereupon become vested in the Administrative Agent, which shall thereupon have the sole right to exercise such voting and other consensual rights.

(ii) All rights of each Pledgor to receive Distributions which it would otherwise be authorized to receive and retain pursuant to Section 5.2(a)(ii) hereof shall immediately cease and all such rights shall thereupon become vested in the Administrative Agent, which shall thereupon have the sole right to receive and hold as Pledged Collateral such Distributions.

(c) Each Pledgor shall, at its sole cost and expense, from time to time execute and deliver to the Administrative Agent instruments as the Administrative Agent may reasonably request in order to permit the Administrative Agent to exercise the voting and other rights which it may be entitled to exercise pursuant to Section 5.2(b)(i) hereof and to receive all Distributions which it may be entitled to receive under Section 5.2(b)(ii) hereof.

(d) All Distributions which are received by any Pledgor contrary to the provisions of Section 5.2(a)(ii) hereof shall be received in trust for the benefit of the Administrative Agent, shall be segregated from other funds of such Pledgor and shall forthwith be delivered to the Administrative Agent as Pledged Collateral in the same form as so received (with any necessary endorsement reasonably requested by the Administrative Agent).

SECTION 5.3. Certain Agreements of Pledgors as Issuers and Holders of Equity Interests.

(a) In the case of each Pledgor which is an issuer of Securities Collateral, such Pledgor agrees to be bound by the terms of this Agreement relating to the Securities Collateral issued by it and will comply with such terms insofar as such terms are applicable to it.

(b) In the case of each Pledgor which is a partner, shareholder or member, as the case may be, in a partnership, limited liability company or other entity, such Pledgor hereby consents to the extent required by the applicable Organization Document to the pledge by each other Pledgor, pursuant to the terms hereof, of the Pledged Securities in such partnership, limited liability company or other entity and, upon the occurrence and during the continuance of an Event of Default, to the transfer of such Pledged Securities to the Administrative Agent or its nominee and to the substitution of the Administrative Agent or its nominee as a substituted partner, shareholder or member in such partnership, limited liability company or other entity with all the rights, powers and duties of a general partner, limited partner, shareholder or member, as the case may be.

-19-

ARTICLE VI

CERTAIN PROVISIONS CONCERNING INTELLECTUAL

PROPERTY COLLATERAL

SECTION 6.1. Grant of Intellectual Property License. For the purpose of enabling the Administrative Agent, during the continuance of an Event of Default, to exercise rights and remedies under Article IX hereof at such time as the Administrative Agent shall be lawfully entitled to exercise such rights and remedies, and for no other purpose, each Pledgor hereby grants to the Administrative Agent, to the extent assignable, an irrevocable, non-exclusive license to use, assign, license or sublicense any of the Intellectual Property Collateral now owned or hereafter acquired by such Pledgor, wherever the same may be located. Such license shall include access to all media in which any of the licensed items may be recorded or stored and to all computer programs used for the compilation or printout hereof. Nothing in this Section 6.1 shall require Pledgors to grant any license that is prohibited by any requirement of law, or is prohibited by, or constitutes a breach or default under or results in the termination of or gives rise to any right of acceleration, modification or cancellation under any Contract (for as long as, such prohibition is not terminated or rendered unenforceable or otherwise deemed ineffective by the Uniform Commercial Code, any other requirement of law or principles of equity); provided, further, that such licenses to be granted hereunder with respect to Trademarks shall be subject to the maintenance of quality standards with respect to the goods and services on which such Trademarks are used sufficient to preserve the validity of such Trademarks.

SECTION 6.2. Protection of Administrative Agent’s Security. Except where the failure to do so could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, on a continuing basis, each Pledgor shall, at its sole cost and expense, (i) promptly following its becoming aware thereof, notify the Administrative Agent of any adverse determination in any proceeding in any federal, state or local court or administrative body or in the United States Patent and Trademark Office or the United States Copyright Office regarding any Material Intellectual Property Collateral, such Pledgor’s right to register such Material Intellectual Property Collateral or its right to keep and maintain such registration in full force and effect, (ii) maintain all Material Intellectual Property Collateral as presently used and operated, (iii) not permit to lapse or become abandoned any Material Intellectual Property Collateral, and not settle or compromise any pending or future litigation or administrative proceeding with respect to any such Material Intellectual Property Collateral, in either case except as shall be consistent with commercially reasonable business judgment, (iv) following such Pledgor obtaining knowledge thereof, promptly notify the Administrative Agent in writing of any event which may be reasonably expected to materially and adversely affect the value or utility of any Material Intellectual Property Collateral or the rights and remedies of the Administrative Agent in relation thereto including a levy or threat of levy or any legal process against any Material Intellectual Property Collateral, (v) not license any Intellectual Property Collateral other than licenses entered into by such Pledgor in, or incidental to, the ordinary course of business, or amend or permit the amendment of any of the licenses in a manner that materially and adversely affects the right to receive payments thereunder, or in any manner that would materially impair the value of any Intellectual Property Collateral or the Lien on and security interest in the Intellectual Property Collateral created therein hereby, without the consent

-20-

of the Administrative Agent, (vi) diligently keep adequate records respecting all Intellectual Property Collateral and (vii) furnish to the Administrative Agent from time to time upon the Administrative Agent’s reasonable request therefor, reasonably detailed statements and amended schedules further identifying and describing the United States federal registered and applied for Intellectual Property Collateral and such other materials evidencing or reports pertaining to any Intellectual Property Collateral.

SECTION 6.3. After-Acquired Property. If any Pledgor shall at any time after the date hereof (i) obtain any rights to any additional Intellectual Property Collateral or (ii) become entitled to the benefit of any additional Intellectual Property Collateral or any renewal or extension thereof, including any reissue, division, continuation, or continuation-in-part of any Intellectual Property Collateral, or any improvement on any Intellectual Property Collateral, or if any intent-to use trademark application is no longer subject to clause (vi) of the definition of “Excluded Property,” the provisions hereof shall automatically apply thereto and any such item enumerated in the preceding clause (i) or (ii) shall automatically constitute Intellectual Property Collateral as if such would have constituted Intellectual Property Collateral at the time of execution hereof and be subject to the Lien and security interest created by this Agreement without further action by any party. Each Pledgor shall promptly provide to the Administrative Agent written notice of any of the foregoing and confirm the attachment of the Lien and security interest created by this Agreement to any rights described in clauses (i) and (ii) above by execution of an instrument in form reasonably acceptable to the Administrative Agent and the filing of any instruments or statements as shall be reasonably necessary to create, preserve, protect or perfect the Administrative Agent’s security interest in such Intellectual Property Collateral. Further, each Pledgor authorizes the Administrative Agent to modify this Agreement by amending Schedules 9(a) and 9(b) to the Perfection Certificate to include any Intellectual Property Collateral that is registered, or whose registration has been applied for, with the United States Patent and Trademark Office or United States Copyright Office (or any successor office) of such Pledgor acquired or arising after the date hereof.

SECTION 6.4. Litigation. Except where the failure to do so could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, each Pledgor agrees to take all commercially reasonable actions necessary, whether by suit, proceeding or other action, to prevent the infringement, counterfeiting, unfair competition, dilution, diminution in value of or other damage to any of the Material Intellectual Property Collateral owned by such Pledgor.

SECTION 6.5. Permitted Disposal of Intellectual Property Collateral. Nothing in this Agreement prevents any Pledgor from disposing of, discontinuing the use or maintenance of, failing to pursue or otherwise allowing to lapse, terminate or put into the public domain any of its Intellectual Property Collateral to the extent permitted by the Credit Agreement if such Pledgor determines in its reasonable business judgment that such action is desirable in the conduct of its business.

-21-

ARTICLE VII

CERTAIN PROVISIONS CONCERNING RECEIVABLES

SECTION 7.1. Maintenance of Records. Each Pledgor shall keep and maintain at its own cost and expense complete records of each Receivable, in a manner consistent with prudent business practice, including records of all payments received, all credits granted thereon, all merchandise returned and all other documentation relating thereto. Each Pledgor shall, at such Pledgor’s sole cost and expense, upon the Administrative Agent’s demand made at any time after the occurrence and during the continuance of any Event of Default, deliver all tangible evidence of Receivables, including all documents evidencing Receivables and any books and records relating thereto to the Administrative Agent or to its representatives (copies of which evidence and books and records may be retained by such Pledgor). Upon the occurrence and during the continuance of any Event of Default, the Administrative Agent may transfer a full and complete copy of any Pledgor’s books, records, credit information, reports, memoranda and all other writings relating to the Receivables to and for the use by any person that has acquired or is contemplating acquisition of an interest in the Receivables or the Administrative Agent’s security interest therein without the consent of any Pledgor.

SECTION 7.2. Legend. After the occurrence and during the continuance of an Event of Default and upon the Administrative Agent’s request, each Pledgor shall legend, at the request of the Administrative Agent and in form and manner satisfactory to the Administrative Agent, the Receivables and the other books, records and documents of such Pledgor evidencing or pertaining to the Receivables with an appropriate reference to the fact that the Receivables have been assigned to the Administrative Agent for the benefit of the Secured Parties and that the Administrative Agent has a security interest therein.

ARTICLE VIII

TRANSFERS

SECTION 8.1. Transfers of Pledged Collateral. No Pledgor shall sell, convey, assign or otherwise dispose of, or grant any option with respect to, any of the Pledged Collateral pledged by it hereunder except as expressly permitted by the Credit Agreement and the other Loan Documents.

ARTICLE IX

REMEDIES

SECTION 9.1. Remedies. Upon the occurrence and during the continuance of any Event of Default, the Administrative Agent may from time to time exercise in respect of the Pledged Collateral, in addition to the other rights and remedies provided for herein or otherwise available to it, the following remedies:

(i) Personally, or by agents or attorneys, immediately take possession of the Pledged Collateral or any part thereof, from any Pledgor or any other person who then

-22-

has possession of any part thereof with or without notice or process of law, and for that purpose may enter upon any Pledgor’s premises where any of the Pledged Collateral is located, remove such Pledged Collateral, remain present at such premises to receive copies of all communications and remittances relating to the Pledged Collateral and use in connection with such removal and possession any and all services, supplies, aids and other facilities of any Pledgor;

(ii) Demand, sue for, collect or receive any money or property at any time payable or receivable in respect of the Pledged Collateral including instructing the obligor or obligors on any agreement, instrument or other obligation constituting part of the Pledged Collateral to make any payment required by the terms of such agreement, instrument or other obligation directly to the Administrative Agent, and in connection with any of the foregoing, compromise, settle, extend the time for payment and make other modifications with respect thereto; provided, however, that in the event that any such payments are made directly to any Pledgor, prior to receipt by any such obligor of such instruction, such Pledgor shall segregate all amounts received pursuant thereto in trust for the benefit of the Administrative Agent and shall promptly (but in no event later than one (1) Business Day after receipt thereof) pay such amounts to the Administrative Agent;

(iii) Sell, assign, grant a license to use or otherwise liquidate, or direct any Pledgor to sell, assign, grant a license to use or otherwise liquidate, any and all investments made in whole or in part with the Pledged Collateral or any part thereof, and take possession of the proceeds of any such sale, assignment, license or liquidation;

(iv) Take possession of the Pledged Collateral or any part thereof, by directing any Pledgor in writing to deliver the same to the Administrative Agent at any place or places so designated by the Administrative Agent, in which event such Pledgor shall at its own expense: (A) forthwith cause the same to be moved to the place or places designated by the Administrative Agent and therewith delivered to the Administrative Agent, (B) store and keep any Pledged Collateral so delivered to the Administrative Agent at such place or places pending further action by the Administrative Agent and (C) while the Pledged Collateral shall be so stored and kept, provide such security and maintenance services as shall be necessary to protect the same and to preserve and maintain them in good condition. Each Pledgor’s obligation to deliver the Pledged Collateral as contemplated in this Section 9.1(iv) is of the essence hereof. Upon application to a court of equity having jurisdiction, the Administrative Agent shall be entitled to a decree requiring specific performance by any Pledgor of such obligation;

(v) Withdraw all moneys, instruments, securities and other property in any bank, financial securities, deposit or other account of any Pledgor constituting Pledged Collateral for application to the Obligations as provided in Article X hereof;

(vi) Retain and apply the Distributions to the Obligations as provided in Article X hereof;

-23-

(vii) Exercise any and all rights as beneficial and legal owner of the Pledged Collateral, including perfecting assignment of and exercising any and all voting, consensual and other rights and powers with respect to any Pledged Collateral; and

(viii) Exercise all the rights and remedies of a secured party on default under the UCC, and the Administrative Agent may also, without notice except as specified in Section 9.2 hereof, sell, assign or grant a license to use the Pledged Collateral or any part thereof in one or more parcels at public or private sale, at any exchange, broker’s board or at any of the Administrative Agent’s offices or elsewhere, for cash, on credit or for future delivery, and at such price or prices and upon such other terms as the Administrative Agent may deem commercially reasonable. The Administrative Agent or any other Secured Party or any of their respective Affiliates may be the purchaser, licensee, assignee or recipient of the Pledged Collateral or any part thereof at any such sale and shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Pledged Collateral sold, assigned or licensed at such sale, to use and apply any of the Obligations owed to such person as a credit on account of the purchase price of the Pledged Collateral or any part thereof payable by such person at such sale. Each purchaser, assignee, licensee or recipient at any such sale shall acquire the property sold, assigned or licensed absolutely free from any claim or right on the part of any Pledgor, and each Pledgor hereby waives, to the fullest extent permitted by law, all rights of redemption, stay and/or appraisal which it now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted. The Administrative Agent shall not be obligated to make any sale of the Pledged Collateral or any part thereof regardless of notice of sale having been given. The Administrative Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. Each Pledgor hereby waives, to the fullest extent permitted by law, any claims against the Administrative Agent arising by reason of the fact that the price at which the Pledged Collateral or any part thereof may have been sold, assigned or licensed at such a private sale was less than the price which might have been obtained at a public sale, even if the Administrative Agent accepts the first offer received and does not offer such Pledged Collateral to more than one offeree.

SECTION 9.2. Notice of Sale. Each Pledgor acknowledges and agrees that, to the extent notice of sale or other disposition of the Pledged Collateral or any part thereof shall be required by law, ten (10) days’ prior notice to such Pledgor of the time and place of any public sale or of the time after which any private sale or other intended disposition is to take place shall be commercially reasonable notification of such matters. No notification need be given to any Pledgor if it has signed, after the occurrence of an Event of Default, a statement renouncing or modifying any right to notification of sale or other intended disposition.

SECTION 9.3. Waiver of Notice and Claims. Each Pledgor hereby waives, to the fullest extent permitted by applicable law, notice or judicial hearing in connection with the Administrative Agent’s taking possession or the Administrative Agent’s disposition of the Pledged Collateral or any part thereof, including any and all prior notice and hearing for any

-24-

prejudgment remedy or remedies and any such right which such Pledgor would otherwise have under law, and each Pledgor hereby further waives, to the fullest extent permitted by applicable law: (i) all damages occasioned by such taking of possession, (ii) all other requirements as to the time, place and terms of sale or other requirements with respect to the enforcement of the Administrative Agent’s rights hereunder and (iii) all rights of redemption, appraisal, valuation, stay, extension or moratorium now or hereafter in force under any applicable law. The Administrative Agent shall not be liable for any incorrect or improper payment made pursuant to this Article IX in the absence of gross negligence or willful misconduct on the part of the Administrative Agent. Any sale of, or the grant of options to purchase, or any other realization upon, any Pledged Collateral shall operate to divest all right, title, interest, claim and demand, either at law or in equity, of the applicable Pledgor therein and thereto, and shall be a perpetual bar both at law and in equity against such Pledgor and against any and all persons claiming or attempting to claim the Pledged Collateral so sold, optioned or realized upon, or any part thereof, from, through or under such Pledgor.

SECTION 9.4. Certain Sales of Pledged Collateral.

(a) Each Pledgor recognizes that, by reason of certain prohibitions contained in law, rules, regulations or orders of any Governmental Authority, the Administrative Agent may be compelled, with respect to any sale of all or any part of the Pledged Collateral, to limit purchasers to those who meet the requirements of such Governmental Authority. Each Pledgor acknowledges that any such sales may be at prices and on terms less favorable to the Administrative Agent than those obtainable through a public sale without such restrictions, and, notwithstanding such circumstances, agrees that any such restricted sale shall be deemed to have been made in a commercially reasonable manner and that, except as may be required by applicable law, the Administrative Agent shall have no obligation to engage in public sales.

(b) Each Pledgor recognizes that, by reason of certain prohibitions contained in the Securities Act, and applicable state securities laws, the Administrative Agent may be compelled, with respect to any sale of all or any part of the Securities Collateral and Investment Property, to limit purchasers to persons who will agree, among other things, to acquire such Securities Collateral or Investment Property for their own account, for investment and not with a view to the distribution or resale thereof. Each Pledgor acknowledges that any such private sales may be at prices and on terms less favorable to the Administrative Agent than those obtainable through a public sale without such restrictions (including a public offering made pursuant to a registration statement under the Securities Act), and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner and that the Administrative Agent shall have no obligation to engage in public sales and no obligation to delay the sale of any Securities Collateral or Investment Property for the period of time necessary to permit the issuer thereof to register it for a form of public sale requiring registration under the Securities Act or under applicable state securities laws, even if such issuer would agree to do so.

(c) Notwithstanding the foregoing, each Pledgor shall, upon the occurrence and during the continuance of any Event of Default, at the reasonable request of the Administrative Agent, for the benefit of the Administrative Agent, cause any registration,

-25-

qualification under or compliance with any Federal or state securities law or laws to be effected with respect to all or any part of the Securities Collateral as soon as practicable and at the sole cost and expense of the Pledgors. Each Pledgor will use its commercially reasonable efforts to cause such registration to be effected (and be kept effective) and will use its commercially reasonable efforts to cause such qualification and compliance to be effected (and be kept effective) as may be so requested and as would permit or facilitate the sale and distribution of such Securities Collateral including registration under the Securities Act (or any similar statute then in effect), qualifications under applicable blue sky or other state securities laws and compliance with all other requirements of any Governmental Authority. Each Pledgor shall use its commercially reasonable efforts to cause the Administrative Agent to be kept advised in writing as to the progress of each such registration, qualification or compliance and as to the completion thereof, shall furnish to the Administrative Agent such number of prospectuses, offering circulars or other documents incident thereto as the Administrative Agent from time to time may reasonably request, and shall indemnify and shall cause the issuer of the Securities Collateral to indemnify the Administrative Agent and all others participating in the distribution of such Securities Collateral against all claims, losses, damages and liabilities caused by any untrue statement (or alleged untrue statement) of a material fact contained therein (or in any related registration statement, notification or the like) or by any omission (or alleged omission) to state therein (or in any related registration statement, notification or the like) a material fact required to be stated therein or necessary to make the statements therein not misleading.

(d) If the Administrative Agent determines to exercise its right to sell any or all of the Securities Collateral or Investment Property, upon written request, the applicable Pledgor shall from time to time furnish to the Administrative Agent all such information as the Administrative Agent may reasonably request in order to determine the number of securities included in the Securities Collateral or Investment Property which may be sold by the Administrative Agent as exempt transactions under the Securities Act and the rules of the Securities and Exchange Commission thereunder, as the same are from time to time in effect.

(e) Each Pledgor further agrees that a breach of any of the covenants contained in this Section 9.4 will cause irreparable injury to the Administrative Agent and the other Secured Parties, that the Administrative Agent and the other Secured Parties have no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section 9.4 shall be specifically enforceable against such Pledgor, and such Pledgor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no Event of Default has occurred and is continuing.

SECTION 9.5. No Waiver; Cumulative Remedies.

(a) No failure on the part of the Administrative Agent to exercise, no course of dealing with respect to, and no delay on the part of the Administrative Agent in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power, privilege or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right, power, privilege or remedy; nor shall the Administrative Agent be required to look first to, enforce or exhaust any other security, collateral or guaranties. All rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies provided by law or otherwise available.

-26-

(b) In the event that the Administrative Agent shall have instituted any proceeding to enforce any right, power, privilege or remedy under this Agreement or any other Loan Document by foreclosure, sale, entry or otherwise, and such proceeding shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Administrative Agent, then and in every such case, the Pledgors, the Administrative Agent and each other Secured Party shall be restored to their respective former positions and rights hereunder with respect to the Pledged Collateral, and all rights, remedies, privileges and powers of the Administrative Agent and the other Secured Parties shall continue as if no such proceeding had been instituted.

SECTION 9.6. Certain Additional Actions Regarding Intellectual Property. If any Event of Default shall have occurred and be continuing, upon the written demand of the Administrative Agent, each Pledgor shall execute and deliver to the Administrative Agent an assignment or assignments of the registered Patents, Trademarks and/or Copyrights and Goodwill and such other documents as are necessary to carry out the intent and purposes hereof. Within five (5) Business Days of written notice thereafter from the Administrative Agent, each Pledgor shall use commercially reasonable efforts to make available to the Administrative Agent, to the extent within such Pledgor’s power and authority, such personnel in such Pledgor’s employ on the date of the Event of Default as the Administrative Agent may reasonably request to permit such Pledgor to continue, directly or indirectly, to produce, advertise and sell the products and services sold by such Pledgor under the registered Patents, Trademarks and/or Copyrights, and each Pledgor shall use commercially reasonable efforts to make such persons available to perform their prior functions on the Administrative Agent’s behalf.

ARTICLE X

APPLICATION OF PROCEEDS

SECTION 10.1. Application of Proceeds. The proceeds received by the Administrative Agent in respect of any sale of, collection from or other realization upon all or any part of the Pledged Collateral pursuant to the exercise by the Administrative Agent of its remedies shall be applied, together with any other sums then held by the Administrative Agent pursuant to this Agreement, in accordance with the Credit Agreement.

ARTICLE XI

MISCELLANEOUS

SECTION 11.1. Concerning Administrative Agent.

(a) The Administrative Agent has been appointed as Administrative Agent pursuant to the Credit Agreement. The actions of the Administrative Agent hereunder are subject to the provisions of the Credit Agreement. The Administrative Agent shall have the right hereunder to make demands, to give notices, to exercise or refrain from exercising any rights,

-27-

and to take or refrain from taking action (including the release or substitution of the Pledged Collateral), in accordance with this Agreement and the Credit Agreement. The Administrative Agent may employ agents and attorneys-in-fact in connection herewith and shall not be liable for any acts or omissions of any such agents or attorneys-in-fact selected by it in good faith. The Administrative Agent may resign and a successor Administrative Agent may be appointed in the manner provided in the Credit Agreement. Upon the acceptance of any appointment as the Administrative Agent by a successor Administrative Agent, that successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent under this Agreement, and the retiring Administrative Agent shall thereupon be discharged from its duties and obligations under this Agreement. After any retiring Administrative Agent’s resignation, the provisions hereof shall inure to its benefit as to any actions taken or omitted to be taken by it under this Agreement while it was the Administrative Agent.

(b) The Administrative Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Pledged Collateral in its possession if such Pledged Collateral is accorded treatment substantially equivalent to that which the Administrative Agent, in its individual capacity, generally accords its own property consisting of similar instruments or interests, it being understood that neither the Administrative Agent nor any of the Secured Parties shall have responsibility for (i) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relating to any Securities Collateral, whether or not the Administrative Agent or any other Secured Party has or is deemed to have knowledge of such matters or (ii) taking any necessary steps to preserve rights against any person with respect to any Pledged Collateral.

(c) The Administrative Agent shall be entitled to rely upon any written notice, statement, certificate, order or other document or any telephone message believed by it to be genuine and correct and to have been signed, sent or made by the proper person, and, with respect to all matters pertaining to this Agreement and its duties hereunder, upon advice of counsel selected by it.

(d) If any item of Pledged Collateral also constitutes collateral granted to the Administrative Agent under any other deed of trust, mortgage, security agreement, pledge or instrument of any type, in the event of any conflict between the provisions hereof and the provisions of such other deed of trust, mortgage, security agreement, pledge or instrument of any type in respect of such collateral, the provisions hereof shall control.

(e) The Administrative Agent may rely on advice of counsel as to whether any or all UCC financing statements of the Pledgors need to be amended as a result of any of the changes described in Section 6.02(g) of the Credit Agreement. If any Pledgor fails to provide information to the Administrative Agent about such changes on a timely basis, the Administrative Agent shall not be liable or responsible to any party for any failure to maintain a perfected security interest in such Pledgor’s property constituting Pledged Collateral, for which the Administrative Agent needed to have information relating to such changes. The Administrative Agent shall have no duty to inquire about such changes if any Pledgor does not inform the Administrative Agent of such changes, the parties acknowledging and agreeing that it would not be feasible or practical for the Administrative Agent to search for information on such changes if such information is not provided by any Pledgor.

-28-

SECTION 11.2. Intercreditor Agreement. Notwithstanding anything herein to the contrary, the Liens and security interests granted to the Administrative Agent pursuant to this Agreement and the exercise of any right or remedy by the Administrative Agent hereunder are subject to the terms of the Intercreditor Agreement. In the event of any conflict between the terms of the Intercreditor Agreement and the terms of this Agreement, the terms of the Intercreditor Agreement shall govern and control.

THIS SECURITY AGREEMENT IS SUBJECT TO THE PROVISIONS OF THE INTERCREDITOR AGREEMENT DATED AS OF MAY 7, 2010 (AS AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME), AMONG C.P. ATLAS ACQUISITION CORP. (TO BE MERGED WITH AND INTO AMERICAN RENAL HOLDINGS INC.), THE GRANTORS PARTY THERETO, BANK OF AMERICA, N.A., AS CREDIT AGREEMENT ADMINISTRATIVE AGENT, WILMINGTON TRUST FSB, AS SENIOR SECURED NOTES COLLATERAL AGENT AND EACH ADDITIONAL NOTES COLLATERAL AGENT FROM TIME TO TIME PARTY THERETO.

SECTION 11.3. Administrative Agent May Perform; Administrative Agent Appointed Attorney-in-Fact. If any Pledgor shall fail to perform any covenants contained in this Agreement or if any representation or warranty on the part of any Pledgor contained herein shall be breached, the Administrative Agent may (but shall not be obligated to) do the same or cause it to be done or remedy any such breach, and may expend funds for such purpose; provided, however, that the Administrative Agent shall in no event be bound to inquire into the validity of any tax, Lien, imposition or other obligation which such Pledgor fails to pay or perform as and when required hereby and which such Pledgor does not contest in accordance with the provisions of the Credit Agreement. Any and all amounts so expended by the Administrative Agent shall be paid by the Pledgors in accordance with the provisions of Section 11.05 of the Credit Agreement. Neither the provisions of this Section 11.3 nor any action taken by the Administrative Agent pursuant to the provisions of this Section 11.3 shall prevent any such failure to observe any covenant contained in this Agreement nor any breach of representation or warranty from constituting an Event of Default. Each Pledgor hereby appoints the Administrative Agent its attorney-in-fact, with full power and authority in the place and stead of such Pledgor and in the name of such Pledgor, or otherwise, from time to time to take any action and to execute any instrument consistent with the terms of the Credit Agreement, this Agreement and the other Collateral Documents which the Administrative Agent may deem necessary to accomplish the purposes hereof (but the Administrative Agent shall not be obligated to and shall have no liability to such Pledgor or any third party for failure to so do or take action). The foregoing grant of authority is a power of attorney coupled with an interest and such appointment shall be irrevocable for the term hereof. Each Pledgor hereby ratifies all that such attorney shall lawfully do or cause to be done by virtue hereof.

SECTION 11.4. Continuing Security Interest; Assignment. This Agreement shall create a continuing security interest in the Pledged Collateral and shall (i) be binding upon

-29-

the Pledgors, their respective successors and assigns and (ii) inure, together with the rights and remedies of the Administrative Agent hereunder, to the benefit of the Administrative Agent and the other Secured Parties and each of their respective successors, transferees and assigns. No other persons (including any other creditor of any Pledgor) shall have any interest herein or any right or benefit with respect hereto. Without limiting the generality of the foregoing clause (ii), any Secured Party may assign or otherwise transfer any indebtedness held by it secured by this Agreement to any other person, and such other person shall thereupon become vested with all the benefits in respect thereof granted to such Secured Party, herein or otherwise, subject however, to the provisions of the Credit Agreement and, in the case of a Secured Party that is a party to a Secured Hedging Agreement or a Secured Cash Management Agreements, such Secured Hedging Agreement or Secured Cash Management Agreement, as applicable. Each of the Pledgors agrees that its obligations hereunder and the security interest created hereunder shall continue to be effective or be reinstated, as applicable, if at any time payment, or any part thereof, of all or any part of the Obligations is rescinded or must otherwise be restored by the Secured Party upon the bankruptcy or reorganization of any Pledgor or otherwise.

SECTION 11.5. Termination; Release. When all the Obligations have been paid in full and the Commitments of the Lenders to make any Loan or to issue any Letter of Credit under the Credit Agreement shall have expired or been sooner terminated and all Letters of Credit have been terminated or cash collateralized in accordance with the provisions of the Credit Agreement, this Agreement shall terminate. Upon termination of this Agreement the Pledged Collateral shall be released from the Lien of this Agreement. Upon such release or any release of Pledged Collateral or any part thereof in accordance with the provisions of the Credit Agreement or the other Loan Documents, the Administrative Agent shall, upon the request and at the sole cost and expense of the Pledgors, assign, transfer and deliver to Pledgor, against receipt and without recourse to or warranty by the Administrative Agent except as to the fact that the Administrative Agent has not encumbered the released assets, such of the Pledged Collateral or any part thereof to be released (in the case of a release) as may be in possession of the Administrative Agent and as shall not have been sold or otherwise applied pursuant to the terms hereof, and, with respect to any other Pledged Collateral, proper documents and instruments (including UCC-3 termination financing statements or releases) acknowledging the termination hereof or the release of such Pledged Collateral, as the case may be.

SECTION 11.6. Modification in Writing. No amendment, modification, supplement, termination or waiver of or to any provision hereof, nor consent to any departure by any Pledgor therefrom, shall be effective unless the same shall be made in accordance with the terms of the Credit Agreement and unless in writing and signed by the Administrative Agent. Any amendment, modification or supplement of or to any provision hereof, any waiver of any provision hereof and any consent to any departure by any Pledgor from the terms of any provision hereof in each case shall be effective only in the specific instance and for the specific purpose for which made or given. Except where notice is specifically required by this Agreement or any other document evidencing the Obligations, no notice to or demand on any Pledgor in any case shall entitle any Pledgor to any other or further notice or demand in similar or other circumstances.

-30-

SECTION 11.7. Notices. Unless otherwise provided herein or in the Credit Agreement, any notice or other communication herein required or permitted to be given shall be given in the manner and become effective as set forth in the Credit Agreement, as to any Pledgor, addressed to it at the address of the Borrower set forth in the Credit Agreement and as to the Administrative Agent, addressed to it at the address set forth in the Credit Agreement, or in each case at such other address as shall be designated by such party in a written notice to the other party complying as to delivery with the terms of this Section 11.7.

SECTION 11.8. Governing Law, Consent to Jurisdiction and Service of Process; Waiver of Jury Trial. Sections 11.15 and 11.16 of the Credit Agreement are incorporated herein, mutatis mutandis, as if a part hereof.

SECTION 11.9. Severability of Provisions. Any provision hereof which is invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without invalidating the remaining provisions hereof or affecting the validity, legality or enforceability of such provision in any other jurisdiction.

SECTION 11.10. Execution in Counterparts. This Agreement and any amendments, waivers, consents or supplements hereto may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original, but all such counterparts together shall constitute one and the same agreement.

SECTION 11.11. Business Days. In the event any time period or any date provided in this Agreement ends or falls on a day other than a Business Day, then such time period shall be deemed to end and such date shall be deemed to fall on the next succeeding Business Day, and performance herein may be made on such Business Day, with the same force and effect as if made on such other day.

SECTION 11.12. No Credit for Payment of Taxes or Imposition. Such Pledgor shall not be entitled to any credit against the principal, premium, if any, or interest payable under the Credit Agreement, and such Pledgor shall not be entitled to any credit against any other sums which may become payable under the terms thereof or hereof, by reason of the payment of any Tax on the Pledged Collateral or any part thereof.

SECTION 11.13. No Claims Against Administrative Agent. Nothing contained in this Agreement shall constitute any consent or request by the Administrative Agent, express or implied, for the performance of any labor or services or the furnishing of any materials or other property in respect of the Pledged Collateral or any part thereof, nor as giving any Pledgor any right, power or authority to contract for or permit the performance of any labor or services or the furnishing of any materials or other property in such fashion as would permit the making of any claim against the Administrative Agent in respect thereof or any claim that any Lien based on the performance of such labor or services or the furnishing of any such materials or other property is prior to the Lien hereof.

-31-

SECTION 11.14. No Release. Nothing set forth in this Agreement or any other Loan Document, nor the exercise by the Administrative Agent of any of the rights or remedies hereunder, shall relieve any Pledgor from the performance of any term, covenant, condition or agreement on such Pledgor’s part to be performed or observed under or in respect of any of the Pledged Collateral or from any liability to any person under or in respect of any of the Pledged Collateral or shall impose any obligation on the Administrative Agent or any other Secured Party to perform or observe any such term, covenant, condition or agreement on such Pledgor’s part to be so performed or observed or shall impose any liability on the Administrative Agent or any other Secured Party for any act or omission on the part of such Pledgor relating thereto or for any breach of any representation or warranty on the part of such Pledgor contained in this Agreement, the Credit Agreement or the other Loan Documents, or under or in respect of the Pledged Collateral or made in connection herewith or therewith. Anything herein to the contrary notwithstanding, neither the Administrative Agent nor any other Secured Party shall have any obligation or liability under any contracts, agreements and other documents included in the Pledged Collateral by reason of this Agreement, nor shall the Administrative Agent or any other Secured Party be obligated to perform any of the obligations or duties of any Pledgor thereunder or to take any action to collect or enforce any such contract, agreement or other document included in the Pledged Collateral hereunder. The obligations of each Pledgor contained in this Section 11.14 shall survive the termination hereof and the discharge of such Pledgor’s other obligations under this Agreement, the Credit Agreement and the other Loan Documents.

SECTION 11.15. Obligations Absolute. All obligations of each Pledgor hereunder shall be absolute and unconditional irrespective of:

(i) any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or the like of any other Pledgor;

(ii) any lack of validity or enforceability of the Credit Agreement, any Secured Hedging Agreement, any Secured Cash Management Agreement or any other Loan Document, or any other agreement or instrument relating thereto;

(iii) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from the Credit Agreement, any Secured Hedging Agreement, Secured Cash Management Agreement or any other Loan Document or any other agreement or instrument relating thereto;

(iv) any pledge, exchange, release or non-perfection of any other collateral, or any release or amendment or waiver of or consent to any departure from any guarantee, for all or any of the Obligations;

(v) any exercise, non-exercise or waiver of any right, remedy, power or privilege under or in respect hereof, the Credit Agreement, any Secured Hedging Agreement, any Secured Cash Management Agreement or any other Loan Document except as specifically set forth in a waiver granted pursuant to the provisions of Section 11.4 hereof; or

-32-

(vi) any other circumstances which might otherwise constitute a defense (other than a defense of payment in full of the Obligations) available to, or a discharge of, any Pledgor.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]

-33-

IN WITNESS WHEREOF, each Pledgor and the Administrative Agent have caused this Agreement to be duly executed and delivered by their duly authorized officers as of the date first above written.

C.P. ATLAS ACQUISITION CORP. (which on the Closing Date shall be merged with and into AMERICAN RENAL HOLDINGS INC. with AMERICAN RENAL HOLDINGS INC. surviving such merger), as Pledgor
By:		/s/ Jared S. Hendricks
	Name:	Jared S. Hendricks
	Title:	Vice President
AMERICAN RENAL HOLDINGS INC., as Pledgor
By:		/s/ Joseph A. Carlucci
	Name:	Joseph A. Carlucci
	Title:	Chief Executive Officer
AMERICAN RENAL ASSOCIATES LLC, as Pledgor
	By: AMERICAN RENAL HOLDINGS INC.
By:		/s/ Joseph A. Carlucci
	Name:	Joseph A. Carlucci
	Title:	Chief Executive Officer

AMERICAN RENAL MANAGEMENT LLC
AKC HOLDING LLC
JKC HOLDING LLC
ARA-BOCA RATON HOLDING LLC
ARA-RHODE ISLAND DIALYSIS II LLC
ARA-OHIO HOLDINGS LLC
TEXAS-ARA LLC
ACUTE DIALYSIS SERVICES-ARA LLC, as Pledgors
	By: AMERICAN RENAL ASSOCIATES LLC
By:		/s/ Joseph A. Carlucci
	Name:	Joseph A. Carlucci
	Title:	Chief Executive Officer
AMERICAN RENAL TEXAS L.P.
AMERICAN RENAL TEXAS II, L.P., as Pledgors
	By: TEXAS-ARA LLC
By:		/s/ Joseph A. Carlucci
	Name:	Joseph A. Carlucci
	Title:	Chief Executive Officer
C.P. ATLAS INTERMEDIATE HOLDINGS, LLC, as Pledgor
By:		/s/ Jared S. Hendricks
	Name:	Jared S. Hendricks
	Title:	Vice President

-2-

BANK OF AMERICA, N.A.,
as Administrative Agent
By:		/s/ Mollie S. Canup
	Name:	Mollie S. Canup
	Title:	Vice President

-3-

EXHIBIT 1

[Form of]

ISSUER’S ACKNOWLEDGMENT

The undersigned hereby (i) acknowledges receipt of the Security Agreement (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement;” capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Security Agreement), dated as of May 7, 2010, made by C.P. ATLAS ACQUISITION CORP., a Delaware corporation (which on the Closing Date shall be merged with and into American Renal Holdings Inc., a Delaware corporation (the “Company”), with the Company surviving such merger as the borrower, the “Borrower”), the Guarantors party thereto and BANK OF AMERICA, N.A., as administrative agent (in such capacity and together with any successors in such capacity, the “Administrative Agent”), (ii) agrees promptly to note on its books the security interests granted to the Administrative Agent and confirmed under the Security Agreement, (iii) agrees that it will comply with instructions of the Administrative Agent with respect to the applicable Securities Collateral (including all Equity Interests of the undersigned) without further consent by the applicable Pledgor, (iv) agrees to notify the Administrative Agent upon obtaining knowledge of any interest in favor of any person in the applicable Securities Collateral that is adverse to the interest of the Administrative Agent therein and (v) waives any right or requirement at any time hereafter to receive a copy of the Security Agreement in connection with the registration of any Securities Collateral thereunder in the name of the Administrative Agent or its nominee or the exercise of voting rights by the Administrative Agent or its nominee.

[                                                                 ]
By:
	Name:
	Title:

EXHIBIT 2

[Form of]

SECURITIES PLEDGE AMENDMENT

This Securities Pledge Amendment, dated as of May 7, 2010, is delivered pursuant to Section 5.1 of the Security Agreement (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement;” capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Security Agreement), dated as of May 7, 2010, made by C.P. ATLAS ACQUISITION CORP., a Delaware corporation C.P. ATLAS ACQUISITION CORP., a Delaware corporation (which on the Closing Date shall be merged with and into American Renal Holdings Inc., a Delaware corporation (the “Company”), with the Company surviving such merger as the borrower, the “Borrower”), the Guarantors party thereto and BANK OF AMERICA, N.A., as Administrative Agent (in such capacity and together with any successors in such capacity, the “Administrative Agent”). The undersigned hereby agrees that this Securities Pledge Amendment may be attached to the Security Agreement and that the Pledged Securities and/or Intercompany Notes listed on this Securities Pledge Amendment shall be deemed to be and shall become part of the Pledged Collateral and shall secure all Obligations.

PLEDGED SECURITIES

ISSUER CLASS
OF STOCK
OR
INTERESTS PAR
VALUE CERTIFICATE
NO(S). NUMBER OF
SHARES
OR
INTERESTS PERCENTAGE OF
ALL ISSUED CAPITAL
OR OTHER EQUITY
INTERESTS OF ISSUER

INTERCOMPANY NOTES

ISSUER PRINCIPAL
AMOUNT DATE OF
ISSUANCE INTEREST
RATE MATURITY
DATE

[                                                                              ],
as Pledgor
By:
	Name:
	Title:

AGREED TO AND ACCEPTED:

BANK OF AMERICA, N.A., as Administrative Agent
By:
	Name:
	Title:

-2-

EXHIBIT 3

[Form of]

SECURITY AGREEMENT SUPPLEMENT

[Name of New Pledgor]

[Address of New Pledgor]

[Date]

Ladies and Gentlemen:

Reference is made to the Security Agreement (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement;” capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Security Agreement), dated as of May 7, 2010, made by C.P. ATLAS ACQUISITION CORP., a Delaware corporation (the “Borrower”), the Guarantors party thereto and BANK OF AMERICA, N.A., as administrative agent (in such capacity and together with any successors in such capacity, the “Administrative Agent”).

This Security Agreement Supplement supplements the Security Agreement and is delivered by the undersigned, [                    ] (the “New Pledgor”), pursuant to Section 3.5 of the Security Agreement. The New Pledgor hereby agrees to be bound as a Guarantor and as a Pledgor party to the Security Agreement by all of the terms, covenants and conditions set forth in the Security Agreement to the same extent that it would have been bound if it had been a signatory to the Security Agreement on the date of the Security Agreement. Without limiting the generality of the foregoing, the New Pledgor hereby grants and pledges to the Administrative Agent, as collateral security for the full, prompt and complete payment and performance when due (whether at stated maturity, by acceleration or otherwise) of the Obligations, a Lien on and security interest in, all of its right, title and interest in, to and under the Pledged Collateral and expressly assumes all obligations and liabilities of a Guarantor and Pledgor thereunder. The New Pledgor hereby makes each of the representations and warranties and agrees to each of the covenants applicable to the Pledgors contained in the Security Agreement.

Annexed hereto are supplements to schedules 1(a), 1(b), 1(c), 2, 3, 5, 6(a), 6(b), 7(a), 7(b), 8(a), 8(b), 8(c), 9, 10, 11 and 12 to the Perfection Certificate with respect to the New Pledgor. Such supplements shall be deemed to be part of the Security Agreement.

This Security Agreement Supplement and any amendments, waivers, consents or supplements hereto may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original, but all such counterparts together shall constitute one and the same agreement.

THIS SECURITY AGREEMENT SUPPLEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

-2-

IN WITNESS WHEREOF, the New Pledgor has caused this Security Agreement Supplement to be executed and delivered by its duly authorized officer as of the date first above written.

[NEW PLEDGOR]
By:
	Name:
	Title:

AGREED TO AND ACCEPTED:

BANK OF AMERICA, N.A.,
as Administrative Agent
By:
	Name:
	Title:

[Schedules to be attached]

-3-

EXHIBIT 4

[Form of]

Copyright Security Agreement

Copyright Security Agreement, dated as of [                    ], 20[    ], by [INSERT NAME OF PLEDGOR THAT OWNS ANY REGISTERED COPYRIGHTS] (“Pledgor”), in favor of BANK OF AMERICA, N.A., in its capacity as Administrative Agent pursuant to the Credit Agreement (in such capacity, the “Administrative Agent”).

W I T N E S S E T H:

WHEREAS, the Pledgor is party to a Security Agreement of even date herewith (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement”) in favor of the Administrative Agent pursuant to which the Pledgor is required to execute and deliver this Copyright Security Agreement;

NOW, THEREFORE, in consideration of the premises and to induce the Administrative Agent, for the benefit of the Secured Parties, to enter into the Credit Agreement, the Pledgor hereby agrees with the Administrative Agent as follows:

SECTION 1. Defined Terms. Unless otherwise defined herein, terms defined in the Security Agreement and used herein have the meaning given to them in the Security Agreement.

SECTION 2. Grant of Security Interest in Copyright Collateral. Pledgor hereby pledges and grants to the Administrative Agent for the benefit of the Secured Parties a lien on and security interest in and to all of its right, title and interest in, to and under all the following Pledged Collateral of such Pledgor:

(a) Copyright registrations of such Pledgor listed on Schedule I attached hereto; and

(b) all Proceeds of any and all of the foregoing (other than Excluded Property).

SECTION 3. Security Agreement. The security interest granted pursuant to this Copyright Security Agreement is granted in conjunction with the security interest granted to the Administrative Agent pursuant to the Security Agreement and Pledgor hereby acknowledges and affirms that the rights and remedies of the Administrative Agent with respect to the security interest in the Copyrights made and granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein. In the event that any provision of this Copyright Security Agreement is deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall control.

SECTION 4. Intercreditor Agreement. Notwithstanding anything herein to the contrary, the Liens and security interests granted to the Administrative Agent pursuant to this Agreement and the exercise of any right or remedy by the Administrative Agent hereunder are subject to the terms of the Intercreditor Agreement. In the event of any conflict between the terms of the Intercreditor Agreement and the terms of this Agreement, the terms of the Intercreditor Agreement shall govern and control.

SECTION 5. Termination. Upon the payment in full of the Obligations and termination of the Security Agreement, the Administrative Agent shall execute, acknowledge, and deliver to the Pledgors an instrument in writing in recordable form releasing the collateral pledge, grant, assignment, lien and security interest in the Copyrights under this Copyright Security Agreement.

SECTION 6. Counterparts. This Copyright Security Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Copyright Security Agreement by signing and delivering one or more counterparts.

SECTION 7. Governing Law. This Copyright Security Agreement and the transactions contemplated hereby, and all disputes between the parties under or relating to this Copyright Security Agreement or the facts or circumstances leading to its execution, whether in contract, tort or otherwise, shall be construed in accordance with and governed by the laws (including statutes of limitation) of the State of New York, without regard to conflicts of law principles that would require the application of the laws of another jurisdiction.

[signature page follows]

-2-

IN WITNESS WHEREOF, Pledgor has caused this Copyright Security Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.

Very truly yours,
[PLEDGOR]
By:
	Name:
	Title:

Accepted and Agreed:

BANK OF AMERICA, N.A.,
as Administrative Agent
By:
	Name:
	Title:

-3-

SCHEDULE I

to

COPYRIGHT SECURITY AGREEMENT

UNITED STATES COPYRIGHT REGISTRATIONS AND COPYRIGHT

APPLICATIONS

Copyright Registrations:

OWNER REGISTRATION NUMBER TITLE

Copyright Applications:

OWNER TITLE

-4-

EXHIBIT 5

[Form of]

Patent Security Agreement

Patent Security Agreement, dated as of [                    ], 20[    ], by [INSERT NAME OF PLEDGOR THAT OWNS ANY PATENTS] (“Pledgor”), in favor of BANK OF AMERICA, N.A., in its capacity as Administrative Agent pursuant to the Credit Agreement (in such capacity, the “Administrative Agent”).

W I T N E S S E T H:

WHEREAS, the Pledgor is party to a Security Agreement of even date herewith (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement”) in favor of the Administrative Agent pursuant to which the Pledgor is required to execute and deliver this Patent Security Agreement;

NOW, THEREFORE, in consideration of the premises and to induce the Administrative Agent, for the benefit of the Secured Parties, to enter into the Credit Agreement, the Pledgor hereby agrees with the Administrative Agent as follows:

SECTION 1. Defined Terms. Unless otherwise defined herein, terms defined in the Security Agreement and used herein have the meaning given to them in the Security Agreement.

SECTION 2. Grant of Security Interest in Patent Collateral. Pledgor hereby pledges and grants to the Administrative Agent for the benefit of the Secured Parties a lien on and security interest in and to all of its right, title and interest in, to and under all the following Pledged Collateral of such Pledgor:

(a) Patents and patent applications of such Pledgor listed on Schedule I attached hereto; and

(b) all Proceeds of any and all of the foregoing (other than Excluded Property).

SECTION 3. Security Agreement. The security interest granted pursuant to this Patent Security Agreement is granted in conjunction with the security interest granted to the Administrative Agent pursuant to the Security Agreement and Pledgor hereby acknowledges and affirms that the rights and remedies of the Administrative Agent with respect to the security interest in the Patents made and granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein. In the event that any provision of this Patent Security Agreement is deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall control.

SECTION 4. Intercreditor Agreement. Notwithstanding anything herein to the contrary, the Liens and security interests granted to the Administrative Agent pursuant to this Agreement and the exercise of any right or remedy by the Administrative Agent hereunder are subject to the terms of the Intercreditor Agreement. In the event of any conflict between the terms of the Intercreditor Agreement and the terms of this Agreement, the terms of the Intercreditor Agreement shall govern and control.

SECTION 5. Termination. Upon the payment in full of the Obligations and termination of the Security Agreement, the Administrative Agent shall execute, acknowledge, and deliver to the Pledgor an instrument in writing in recordable form releasing the collateral pledge, grant, assignment, lien and security interest in the Patents under this Patent Security Agreement.

SECTION 6. Counterparts. This Patent Security Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Patent Security Agreement by signing and delivering one or more counterparts.

SECTION 7. Governing Law. This Patent Security Agreement and the transactions contemplated hereby, and all disputes between the parties under or relating to this Patent Security Agreement or the facts or circumstances leading to its execution, whether in contract, tort or otherwise, shall be construed in accordance with and governed by the laws (including statutes of limitation) of the State of New York, without regard to conflicts of law principles that would require the application of the laws of another jurisdiction.

[signature page follows]

-2-

IN WITNESS WHEREOF, Pledgor has caused this Patent Security Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.

Very truly yours,
[PLEDGOR]
By:
	Name:
	Title:

Accepted and Agreed:

BANK OF AMERICA, N.A.,
as Administrative Agent
By:
	Name:
	Title:

-3-

SCHEDULE I

to

PATENT SECURITY AGREEMENT

UNITED STATES PATENTS AND PATENT APPLICATIONS

Patents:

OWNER REGISTRATION NUMBER NAME

Patent Applications:

OWNER APPLICATION NUMBER NAME

-4-

EXHIBIT 6

[Form of]

Trademark Security Agreement

Trademark Security Agreement, dated as of [                    ], 20[    ], by [INSERT NAME OF PLEDGOR THAT OWNS ANY REGISTERED OR APPLIED FOR TRADEMARKS] (“Pledgor”), in favor of BANK OF AMERICA, N.A., in its capacity as Administrative Agent pursuant to the Credit Agreement (in such capacity, the “Administrative Agent”).

W I T N E S S E T H:

WHEREAS, the Pledgor is party to a Security Agreement of even date herewith (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement”) in favor of the Administrative Agent pursuant to which the Pledgor is required to execute and deliver this Trademark Security Agreement;

NOW, THEREFORE, in consideration of the premises and to induce the Administrative Agent, for the benefit of the Secured Parties, to enter into the Credit Agreement, the Pledgor hereby agrees with the Administrative Agent as follows:

SECTION 1. Defined Terms. Unless otherwise defined herein, terms defined in the Security Agreement and used herein have the meaning given to them in the Security Agreement.

SECTION 2. Grant of Security Interest in Trademark Collateral. Pledgor hereby pledges and grants to the Administrative Agent for the benefit of the Secured Parties a lien on and security interest in and to all of its right, title and interest in, to and under all the following Pledged Collateral of such Pledgor:

(a) Trademark registrations and applications of such Pledgor listed on Schedule I attached hereto;

(b) all Goodwill associated with such Trademarks; and

(c) all Proceeds of any and all of the foregoing (other than Excluded Property).

SECTION 3. Security Agreement. The security interest granted pursuant to this Trademark Security Agreement is granted in conjunction with the security interest granted to the Administrative Agent pursuant to the Security Agreement and Pledgor hereby acknowledges and affirms that the rights and remedies of the Administrative Agent with respect to the security interest in the Trademarks made and granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein. In the event that any provision of this Trademark Security Agreement is deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall control.

SECTION 4. Intercreditor Agreement. Notwithstanding anything herein to the contrary, the Liens and security interests granted to the Administrative Agent pursuant to this Agreement and the exercise of any right or remedy by the Administrative Agent hereunder are subject to the terms of the Intercreditor Agreement. In the event of any conflict between the terms of the Intercreditor Agreement and the terms of this Agreement, the terms of the Intercreditor Agreement shall govern and control.

SECTION 5. Termination. Upon the payment in full of the Obligations and termination of the Security Agreement, the Administrative Agent shall execute, acknowledge, and deliver to the Pledgor an instrument in writing in recordable form releasing the collateral pledge, grant, assignment, lien and security interest in the Trademarks under this Trademark Security Agreement.

SECTION 6. Counterparts. This Trademark Security Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Trademark Security Agreement by signing and delivering one or more counterparts.

SECTION 7. Governing Law. This Trademark Security Agreement and the transactions contemplated hereby, and all disputes between the parties under or relating to this Trademark Security Agreement or the facts or circumstances leading to its execution, whether in contract, tort or otherwise, shall be construed in accordance with and governed by the laws (including statutes of limitation) of the State of New York, without regard to conflicts of law principles that would require the application of the laws of another jurisdiction.

[signature page follows]

-2-

IN WITNESS WHEREOF, Pledgor has caused this Trademark Security Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.

[PLEDGOR]
By:
	Name:
	Title:

Accepted and Agreed:

BANK OF AMERICA, N.A.,
as Administrative Agent
By:
	Name:
	Title:

-3-

SCHEDULE I

to

TRADEMARK SECURITY AGREEMENT

UNITED STATES TRADEMARK REGISTRATIONS AND TRADEMARK

APPLICATIONS

Trademark Registrations:

OWNER REGISTRATION NUMBER TRADEMARK

Trademark Applications:

OWNER APPLICATION NUMBER TRADEMARK

-4-

EX-12.1

Exhibit 12.1

	Predecessor Entity																					Successor Entity
	Year Ended December 31,															Nine Months Ended September 30, 2009			For the period from January 1, 2010 through May 7, 2010			For the period from May 8, 2010 through September 30, 2010
	2005			2006			2007			2008			2009
Earnings adjusted for fixed charges:
Income from operations before income taxes	$	11,131		$	16,375		$	19,866		$	27,683		$	37,053		$	38,588		$	8,846		$	5,213
Add: Interest expense		4,545			12,845			13,695			13,729			14,948			11,212			5,717			9,205
Add: Estimate of implicit interest in rental expense		1,241			1,628			1,920			2,747			3,051			2,279			1,124			1,341
Less: Noncontrolling interests		(7,198	)		(11,833	)		(14,706	)		(17,179	)		(22,391	)		(15,823	)		(9,266	)		(10,949	)
Total adjustments		(1,412	)		2,640			909			(703	)		(4,392	)		(2,332	)		(2,425	)		(403	)
Adjusted income from operations	$	9,719		$	19,015		$	20,775		$	26,980		$	32,661		$	36,256		$	6,421		$	5,810
Fixed charges:
Interest expense	$	4,545		$	12,845		$	13,695		$	13,729		$	14,948		$	11,212		$	5,717		$	9,205
Interest portion of rent expense		1,241			1,628			1,920			2,747			3,051			2,279			1,124			1,341
Total fixed charges	$	5,786		$	14,473		$	15,615		$	16,476		$	17,999		$	13,491		$	6,841		$	10,546
Ratio of earnings to fixed charges		1.68			1.31			1.33			1.64			1.81			2.69			0.94			0.55

EX-23.3

Exhibit 23.3

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have issued our report dated November 4, 2010, with respect to the consolidated financial statements and schedule of American Renal Holdings Inc. and subsidiaries contained in the Registration Statement and Prospectus. We consent to the use of the aforementioned report in the Registration Statement and Prospectus, and to the use of our name as it appears under the captions “Summary Historical and Pro Forma Consolidated and Other Data,” “Unaudited Pro Forma Condensed Consolidated Financial and Other Data,” and “Independent Registered Public Accounting Firm.”

/s/ GRANT THORNTON LLP

Boston, Massachusetts

December 6, 2010

CORRESP

SEC Supplemental Response Letter

 

 

CORRESP

December 6, 2010

BY EDGAR AND OVERNIGHT MAIL

Mr. John Reynolds

Assistant Director

United States Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, D.C. 20549

Re: American Renal Holdings Inc.

Registration Statement on Form S-4

File No. 333-170376

Filed on November 4, 2010

Dear Mr. Reynolds:

This letter is submitted on behalf of American Renal Holdings Inc. (the “Company”) in response to comments from the staff of the Division of Corporation Finance (the “Staff”) of the Securities and Exchange Commission (the “Commission”) with respect to the Company’s Registration Statement on Form S-4 filed with the Commission on November 4, 2010 (file number 333-170376, the “Registration Statement”). Such comments are set forth in the Staff’s letter, dated December 1, 2010 (the “Comment Letter”), to Joseph Carlucci, Chief Executive Officer of the Company. The Company is filing Amendment No. 1 to the Registration Statement (“Amendment No. 1”) on the date hereof, which includes revisions to reflect responses to the Staff’s comments. The Company will separately deliver to you copies of Amendment No. 1, which will be marked to show changes from the preliminary prospectus contained in the Registration Statement.

For reference purposes, the Staff’s numbered comments have been reproduced in italics herein with the Company’s responses immediately following each comment. Unless otherwise indicated, page references in the descriptions of the Staff’s comments refer to the Registration Statement, and page references in the responses refer to the preliminary prospectus contained in Amendment No. 1.

General

1. We note that you are registering the notes in reliance on our position enunciated in Exxon Capital Holdings Corp., SEC No-Action Letter (May 13, 1988). See also Morgan Stanley & Co. Inc., SEC No-Action Letter (June 5, 1991) and Shearman & Sterling, SEC No-Action Letter (July 2, 1993). Accordingly, with the next amendment, please provide us with a supplemental letter stating that you are registering the exchange offer in reliance on our position contained in these letters and include the representations contained in the Morgan Stanley and Shearman & Sterling no-action letters.

Response to Comment No. 1

In response to the Staff’s comment, the Company has filed a supplemental letter, together with this response letter, that includes the requested statements.

Summary

2. Please revise your disclosure under Consistent Financial Performance and Strong Free Cash Flow Generation on page 5 to separately address the cash flows generated by your joint ventures from the cash flows generated by the issuer and guarantors. In addition, revise to state the operating cash flows generated by the issuer and guarantors for the year-ended December 31, 2009 and clarify the source of such cash flows.

Response to Comment No. 2

In response to the Staff’s comment, the Company has revised page 5 to include the requested disclosure.

3. We note the statement on page 14 that the notes and guarantees are secured by first priority liens “on substantially all of [y]our and [y]our guarantors’ tangible and intangible assets.” Please revise to provide an approximate value of these assets as of the interim balance sheet date.

Response to Comment No. 3

In response to the Staff’s comment, the Company has revised page 14 to include the requested disclosure.

4. Please revise to disclose the amount debt and other obligations having priority over the notes pursuant to the inter-creditor agreement as of the interim balance sheet date.

Response to Comment No. 4

In response to the Staff’s comment, the Company has revised pages 14 and 15 to include the requested disclosure.

2

5. Please expand on the last bullet under Ranking on page 15 to disclose the approximate amount of debt to which the notes are structurally subordinate.

Response to Comment No. 5

In response to the Staff’s comment, the Company has revised page 15 to include the requested disclosure.

6. Please provide a brief statement either in the Summary or as part of your Summary Historical and Pro Forma Consolidated Financial and Other Data indicating that the information you present throughout includes the non-guarantor joint ventures and include a reference to your Critical Accounting Policies and to Footnotes Q and K of your financial statements for the periods ended December 31, 2009 and June 30, 2010 respectively for additional information.

Response to Comment No. 6

In response to the Staff’s comment, the Company has revised page 1 to include the requested disclosure.

7. Also, we note that your joint venture agreements provide for you to receive a stated percentage of the net revenues of the joint venture and a pro-rata share of the joint venture’s distributions. Currently it is unclear how much of the joint ventures’ net income is available for distribution to you or whether your joint ventures are limited in any manner from making full pro-rata distributions to you. To the extent that the issuer’s legally available cash flows are materially different than that suggested by the financial statement presentation, revise to address here and elsewhere as appropriate.

Response to Comment No. 7

In response to the Staff’s comment, the Company has revised page 90 to include the requested disclosure. We also supplementally note that the issuer’s legally available cash flows are not materially different than that suggested by the financial statement presentation.

8. Please confirm to us that your exchange offer will remain open for at least 20 full business days to ensure compliance with Rule 14e-1(a). Further please confirm that the expiration date will be included in the final prospectus disseminated to security holders and filed pursuant to the applicable provisions of Rule 424.

Response to Comment No. 8

In response to the Staff’s comment, the Company confirms that the exchange offer will remain open at least 20 full business days to ensure compliance with Rule 14e-1(a) and that the expiration date will be included in the final prospectus disseminated to security holders and filed pursuant to the applicable provisions of Rule 424.

3

9. We were unable to locate the disclosure requested by Item 503(d) of Regulation S-K in your Summary. Please revise or advise. In this respect your attention is directed to Instruction 2.D of the Item requirement.

Response to Comment No. 9

In response to the Staff’s comment, the Company has added the requested item to the Selected Consolidated Financial Data section of the prospectus and has added a cross-reference to this information in the Summary Historical and Pro Forma Consolidated Financial and Other Data section of the prospectus.

The Transactions, page 47

10. We note the disclosure on page 47 that certain former shareholders have “the right to receive certain future payments…” Please disclose the approximate value of these payments and the date by which such payments are required to be made, to the extent material to the issuer or the guarantors.

Response to Comment No. 10

In response to the Staff’s comment, the Company has revised page 47 to include the requested disclosure.

Notes to Unaudited Pro Forma Financial Information, page 55

11. Please add disclosure to state the income tax rate applied in adjustment (h) and describe the significant assumptions used in applying such adjustment.

Response to Comment No. 11

In response to the Staff’s comment, the Company has revised page 55 to include the requested disclosure.

12. We note that you compare the pro forma results for the three and six months ended June 30, 2010 to the respective historical predecessor results. Please discuss why you believe a comparison of the pro forma results to the historical predecessor results is meaningful.

Response to Comment No. 12

In response to the Staff’s comment, the Company has amended our S-4 filing to include a comparison of the actual results for the nine-month period ended September 30, 2010 to the actual results for the nine-month period ended September 2009. In addition, the Company has supplementally provided a comparison of the pro forma results for the nine-month period ended September 30, 2010 to the actual results for the nine-month period ended September 30, 2009 for those line items where pro forma and actual results are different. The Company believes this supplemental disclosure is useful to an investor in the notes.

In addition, the Company is providing a comparison of the actual results for the three-month period ended September 30, 2010 to the actual results for the three-month period ended September 30, 2009. The Company believes that this supplemental information is useful to an investor in the notes.

4

Management’s Discussion and Analysis of Financial Condition and Results of Operations, page 57

13. Please revise the disclosure on page 59 under Effect of the Transactions to address your annualized interest expense associated with the $250 million in notes and discuss the impact it may have on your financial results.

Response to Comment No. 13

In response to the Staff’s comment, the Company has revised page 58 to include the requested disclosure. Because a large portion of this section appears as newly added text, for ease of review the Company directs you to the language: “We estimate this additional indebtedness will result in annualized interest expense, including amortization of deferred financing costs and discounts, of approximately $23.0 million which is significantly higher than our historical annual interest expense and which may result in lower net income in future periods.”

Operating Environment, page 60

Current regulation and proposed changes, page 60

14. We note that the 2011 initial bundled rate will be set based on a 2% reduction under the historical methodology. We further note on page 85 that the Congressional Budget Office estimates the changes will result in an additional $1.5 billion in government payments to the dialysis industry over the next 10 years. Please explain in greater detail how you expect the changes in regulation to impact the amount and timing of collection of fees received under Medicare and Medicaid programs. In addition, please clarify how the Congressional Budget Office estimates an increase in payments to the dialysis industry when the initial bundled rate will be lower than the historical rate.

Response to Comment No. 14

In response to the Staff’s comment, the Company offers the following explanations:

Starting in 2012, the bundled Medicare reimbursement will be increased annually (for inflation) by a defined market basket index, minus 1%. Previously, Medicare reimbursement rate updates required specific Congressional approval, on a case-by-case basis. These approvals were, as a result, historically unpredictable and inconsistently applied. The automatic annual update (as mandated by MIPPA) beginning in 2012 is expected to yield more predictable rate increases and revenue stability, which will also align more closely with external factors such as inflationary cost pressure.

We understand that the Congressional Budget Office (CBO) estimate of an additional $1.5 billion in payments to the dialysis industry over the next 10 years is directly related to this annual updated mechanism which is projected to yield an approximate average annual update of 1.5% per year (i.e. 2.5% market basket, minus the 1.0% productivity adjustment).

The Company has also included additional disclosure on page 86 in response to the Staff’s comment.

5

Year ended December 31, 2009, as compared with year ended December 31, 2008, page 67

15. Please explain the reason for the decline in the administration of EPO referenced on page 67.

Response to Comment No. 15

In response to the Staff’s comment, the Company offers the following explanation:

The administration of EPO helps prevents anemia but can increase hemoglobin levels. In October, 2008, in response to studies confirming the risk of higher hemoglobins, industry guidelines (as well as target goals set by the Centers for Medicare and Medicaid Services (CMS) for target hemoglobin levels was set at a range of 10-12 g/dl. At the time of this change, the Company’s target goal for hemoglobin was greater than 11g/dl (grams/deciliter). In March of 2009, the Company changed its hemoglobin goal from greater than 11 g/dl to 10-12 g/dl. The decline in the administration of EPO was due primarily to this change in the Company’s goal in hemoglobin levels, which was reset as a result of these new target hemoglobin levels in patients set by the (CMS).

The Company supplementally notes that physicians are the sole determinates of drug dosaging. The Company level helps establish optimal treatment goals for our patients.

In response to the Staff’s comment, the Company has included disclosure on page 67 to reflect the above explanation.

Liquidity and Capital Resources, page, 73

16. We note on page 77 your discussion with respect to Consolidated EBITDA as defined under your New Revolving Credit Facility. We also note on page 19 that you present Adjusted EBITDA because it is one of the components used in the calculations under the covenants contained in your revolving credit facility. Please clarify whether Consolidated EBITDA and Adjusted EBITDA are the same measure. To the extent they are not the same measure, please expand your discussion to compare and contrast how the measures are defined and how they are applied under your revolving credit facilities. To the extent they are the same measure, please use consistent terms to define the measure.

Response to Comment No. 16

In response to the Staff’s comment, the Company has revised pages 77 and 78 to clarify the distinction between Adjusted EBITDA and Consolidated EBITDA.

6

Capital Resources, page 75

17. Please revise to disclose the amount of cash and cash equivalents held at your non-guarantor subsidiaries in addition to your consolidated cash balances for each period.

Response to Comment No. 17

In response to the Staff’s comment, the Company has revised page 74 to add a table presenting cash and cash equivalents for non-guarantor subsidiaries as well as for the issuer and the guarantor subsidiaries.

Critical Accounting Policies and Estimates, page 79

Stock-based Compensation, page 80

18. Please expand your discussion of critical accounting estimates with respect to the measurement of stock-based compensation to disclose the fair value of common stock and describe the methods and key assumptions used and how the key assumptions were determined in valuing the common stock, an input to the Black-Scholes model you used to value the share-based awards.

Response to Comment No. 18

In response to the Staff’s comment, the Company has revised pages 80 and 81 to include the requested disclosure.

Business, page 83

19. Please revise your distribution-related discussion on page 89 to address how the amounts distributed are calculated and address any restrictions on such distributions such as statutory restrictions, etc. In this respect we note your statement on page 36 that “distributions by [y]our clinics could be subject to statutory restrictions, including state laws requiring that such subsidiaries be solvent, or contractual restrictions.”

Response to Comment No. 19

In response to the Staff’s comment, the Company has revised page 90 to include the requested disclosure.

20. It was unclear to us whether your activities implicated state law restrictions on the corporate practice of medicine, or similar doctrines. If so, please revise your Government Regulation disclosure to address the nature of such restrictions and describe how you comply with the regulations.

Response to Comment No. 20

In response to the Staff’s comment, the Company supplementally offers the following explanation:

The Company has structured its activities and operations to avoid conflict with state law restrictions on the corporate practice of medicine which generally prohibit non-licensed persons or corporations from employing physicians to practice medicine, restrict the delivery of medical services to those entities owned and controlled only by licensed professionals and prohibit the division or splitting of professional fees between licensed medical doctors and non-licensed individuals or entities. The Company (or the JVs) does not directly employ physicians, but rather establishes its relationship on an independent contractor basis through our Medical Director Agreements. Further, we have structured all of our corporate and operational agreements to conform to any licensure requirements, fee-splitting and related corporate practice of medicine prohibitions.

7

21. We note that your management services agreements entitle the company to a percentage of the clinic’s net revenues. Revise to indicate the range in percentage of net revenues under your management services agreements.

Response to Comment No. 21

In response to the Staff’s comment, the Company has revised page 90 to include the requested disclosure.

Management and Board of Directors, page 102

22. Please provide the disclosure contemplated by Item 401(e) of Regulation S-K for your directors.

Response to Comment No. 22

In response to the Staff’s comment, the Company has revised page 104 to clarify that, except as otherwise indicated, none of the directors of the Company holds any other directorships. The Company believes the disclosure on pages 103 and 104 otherwise responds to Item 401(e) of Regulation S-K.

Executive Compensation, page 106

23. We note your disclosure in response to Item 402(s) of Regulation S-K in the section Compensation Risk Assessment. Please advise us of the process you undertook to reach the conclusion that disclosure is not necessary.

Response to Comment No. 23

In response to the Staff’s comment, the Company offers the following explanation:

In connection with evaluating whether the Company’s compensation policies and practices for employees generally are reasonably likely to have a material adverse effect on the Company, the Company considered all of the components of its compensation program. As described in the Compensation Discussion and Analysis section on pages 107 to 111, the Company delivers executive compensation primarily through a combination of annual base salary, annual cash incentive payments and long-term equity incentives in the form of equity interests in its parent, C.P. Atlas Holdings, Inc. More specifically:

• Because annual base salaries are generally stable, the Company does not believe that they encourage excessive risk-taking.

• Annual cash incentive payments for 2009 were based upon the achievement of an annual, fiscal year consolidated EBITDA performance goal and the achievement of an annual target with respect to the number of dialysis patients treated during the year.

8

Annual cash incentive payments for 2010 will be based upon the achievement of an annual, fiscal year consolidated EBITDA performance goal. These goals are structured to encourage management to focus on strengthening the Company’s business on a long-term basis.

• The Company grants long-term equity incentives to create an ownership culture focused on the Company’s sustainable growth. These equity incentives are subject to time-based vesting requirements, which the Company believes discourage excessive risk-taking by rewarding employees for remaining in the Company’s service and promoting the Company’s long-term stability and success.

The Company believes these components have been structured so that inappropriate risk-taking is not encouraged or incentivized and that the overall design of its compensation program aligns the interests of the Company’s employees with those of the Company’s stockholders. In particular, the Company believes that its approach of tying a meaningful portion of executive compensation to the long-term value of the Company’s equity is a valuable tool in managing and mitigating any risks associated with its compensation policies and practices.

24. Please explain the meaning of your statement on page 106 that “[a]ctual compensation programs that [you] adopt may differ materially from the programs summarized in this discussion and analysis.”

Response to Comment No. 24

In response to the Staff’s comment, the Company has revised page 107 to delete the referenced statement.

25. We note the reference to “pre-established performance goals” and “annual targets” on page 107. It does not appear that you have discussed these targets which were used to establish the bonus pool. Please disclose the specific performance targets used to determine the bonus pool amount or provide us with a supplemental analysis as to why it is appropriate to omit these targets pursuant to Instruction 4 to Item 402(b) of Regulation S-K. To the extent that it is appropriate to omit specific targets, please provide the disclosure pursuant to Instruction 4 to Item 402(b) of Regulation S-K. General statements regarding the level of difficulty, or ease, associated with achieving performance goals either corporately or individually are not sufficient. In discussing how likely it will be fort the business unit or division to achieve the target levels or other factors, provide as much detail as necessary without providing information that poses a reasonable risk of competitive harm.

Response to Comment No. 25

In response to the Staff’s comment, the Company has revised page 108 to include the specific performance targets used to determine the bonus pool amount.

9

26. In addition, we note that the compensation committee recommends the actual allocation of the bonus pool to the named executive officers. Please discuss the factors considered in determining the allocation of the bonuses. See 402(b)(l)(v). Similarly, discuss the reasons for the award of the discretionary cash bonus to Mr. Costa.

Response to Comment No. 26

In response to the Staff’s comment, the Company has revised page 109 to provide additional discussion of the factors considered in determining the allocation of the bonuses to Messrs. Carlucci, Ford, Kamal and McDonough and the reasons for the award of the discretionary cash bonus to Mr. Costa.

Grants of Plan-Based Awards in 2009, page 110

27. Please include an amount for the target column. The company must provide a representative amount based on the previous fiscal year’s performance if the target amount is not determinable. See Instruction 2 to 402(d).

Response to Comment No. 27

In response to the Staff’s comment, the Company has revised page 111 to delete the threshold and maximum columns and to include amounts in the target column of the Grants of Plan-Based Awards in 2009 for Messrs Carlucci, Ford, Kamal and McDonough.

Security Ownership of Certain Beneficial Owners and Management, page 118

28. Please disclose the natural person(s) who have voting and dispositive control over the shares held by Centerbridge Capital Partners L.P. Also, please advise why these shares are not attributable to Messrs. Silver and Hendricks.

Response to Comment No. 28

In response to the Staff’s comment, the Company has revised page 119 to include the requested disclosure.

Description of the Exchange Notes, page 134

29. Please revise the discussion throughout this section and others as appropriate to clarify the degree to which the indenture places, or fails to place, limits or restrictions on the activities of your non-guarantor joint ventures which would impact the cash flows available to repay the notes or otherwise impact your financial results or business activities on a consolidated basis.

Response to Comment No. 29

In response to the Staff’s comment, the Company has revised page 198 to include the requested disclosure. In addition, the Company supplementally notes the following:

The Indenture places limitations on the activities of the issuer and its “Restricted Subsidiaries.” “Restricted Subsidiaries” are all subsidiaries (including non-guarantor joint ventures) which would be consolidated with the issuer in financial statements of the issuer (or its parent) prepared in accordance with generally accepted accounting principles in the United States as in effect on the date of issuance of the original notes. The non-guarantor joint ventures are consolidated with the issuer on its parent’s GAAP financial statements. Accordingly, the non-guarantor joint ventures are “Restricted Subsidiaries” and are subject to the covenants and other provisions applicable to Restricted Subsidiaries in the “Description of the Exchange Notes”.

10

30. Please clarify, and quantify to the extent appropriate, the reference to “other contingent liabilities” on page 135.

Response to Comment No. 30

In response to the Staff’s comment, the Company has revised page 136 to provide the requested clarification.

31. Please clarify the timing of the entry into the inter-creditor agreement and whether it was contemplated by the indenture.

Response to Comment No. 31

In response to the Staff’s comment, the Company states that the inter-creditor agreement was entered into simultaneously with the indenture and the credit agreement. The inter-creditor agreement was contemplated by the indenture.

Certain U.S. Federal Income Tax Consequences of the Exchange Offer, page 199

32. Revise to indicate that the discussion addresses the material U.S. Federal income tax consequences relevant to the note exchange.

Response to Comment No. 32

In response to the Staff’s comment, the Company has revised pages i, 13 and 200 to inlcude the requested disclosure.

33. Please provide a tax opinion covering the statements made in this section or advise us why you believe a tax opinion is not required.

Response to Comment No. 33

In response to the Staff’s comment, the Company believes a tax opinion covering the statements made in this section is not necessary because the treatment of the exchange as a non-taxable event for holders is clear under U.S. federal income tax law and there is no material risk of alternative treatment. Registration statements for similar exchange offers generally do not include an opinion covering the U.S. federal income tax consequences of the exchange offer.

11

Financial Statements, page F-1

34. Please update your financial statements in accordance with Rule 3-12 of Regulation S-X, and provide an updated consent from your independent registered public accounting firm in your next amendment.

Response to Comment No. 34

In response to the Staff’s comment, the Company has revised its financial statements in accordance with Rule 3-12 of Regulation S-X and has provided an updated consent from its independent registered public accounting firm.

Notes to Consolidated Financial Statements, page F-9

Note B - Significant Accounting Policies, page F-9

35. We note from your disclosure on page 59 that your JV clinics are most commonly newly formed, or de novo clinics, and that you will continue to incur start-up costs associated with the opening of de novo clinics. Please tell us how you account for these start-up costs and disclose your accounting policy to the extent the start-up costs are material.

Response to Comment No. 35

In response to the Staff’s comment, the Company has revised page 57 to clarify that the reference to start-up costs should refer to “losses” from operations incurred during the start-up period and not costs. The Company’s policy for start-up costs is to expense them as incurred. These start-up costs are immaterial to the Company’s business and, as such, we have not included them in our accounting policy disclosure.

Schedule II - Valuation and Qualifying Accounts, page F-39

36. Please identify each class of valuation and qualifying accounts and reserves by descriptive title. Furthermore, please present the balances and activities of your allowance for bad debts separately from your allowance for contractual adjustments.

Response to Comment No. 36

In response to the Staff’s comment, the Company has revised the disclosure on page F-39 to present separately the balances and activities of our allowance for doubtful accounts.

Unaudited Consolidated Statements of Cash Flows, page F-44

37. Please present your issuance of debt and the related issuance costs separately, on a gross basis, within your Financing Activities. See ASC 230-10-45-7 and ASC 230-10-45-15.

Response to Comment No. 37

In response to the Staff’s comment, the Company has presented the issuance of debt and related costs separately, on a gross basis, within financing activities in the unaudited consolidated statement of cash flows for the period from May 8, 2010 through September 30, 2010.

12

Notes to Unaudited Consolidated Financial Statements - June 30, 2010, page F-45

38. Please disclose subsequent events, if any, in a footnote and disclose the date through which you have evaluated subsequent events- State whether such date is either the date your interim financial statements were issued or the date these financial statements were available to be issued. Refer to FASB ASC 855-10-50-1.

Response to Comment No. 38

In response to the Staff’s comment, the Company has revised the disclosure on page F-49 to include the date through which we have evaluated subsequent events.

39. Please revise the header on pages F-49 and F-50 to reference your interim financial statements.

Response to Comment No. 39

In response to the Staff’s comment, the Company has revised the header on pages F-49 and F-50.

Note A - Merger and Presentation, page F-45

40. We note the aggregate purchase price of the Merger is $415 million. We also note from page F-54 that $44.6 million of stock-based compensation was accounted for as part of purchase price. Please revise your footnote disclosure to state the acquisition-date fair value for each major component of consideration provided. Refer to ASC 805-30-50-1. In addition, please provide a reconciliation detailing the difference between the purchase price of $415 million and cash outflow of $244 million captioned as ‘Merger with C.P. Atlas Holdings, Inc. within Investing Activities on your Unaudited Consolidated Statement of Cash Flows at page F-44.

Response to Comment No. 40

In response to the Staff’s comment, the Company has revised the disclosure on pages F-45 and F-48 to state the acquisition-date fair value for each major component of consideration provided and to reconcile the difference between the purchase price of the merger of $415 million, the acquisition-date fair value of consideration of $439 million and cash outflows of $250 million captioned within our unaudited consolidated statement of cash flows.

41. We note from page F-46 that you have allocated a significant portion of the purchase price of the Merger to goodwill. Please explain to us your consideration of ASC 805-20-25-10 in assessing the recognition of intangible assets apart from goodwill. In addition, please advise us of any intangible assets included in goodwill that do not meet the criteria for recognition apart from goodwill and disclose a qualitative description of the factors that make up the goodwill recognized pursuant to ASC 805-30-50-1.

Response to Comment No. 41

In response to the Staff’s comment, the Company has enhanced the disclosure on page F-48 to include a qualitative description of the factors that make up the goodwill recognized. The Company and its advisors have reviewed the guidance provided in ASC 805-20-25-10 as it relates to the various categories of identified intangible assets and after review of the acquired business, and the agreements related thereto, we have concluded that all intangible assets that met the criteria for separate valuation have been reflected in our financial statements. In addition, the Company considered, but did not value, the following intangible assets identified that do not meet the criteria for recognition apart from goodwill:

• Assembled Workforce - Individuals involved in the management and operations at the Company have expertise in this industry. Workforce is required to be recorded as part of goodwill.

13

• Patients - The Company provides dialysis services to patients, who on average receive dialysis treatments for a period of five years. Medical patients are protected under the Health Insurance Portability and Accountability Act (“HIPAA”), which “protects all individually identifiable health information held or transmitted by a covered entity or its business associate, in any form or media, whether electronic, paper, or oral”. Given that a patient list could not be sold, it did not meet the separability criterion. The Financial Accounting Standards Board states in ASC 805-20-55, “a customer list acquired in a business combination would not meet the separability criterion if the terms of confidentiality or other agreements prohibit an entity from selling, leasing, or otherwise exchanging information about its customers”.

• Medical Director Agreements - The Company receives periodic fair value appraisals of all medical director agreements to examine if they are in compliance with anti-kickback regulations. Since these agreements are neither above or below fair value, the Company did not identify them as an intangible asset that is required to be separately valued. It would be a violation of anti-kickback regulations to pay amounts other than fair market value for medical directorships, and the Company is very careful to document and support the amounts paid for these agreements.

• Operating and Management Agreements - The Company owns and operates dialysis centers in partnership with nephrologists. The ownership and management of each center is established through operating and management agreements. Based on management’s industry experience at Fresenius and Davita, the two largest companies in the industry, as well as a financial analysis of the management fees generated from these contracts in relation to the costs incurred, the Company believes the operating agreements and management agreements are at fair value. Further, since most of these contracts involve physician-owned entities, the Company is extremely careful to use market-based terms to stay in compliance with Stark regulations. Non-competition agreements included in the operating agreements have been broken out to be fair valued.

• Location - Clinics that are centrally located where there is a large population in need of dialysis treatment or where a sole provider of dialysis treatment in a region would have value. Location is not a separable intangible asset and therefore was not valued.

• Certificate of Need: Certificates of Need (“CON”), as defined by The National Conference of State Legislatures, are “programs aimed at restraining health care facility costs and allowing coordinated planning of new services and construction. Laws authorizing such programs are one mechanism by which state governments seek to reduce overall health and medical costs.” The Company operates clinics in the District of Columbia and Illinois, which both require clinics to obtain a Certificate of Need. The costs incurred to obtain a certificate of need are approximately $150,000 per clinic. There are only five clinics which have obtained this certificate, and due to the immaterial value of these CONs they were not valued separately from goodwill.

14

42. Please add disclosure to describe the manner in which you have calculated the fair value of your ‘Noncontrolling interests not subject to put provisions’ at the acquisition date. Include the valuation technique and significant inputs used to measure such fair value in your revised discussion. Refer to ASC 805-20-50-1.

Response to Comment No. 42

In response to the Staff’s comment, the Company has revised the disclosure on page F-46 to describe the manner in which we have calculated the fair value of the above mentioned noncontrolling interests.

43. We note from your disclosure on page F-45 that you have preliminarily evaluated and allocated the purchase price. Please advise us whether the initial accounting for the Merger is incomplete. If so, revise your disclosure to describe the reasons why the initial accounting remains incomplete and the assets, liabilities, equity interests or other items of consideration for which the initial accounting is incomplete. Refer to ASC 805-10-50-6.

Response to Comment No. 43

In response to the Staff’s comment, the Company has revised pages 51 and F-46 to reflect that it has completed its evaluation and allocation of the purchase price and the accounting of the Merger.

Note F – Long-Term Debt, page F-51

44. We note from your disclosure on page 123 that you and the guarantors have entered into a registration rights agreement with the initial purchasers of the Senior Secured Notes. Please tell us how you account for these registration rights. Explain to us whether this registration arrangement should be accounted for as a separate unit of account and whether the arrangement should be included in the allocation of the proceeds received from the Senior Secured Notes. See FASB ASC 825-20-30-4.

Response to Comment No. 44

In response to the Staff’s comment, the Company offers the following explanation:

The guidance in ASC 825-20-15-43 related to the accounting for financial instruments defines a registration payment arrangement as an arrangement which 1) specifies the issuer will endeavor to file a registration statement for the resale of specified financial instruments and for that registration statement to be declared effective by the SEC within a specified grace period and 2) requires the issuer to transfer consideration to the counterparty if the registration statement is not declared effective. Furthermore, ASC 825 requires a registration payment arrangement to be recognized separately in the financial statements in accordance with Subtopic 450-20 Loss Contingencies. As such, if the transfer of consideration under a registration payment arrangement is probable and can be reasonably estimated at inception, the contingent liability shall be included in the allocation of proceeds from the financial instrument. Any changes in the measurement of the contingent liability subsequent to the inception of the arrangement, either as a result of the transfer of consideration becoming probable or changes in the estimated amount of consideration transferred should be recorded in earnings.

15

The terms of the registration rights agreement we and the guarantors entered into in connection with the initial purchase of the Senior Secured Notes specified that we use all commercially reasonable efforts to (i) file a registration statement with respect to the outstanding notes and (ii) cause the registration statement to become effective within certain specified time periods. In the event we do not file a registration statement and do not cause the registration statement to become effective with the specified time periods, we are required to pay additional interest to the holders of the outstanding notes, as specified in the agreements. As a result, we have concluded that the registration rights agreement is a registration payment arrangement as defined in ASC 825. At the inception of the arrangement, we concluded that it was not probable that we would be obligated to pay any additional interest under the provisions of the registration rights arrangement. As a result, we did not allocate any proceeds received from the issuance of the Senior Secured Notes to the registration rights agreement. Subsequent to the inception of the arrangement, we have been required to make some additional interest payments under the provisions of the registration rights arrangement. To date, we have incurred $1,736.11 in additional interest which represents one day of penalty interest, which is immaterial. We believe this is consistent with our intent at inception of the arrangement evidenced by the immateriality of the amount.

Exhibits

45. We note you have filed several LLC operating agreements as exhibits. It was unclear if these operating agreements were similar to those used to form and manage your non-guarantor operating LLCs. If not, please file forms of these agreements.

Response to Comment No. 45

In response to the Staff’s comment, the Company has filed a form of operating agreement of the non-guarantor operating LLCs as Exhibit 3.27.

Exhibit 10.3

46. We were unable to locate exhibits 1 to 6. Please file this agreement in its entirety, including all missing exhibits.

Response to Comment No. 46

In response to the Staff’s comment, the Company has revised Exhibit 10.3 to include all exhibits thereto.

16

Exhibit 10.1

47. We were unable to locate schedules 2.01 to 11.02 or exhibits A to L. Please file this agreement in its entirety, including all missing schedules or exhibits.

Response to Comment No. 47

In response to the Staff’s comment, the Company has revised Exhibit 10.1 to include all schedules and exhibits thereto.

**********

The company respectfully believes that the proposed modifications to the Registration Statement and the supplemental information contained herein are responsive to the Staff’s comments. Please do not hesitate to call Stephan Feder at (212) 455-7405 with any questions or further comments you may have regarding this filing or if you wish to discuss the above responses.

Very truly yours,

/s/ SIMPSON THACHER & BARTLETT LLP

SIMPSON THACHER & BARTLETT LLP

cc:	Securities and Exchange Commission
	Jay Williamson
	American Renal Holdings Inc.
	Joseph Carlucci

17