S-4

      As filed with the Securities and Exchange Commission on June 8, 2001
                                                 Registration No. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                ----------------
                                    FORM S-4
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933

                                ----------------
                                  DAVITA INC.
             (Exact name of registrant as specified in its charter)

                                ----------------
                                                             
             Delaware                            8092                          51-0354549
 (State or other jurisdiction of     (Primary Standard Industrial              (Employer
  incorporation or organization)     Classification Code Number)         Identification Number)

 

                      21250 Hawthorne Boulevard, Suite 800
                           Torrance, California 90503
                                 (310) 792-2600
  (Address, including zip code, and telephone number, including area code, of
                   registrant's principal executive offices)

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

                               Steven J. Udicious
                 Vice President, Secretary and General Counsel
                                  DaVita Inc.
                      21250 Hawthorne Boulevard, Suite 800
                           Torrance, California 90503
                                 (310) 792-2600
 (Name, address, including zip code, and telephone number, including area code,
                             of agent for service)

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

                                   Copies to:

                               Roger H. Lustberg
                                 Ronn S. Davids
                               Riordan & McKinzie
                       300 South Grand Avenue, 29th Floor
                         Los Angeles, California 90071

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

     Approximate date of commencement of proposed sale to the public: As soon
as practicable after this Registration Statement becomes effective.
     If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
     If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
     If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

                        CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
                                                                          
                                                                    Proposed Maximum
                                                  Proposed Maximum      Aggregate       Amount of
     Title of Each Class of         Amount to be   Offering Price       Offering       Registration
   Securities to be Registered     Registered(1)     Per Unit(1)        Price(1)           Fee
- ---------------------------------------------------------------------------------------------------
9 1/4% Senior Subordinated Notes
 due 2011.......................    $225,000,000         100%         $225,000,000       $56,250
- ---------------------------------------------------------------------------------------------------
Guarantees of the 9 1/4% Senior
 Subordinated Notes due 2011....         --              --                --            None(2)
- ---------------------------------------------------------------------------------------------------


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

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

  The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
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.

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




                                                                        Address & Telephone
     Exact Name of       State of    Primary Standard                     No., Including
     Registrant as     Incorporation    Industrial    I.R.S. Employer      Area Code, of
   Specified in its         or        Classification  Identification  Registrant's Principal
        Charter        Organization    Code Number           #           Executive Offices
   ----------------    ------------- ---------------- --------------- ----------------------
                                                          
 Beverly Hills          California         8092         95-4504550    21250 Hawthorne
  Dialysis                                                            Boulevard, Suite 800
  Partnership                                                         Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600

 Carroll County          Maryland          8092         52-1693649    21250 Hawthorne
  Dialysis Facility,                                                  Boulevard, Suite 800
  Inc.                                                                Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600

 Continental Dialysis    Virginia          8092         22-2470712    21250 Hawthorne
  Center, Inc.                                                        Boulevard, Suite 800
                                                                      Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600

 Continental Dialysis    Virginia          8092         62-1238381    21250 Hawthorne
  Center of                                                           Boulevard, Suite 800
  Springfield--                                                       Torrance, California,
  Fairfax, Inc.                                                       90503 Telephone: (310)
                                                                      792-2600


 Dialysis Specialists      Texas           8092         75-2533858    21250 Hawthorne
  of Dallas, Inc.                                                     Boulevard, Suite 800
                                                                      Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600

 East End Dialysis       Virginia          8092         54-1318452    21250 Hawthorne
  Center, Inc.                                                        Boulevard, Suite 800
                                                                      Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600

 Elberton Dialysis        Georgia          8092         58-1721014    21250 Hawthorne
  Facility, Inc.                                                      Boulevard, Suite 800
                                                                      Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600

 Flamingo Park Kidney     Florida          8092         65-0431823    21250 Hawthorne
  Center, Inc.                                                        Boulevard, Suite 800
                                                                      Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600

 Houston Kidney          Delaware          8092         76-0509917    21250 Hawthorne
  Center/Total Renal                                                  Boulevard, Suite 800
  Care Integrated                                                     Torrance, California,
  Service Network                                                     90503 Telephone: (310)
  Limited Partnership                                                 792-2600


 Lincoln Park            Illinois          8092         36-3191860    21250 Hawthorne
  Dialysis Services,                                                  Boulevard, Suite 800
  Inc.                                                                Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600

 Mason-Dixon Dialysis    Maryland          8092         52-1766772    21250 Hawthorne
  Facilities, Inc.                                                    Boulevard, Suite 800
                                                                      Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600

 Open Access              Florida          8092         59-3245347    21250 Hawthorne
  Sonography, Inc.                                                    Boulevard, Suite 800
                                                                      Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600





                                                                        Address & Telephone
     Exact Name of       State of    Primary Standard                     No., Including
     Registrant as     Incorporation    Industrial    I.R.S. Employer      Area Code, of
   Specified in its         or        Classification  Identification  Registrant's Principal
        Charter        Organization    Code Number           #           Executive Offices
   ----------------    ------------- ---------------- --------------- ----------------------
                                                          
 Peninsula Dialysis      Virginia          8092         54-1721545    21250 Hawthorne
  Center, Inc.                                                        Boulevard, Suite 800
                                                                      Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600

 Renal Treatment         Delaware          8092         23-2518331    21250 Hawthorne
  Centers, Inc.                                                       Boulevard, Suite 800
                                                                      Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600

 Renal Treatment         Delaware          8092         23-2741218    21250 Hawthorne
  Centers--                                                           Boulevard, Suite 800
  California, Inc.                                                    Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600

 Renal Treatment         Delaware          8092         23-2830661    21250 Hawthorne
  Centers--Hawaii,                                                    Boulevard, Suite 800
  Inc.                                                                Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600

 Renal Treatment         Delaware          8092         23-2798598    21250 Hawthorne
  Centers--Illinois,                                                  Boulevard, Suite 800
  Inc.                                                                Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600

 Renal Treatment         Delaware          8092         23-2536597    21250 Hawthorne
  Centers--Mid-                                                       Boulevard, Suite 800
  Atlantic, Inc.                                                      Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600

 Renal Treatment         Delaware          8092         23-2709856    21250 Hawthorne
  Centers--Northeast,                                                 Boulevard, Suite 800
  Inc.                                                                Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600

 Renal Treatment         Delaware          8092         23-2791135    21250 Hawthorne
  Centers--Southeast,                                                 Boulevard, Suite 800
  Inc.                                                                Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600

 Renal Treatment         Delaware          8092         23-2763722    21250 Hawthorne
  Centers--West, Inc.                                                 Boulevard, Suite 800
                                                                      Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600

 RTC Holdings, Inc.      Delaware          8092         51-0340369    21250 Hawthorne
                                                                      Boulevard, Suite 800
                                                                      Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600

 RTC--Texas                Texas           8092         74-2811204    21250 Hawthorne
  Acquisition, Inc.                                                   Boulevard, Suite 800
                                                                      Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600

 RTC TN, Inc.            Delaware          8092         51-0378828    21250 Hawthorne
                                                                      Boulevard, Suite 800
                                                                      Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600

 Sunrise Dialysis       California         8092         95-4528161    21250 Hawthorne
  Partnership                                                         Boulevard, Suite 800
                                                                      Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600

 Total Acute Kidney       Florida          8092         65-0086334    21250 Hawthorne
  Care, Inc.                                                          Boulevard, Suite 800
                                                                      Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600

 Total Renal Care,      California         8092         95-3372911    21250 Hawthorne
  Inc.                                                                Boulevard, Suite 800
                                                                      Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600





                                                                        Address & Telephone
     Exact Name of       State of    Primary Standard                     No., Including
     Registrant as     Incorporation    Industrial    I.R.S. Employer      Area Code, of
   Specified in its         or        Classification  Identification  Registrant's Principal
        Charter        Organization    Code Number           #           Executive Offices
   ----------------    ------------- ---------------- --------------- ----------------------
                                                          
 Total Renal Care of     Colorado          8092         84-0612148    21250 Hawthorne
  Colorado, Inc.                                                      Boulevard, Suite 800
                                                                      Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600

 Total Renal Care of     Delaware          8092         87-0570546    21250 Hawthorne
  Utah, L.L.C.                                                        Boulevard, Suite 800
                                                                      Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600

 Total Renal            California         8092         94-3249675    21250 Hawthorne
  Care/Peralta Renal                                                  Boulevard, Suite 800
  Center Partnership                                                  Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600

 Total Renal Care/      California         8092         94-3249677    21250 Hawthorne
  Piedmont Dialysis                                                   Boulevard, Suite 800
  Partnership                                                         Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600

 Total Renal Care        Delaware          8092         74-2794200    21250 Hawthorne
  Texas Limited                                                       Boulevard, Suite 800
  Partnership                                                         Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600

 Total Renal              Florida          8092         59-3205549    21250 Hawthorne
  Laboratories, Inc.                                                  Boulevard, Suite 800
                                                                      Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600

 Total Renal             Delaware          8092         94-3269918    21250 Hawthorne
  Research, Inc.                                                      Boulevard, Suite 800
                                                                      Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600

 Total Renal Support     Delaware          8092         95-4393983    21250 Hawthorne
  Services, Inc.                                                      Boulevard, Suite 800
                                                                      Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600

 TRC--Indiana L.L.C.      Indiana          8092         91-1971775    21250 Hawthorne
                                                                      Boulevard, Suite 800
                                                                      Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600

 TRC of New York,        New York          8092         91-1849180    21250 Hawthorne
  Inc.                                                                Boulevard, Suite 800
                                                                      Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600

 TRC West, Inc.          Delaware          8092         88-0364717    21250 Hawthorne
                                                                      Boulevard, Suite 800
                                                                      Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600

 Tri-City Dialysis       Virginia          8092         54-1636509    21250 Hawthorne
  Center, Inc.                                                        Boulevard, Suite 800
                                                                      Torrance, California,
                                                                      90503 Telephone: (310)
                                                                      792-2600



++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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.             +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Prospectus (subject to completion)

[LOGO OF DAVITA]

   We hereby offer to exchange our 9 1/4% Series B Senior Subordinated Notes
due April 15, 2011, which have been registered under the Securities Act, for
any and all of our outstanding 9 1/4% Series A Senior Subordinated Notes due
April 15, 2011.

   The exchange offer will expire at 5:00 p.m., New York City time, on
          2001, unless extended.

                                  -----------

Terms of the exchange offer:

   . We will exchange all outstanding notes that are validly tendered and not
     withdrawn prior to the expiration of the exchange offer.

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

   . The exchange of outstanding notes for new notes should not be a taxable
     exchange for United States federal income tax purposes.

   . The terms of the new notes to be issued are substantially identical to
     the terms of the outstanding notes, except that transfer restrictions,
     registration rights and liquidated damages provisions relating to the
     outstanding notes do not apply.

   . Each broker-dealer that receives new notes for its own account in the
     exchange offer must acknowledge that it will deliver a prospectus in
     connection with any resale of the new notes. The letter of transmittal
     accompanying this prospectus states that by acknowledging this 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. 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 new notes
     received in exchange for outstanding notes where the outstanding notes
     were acquired by the broker-dealer as a result of market-making
     activities or other trading activities. We have agreed that, for a period
     of up to one year after the date of effectiveness of the exchange offer,
     we will make this prospectus available to any broker-dealer for use in
     connection with any resale. See the "Plan of Distribution" section of
     this prospectus for more information.

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

   . There is no existing market for the new notes to be issued, and we do not
     intend to apply for their listing on any securities exchange.

   See the "Description of Series B Notes" section beginning on page 32 for
more information about the new notes to be issued in this exchange offer.

   See "Risk Factors" on page 9 for information that should be considered in
connection with this exchange offer.

                                  -----------

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

                                  -----------

                 The date of this prospectus is June   , 2001.


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

                               TABLE OF CONTENTS
                                                                          
Incorporation by Reference..................................................   i
Forward-Looking Statements..................................................  ii
Summary.....................................................................   1
Risk Factors................................................................   9
Use of Proceeds.............................................................  17
Capitalization..............................................................  17
Exchange Offer..............................................................  18
Selected Financial Data.....................................................  26
Description of Debt.........................................................  29



                                                                          
Description of Series B Notes...............................................  32
Certain United States Federal Income Tax Considerations.....................  71
Plan of Distribution........................................................  71
Legal Matters...............................................................  72
Experts.....................................................................  72
Where You Can Find More Information.........................................  72
Index to Consolidated Financial Statements.................................. F-1


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

     You should rely only on the information contained in this prospectus or to
which we have referred you. We have not authorized anyone to provide you with
information that is different. This prospectus may only be used where it is
legal to sell these securities. The information in this prospectus may only be
accurate on the date of this prospectus.

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

                           INCORPORATION BY REFERENCE

     The following documents have been filed with the Securities and Exchange
Commission and are incorporated by reference into this prospectus:

   (1) Our Annual Report on Form 10-K for the year ended December 31, 2000,
       as amended on Form 10-K/A, except Part III, Item 14 (which Item is
       updated herein);

   (2) Our Quarterly Report on Form 10-Q for the quarter ended March 31,
       2001 (Part I, Item 1 of which is also included herein);

   (3) Our Current Report on Form 8-K dated February 5, 2001; and

   (4) All documents subsequently filed by us pursuant to section 13(a),
       13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
       amended, prior to the termination of this exchange offer.

     Any statements contained in this prospectus or in the documents
incorporated by reference into this prospectus shall be deemed to be modified
or superseded for purposes of this prospectus to the extent that a statement
contained in this prospectus or which is incorporated by reference in this
prospectus modifies or supersedes the statement. Any statement modified or
superseded shall not be deemed, except as modified or superseded, to constitute
part of this prospectus.

     We will provide without charge to each person, including any prospective
investor to whom this prospectus has been delivered, upon written or oral
request of such person, a copy of any and all of the documents referred to
above that have been or may be incorporated by reference in this prospectus
other than exhibits to the documents, unless such exhibits are specifically
incorporated by reference. Requests for such copies should be directed to
DaVita Inc., attention Secretary, Suite 800, 21250 Hawthorne Boulevard,
Torrance, California 90503-5517, telephone number (310) 792-2600.

                                       i


                           FORWARD-LOOKING STATEMENTS

     This prospectus contains statements that are forward-looking statements
within the meaning of the federal securities laws, including statements about
our expectations, beliefs, intentions or strategies for the future. We have
identified some of these forward-looking statements with words such as
"anticipates," "believes," "expects," "will," "should" and "intends" and the
negative of these words or other comparable terminology. These forward-looking
statements include statements regarding our expectations for treatment growth
rates, revenue per treatment, expense growth, levels of the provision for
uncollectible accounts receivable, earnings before depreciation and
amortization, debt expense and taxes, effective income tax rates and capital
expenditures.

     These statements involve known and unknown risks and uncertainties,
including risks resulting from economic and market conditions, the regulatory
environment in which we operate, competitive activities and other business
conditions. Our actual results may differ materially from results anticipated
in these forward-looking statements. Important factors that could cause actual
results to differ materially from the forward-looking statements include those
set forth below under the caption "Risk Factors." We base our forward-looking
statements on information currently available to us, and we undertake no
obligation to update these statements, whether as a result of changes in
underlying factors, new information, future events or other developments.

                                       ii


                                    SUMMARY

     The following summary contains information about DaVita and the exchange
of the notes. It does not contain all of the information that may be important
to you in making a decision to exchange the notes. For a more complete
understanding of DaVita and the exchange of the notes, we urge you to read this
entire prospectus carefully, including the "Risk Factors" section.

                                  The Company

     DaVita Inc., headquartered in Torrance, California, is the second largest
provider of dialysis services in the United States for patients suffering from
chronic kidney failure, also known as end stage renal disease, or ESRD. ESRD is
the state of advanced kidney impairment that is irreversible and requires
routine dialysis treatments or kidney transplantation to sustain life. Dialysis
is the removal of toxins, fluids and salt from the blood of ESRD patients by
artificial means.

     As of March 31, 2001, we operated 486 outpatient dialysis centers located
in 32 states and the District of Columbia, serving over 41,000 patients. Our
centers offer hemodialysis treatments and services for home dialysis patients,
including equipment and supplies, training, patient monitoring and follow-up
assistance. In addition, we provide inpatient dialysis services in more than
280 hospitals. We also provide ancillary services to ESRD patients, including
laboratory services and the administration of erythropoietin, or EPO, and other
pharmaceuticals.

     In October 1999, Kent Thiry was named our chairman and chief executive
officer. Beginning in late 1999, we initiated a multiyear turnaround plan
focused on improving our financial and operational infrastructure. During 2000,
we sold our non-continental U.S. operations, restructured our credit facilities
and reduced our debt, settled a securities class action lawsuit, improved
collections and focused on our core operations.

                             The Dialysis Industry

     Patients suffering from ESRD generally require dialysis at least three
times per week for the rest of their lives. Dialysis services are paid for
primarily by Medicare in accordance with rates established by the Health Care
Financing Administration, or HCFA, by state Medicaid programs and by other
third-party payors such as HMOs and health insurance carriers. For the year
ended December 31, 2000, we generated 53% of our continental U.S. dialysis
revenues from Medicare, 5% from Medicaid and 42% from commercial and other
nongovernment payors.

     The dialysis industry is characterized by:

   .  Stable and predictable growth in patient base. According to the United
      States Renal Data System, or USRDS, the number of ESRD patients in the
      United States, including patients with functioning transplants, is
      forecasted to increase from approximately 324,000 at the end of 1998 to
      approximately 660,000 in 2010, a compound annual growth rate of
      approximately 6%. We believe factors affecting this growth include: (1)
      the continued aging of the general population, (2) better treatment and
      longer survival of patients with diseases that typically lead to ESRD,
      including diabetes and hypertension, (3) improved medical and dialysis
      technology and (4) the growth of minority populations that have a
      higher incidence rate of ESRD.

   .  Limited options for an irreversible life-long condition. Treatment
      options for ESRD are hemodialysis, peritoneal dialysis and kidney
      transplantation. According to the USRDS, of the approximately 324,000
      ESRD patients in the United States at the end of 1998, approximately

                                       1


      233,000 patients were receiving dialysis and the remaining patients had
      functioning transplants. The number of ESRD patients receiving dialysis
      treatments is forecasted to grow to approximately 520,000 in 2010, a
      compound annual growth rate of approximately 7%. In 2000, hemodialysis
      treatments, excluding treatments to hospital inpatients, accounted for
      approximately 87% of our total dialysis treatments, and peritoneal
      dialysis accounted for approximately 9% of our total treatments.

      Although transplantation, when successful, is generally the most
      desirable form of therapeutic intervention, the shortage of suitable
      donors, side effects of immunosuppressive drugs given to transplant
      recipients and dangers associated with transplant surgery for some
      patient populations limit the use of this treatment option. The USRDS
      reports that, while the number of transplants performed has increased
      since 1994, the rate of transplantation is not keeping pace with the
      growth in the ESRD patient population.

   .  Universal Medicare coverage with recent rate increases. Since 1972, the
      federal government has provided universal reimbursement for dialysis
      under the Medicare ESRD program regardless of age or financial
      circumstances. Under this system, Congress establishes Medicare
      reimbursement rates for dialysis treatments and related supplies, tests
      and medications. After nine years without an increase, the Medicare
      treatment reimbursement rate was increased by 1.2% on each of January
      1, 2000 and 2001. An additional 1.2% increase became effective April 1,
      2001, plus an adjustment factor designed to provide the benefits of the
      increase as if it had become effective on January 1, 2001.

                                       2


                               The Exchange Offer

                           
 The exchange offer..........  We are offering to issue $1,000 principal amount
                               of Series B Notes in exchange for each $1,000
                               principal amount of Series A Notes. We are
                               offering to issue the Series B Notes to satisfy
                               our obligations contained in the registration
                               rights agreement entered into when the Series A
                               Notes were sold in transactions permitted by
                               Rule 144A under the Securities Act and therefore
                               not registered with the Commission. See the
                               "Exchange Offer" section of this prospectus. We
                               currently have $225 million in aggregate
                               principal amount of the Series A Notes
                               outstanding. We will issue the Series B Notes on
                               or promptly after the expiration date to holders
                               who tender their Series A Notes in this exchange
                               offer.

 Expiration date; Tender;
  Withdrawal rights..........  The exchange offer will expire at 5:00 p.m., New
                               York City time, on           , 2001, unless the
                               exchange offer is extended, in which case the
                               term "expiration date" means the latest date and
                               time to which the exchange offer is extended. We
                               will accept for exchange any and all Series A
                               Notes which are properly tendered in the
                               exchange offer prior to the expiration date. If
                               you decide to exchange your Series A Notes for
                               Series B Notes, you must acknowledge that you
                               are not engaging in, and do not intend to engage
                               in, a distribution of the Series B Notes. If you
                               decide to tender your Series A Notes in the
                               exchange offer, you may withdraw your tender at
                               any time prior to the expiration date. If we
                               decide for any reason not to accept any Series A
                               Notes for exchange, your Series A Notes will be
                               returned to you without expense promptly after
                               the exchange offer expires. For procedures for
                               tendering, see the "Exchange Offer" section of
                               this prospectus.

 Certain tax considerations..  The exchange of Series A Notes for Series B
                               Notes in the exchange offer should not be a
                               taxable event for U.S. federal income tax
                               purposes.

 Exchange agent..............  U.S. Trust Company of Texas, National
                               Association, is serving as exchange agent in
                               connection with the exchange offer.

 Failure to tender your
  Series A Notes.............  If you fail to tender your Series A Notes in the
                               exchange offer, you will not have any further
                               rights under the registration rights agreement,
                               including any right to require us to register
                               your Series A Notes or to pay you liquidated
                               damages.

 

You will be able to resell the securities without registering them with the
Commission if you meet the requirements described below.

     Based on interpretations by the Commission's staff in no-action letters
issued to third parties, we believe that the Series B Notes issued in exchange
for the Series A Notes in the exchange offer may be offered for resale, resold
or otherwise transferred by you without registering the Series B Notes under
the Securities Act or delivering a prospectus, unless you are a broker-dealer
receiving securities for your own account, so long as:

   .  You are not one of our "affiliates," as defined in Rule 405 of the
      Securities Act;

   .  You acquire the Series B Notes in the ordinary course of your business;

   .  You do not have any arrangement or understanding with any person to
      participate in the distribution of the Series B Notes; and

   .  You are not engaged in, and do not intend to engage in, a distribution
      of the Series B Notes.

                                       3



     If you are an affiliate of ours or you are engaged in, intend to engage in
or have any arrangement or understanding with respect to, the distribution of
new securities acquired in the exchange offer, you (1) should not rely on our
interpretations of the position of the Commission's staff and (2) must comply
with the registration and prospectus delivery requirements of the Securities
Act in connection with any resale transaction.

     If you are a broker-dealer and receive new securities for your own account
in the exchange offer:

   .  You must represent that you do not have any arrangement with us or any
      of our affiliates to distribute the Series B Notes;

   .  You must acknowledge that you will deliver a prospectus in connection
      with any resale of the Series B Notes you receive from us in the
      exchange offer; the letter of transmittal states that by so
      acknowledging and by delivering a prospectus, you will not be deemed to
      admit that you are an "underwriter" within the meaning of the
      Securities Act; and

   .  You may use this prospectus, as it may be amended or supplemented from
      time to time, in connection with the resale of Series B Notes received
      in exchange for Series A Notes acquired by you as a result of market-
      making or other trading activities.

     For a period of one year after the date of effectiveness of the exchange
offer, we will make this prospectus available to any broker-dealer for use in
connection with any resale described above.

                                       4


                            Terms of Series B Notes

                           
 Issuer......................  DaVita Inc.

 Notes offered...............  $225 million aggregate principal amount of 9
                               1/4% senior subordinated notes due 2011.

 Maturity date...............  April 15, 2011.

 Interest payments...........  The Series B Notes will bear interest at the
                               rate of 9 1/4% per year, payable semi-annually,
                               in arrears, on April 15 and October 15 of each
                               year, commencing on October 15, 2001.

 Optional redemption.........  We may redeem the Series B Notes, in whole or in
                               part, on or after April 15, 2006 at the
                               redemption prices set forth in this prospectus,
                               plus accrued and unpaid interest and liquidated
                               damages, if any.

                               In addition, on or prior to April 15, 2004, we
                               may redeem up to 35% of the aggregate principal
                               amount of the Series B Notes with the net
                               proceeds of one or more public equity offerings.
                               See the "Description of Series B Notes--Optional
                               redemption" section of this prospectus for more
                               information.

 Subsidiary guarantees.......  Substantially all of our operations are
                               conducted through our subsidiaries. Our
                               obligations under the Series B Notes will be
                               fully and unconditionally guaranteed on a senior
                               subordinated basis by all of our wholly owned
                               domestic subsidiaries.

 Change of control...........  Upon a change of control, you may require us to
                               repurchase all or a portion of your Series B
                               Notes at a purchase price of 101% of their
                               principal amount, plus accrued and unpaid
                               interest and liquidated damages, if any. The
                               term "change of control" is defined in the
                               "Description of Series B Notes--Certain
                               covenants--Repurchase of Series B Notes at the
                               option of the holder upon a change of control"
                               section of this prospectus.

 Ranking.....................  The Series B Notes and the guarantees will be
                               our and the applicable guarantor's unsecured
                               general obligations and will be:

                               .  Junior in right of payment to all of our and
                                  such guarantor's existing and future senior
                                  indebtedness;

                               .  Equal in right of payment to all of our and
                                  such guarantor's existing and future senior
                                  subordinated indebtedness; and

                               .  Senior in right of payment to all of our and
                                  such guarantor's existing and future
                                  subordinated indebtedness.

                               As of March 31, 2001, on a pro forma basis after
                               giving effect to the issuance of the Series B
                               Notes and the application of the proceeds
                               therefrom and the refinancing of our bank credit
                               facilities, we would have had outstanding an
                               aggregate of approximately $263 million of
                               senior debt.

                               The Series B Notes will rank junior to debt
                               outstanding under our credit facilities. The
                               guarantee by Renal Treatment Centers, or RTC, of
                               the Series B Notes is senior to RTC's
                               obligations under its 5 5/8% convertible
                               subordinated notes. We, but none of our
                               operating subsidiaries, have guaranteed RTC's
                               notes. Our guarantee of RTC's notes is equal to
                               our obligations under the Series B Notes.

 

                                       5


                           
                               See the "Description of Series B Notes--Brief
                               description of the Series B Notes and the
                               guarantees" and the "--Subordination" sections
                               of this prospectus for more information.

 Restrictive covenants.......  The indenture governing the Series B Notes
                               contains covenants that limit our and our
                               subsidiaries' ability to, among other things:

                               .  Pay dividends, redeem capital stock and make
                                  other restricted payments and investments;

                               .  Incur additional debt or issue preferred
                                  stock;

                               .  Enter into agreements that restrict our
                                  subsidiaries from paying dividends or other
                                  distributions, making loans or otherwise
                                  transferring assets to us or to any of our
                                  other subsidiaries;

                               .  Create liens on assets;

                               .  Engage in transactions with affiliates;

                               .  Sell assets, including capital stock of
                                  subsidiaries; and

                               .  Merge, consolidate or sell all or
                                  substantially all of our assets and the
                                  assets of our subsidiaries.

                               All of these limitations are subject to
                               important exceptions and qualifications
                               described under the "Description of Series B
                               Notes--Certain covenants" section of this
                               prospectus.

 Use of proceeds.............  We will not receive any proceeds from the
                               exchange offer.

 

                                  Risk Factors

     Investing in the notes involves substantial risks. You should carefully
consider the matters set forth in this prospectus under the heading "Risk
Factors" before tendering the Series A Notes in exchange for the Series B
Notes.

                                       6


                             Summary Financial Data

     The following tables present our summary financial data. The summary
statement of income data for each of the years ended December 31, 1998, 1999
and 2000 and the summary balance sheet data as of December 31, 2000 have been
derived from our audited consolidated financial statements for the year ended
December 31, 2000 included elsewhere in this prospectus. The summary statement
of income data and the summary balance sheet data for the quarter ended March
31, 2001 have been derived from our unaudited condensed consolidated financial
statements from our Quarterly Report on Form 10-Q for the quarter ended March
31, 2001 included elsewhere in this prospectus.

     Pro forma statement of income and other operating data are calculated as
if the offering of the Series A Notes and the refinancing of our bank credit
facilities and the application of the estimated net proceeds had occurred on
January 1 of each period presented. Pro forma balance sheet data as of December
31, 2000 and as of March 31, 2001 is presented as if the offering of the Series
A Notes and the refinancing of our bank credit facilities and the application
of the estimated net proceeds had occurred on such dates.

     You should read the following information together with "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
incorporated by reference from our Annual Report on Form 10-K for the year
ended December 31, 2000, as amended on Form 10-K/A, our consolidated financial
statements and related notes included elsewhere in this prospectus and our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2001.



                                    Year ended December 31,                     Quarter ended March 31,
                          -------------------------------------------------  --------------------------------
                                                                 Pro forma                         Pro forma
                             1998        1999         2000(a)       2000       2000       2001        2001
                          ----------  ----------     ----------  ----------  --------  ----------  ----------
                                    (dollars in thousands)
                                                                              
Statement of income
 data:
Net operating revenues..  $1,203,738  $1,445,351     $1,486,302  $1,486,302  $372,113  $  386,217  $  386,217
Operating expenses
 before impairment
 losses and merger
 costs..................     990,637   1,369,528      1,307,031   1,307,031   331,796     310,750     310,750
Operating income before
 impairment losses and
 merger costs...........     213,101      75,823        179,271     179,271    40,317      75,467      75,467
Impairment losses and
 merger costs...........      78,188     139,805          4,556       4,556       --          --          --
Operating income
 (loss).................     134,913     (63,982)       174,715     174,715    40,317      75,467      75,467
Debt expense (b)........      84,003     110,797        116,637     106,333    33,165      19,724      19,273
Income (loss) before
 extraordinary item and
 change in accounting
 principle..............      10,192    (147,256)        16,975      23,070     3,847      30,934      31,201
Ratio of earnings to
 fixed charges..........        1.50x            (c)       1.34x        --        --         3.27x        --

Other operating data:
Operating cash flow.....  $   11,918  $  171,506     $  307,648  $      --   $ 62,340  $   57,831  $      --
EBITDA (d)..............     303,454     188,304        290,876     290,876    68,035     101,615     101,615
Margin..................          25%         13%            20%         20%       18%         26%         26%

Pro forma cash interest expense (e)......................        $   79,307       --          --       18,131
Ratio of EBITDA to pro forma cash interest expense.......               3.7x      --          --          5.6x
Ratio of pro forma net debt to EBITDA....................               3.3x      --          --          2.3x

Balance sheet data:
Working capital...............................       $  148,348  $  148,348            $  139,264  $  141,995
Cash and cash equivalents.....................           31,207      31,207                17,443      20,174
Working capital excluding cash and cash
 equivalents..................................          117,141     117,141               121,821     121,821
Total assets..................................        1,596,632   1,608,457             1,625,737   1,637,562
Total debt....................................          975,682     987,507               939,605     958,305
Shareholders' equity..........................          349,368     349,368               388,219     388,219


                                       7





                                        March 31  June 30   Sept. 30  Dec. 31
                                        --------  --------  --------  --------
                                              (dollars in thousands)
                                                          
Quarterly data for 2000:
Net operating revenues................. $372,113  $378,908  $362,535  $372,746
EBITDA (d).............................   68,035    66,927    76,833    79,081
Margin.................................     18.3%     17.7%     21.2%     21.2%

- --------
(a) Excluding our non-continental U.S. operations, which were divested during
    2000, revenues and EBITDA were $1,412 million and $281 million,
    respectively.

(b) Debt expense includes a write-off of deferred financing costs of $1,601 in
    1999 and $1,192 in 2000 and a loss of $9,823 on termination of interest
    rate swap agreements related to refinanced debt in 1998.

(c) Due to the 1999 loss, this ratio was below 1.0x; additional earnings of
    $182 million would have been required to achieve a ratio of 1.0x.

(d) EBITDA as used herein represents operating income plus depreciation,
    amortization, impairment losses and merger costs. We believe that EBITDA
    provides useful information regarding our ability to service our debt.
    EBITDA is not a measure of operating performance computed in accordance
    with GAAP and should not be considered as a substitute for operating income
    (loss), net income (loss), cash flows from operating activities, or other
    statement of operations or cash flow data prepared in conformity with GAAP,
    or as a measure of profitability or liquidity. In addition, EBITDA may not
    be comparable to similarly titled measures of other companies, and EBITDA
    as presented is calculated differently than for purposes of the covenants
    under the indenture governing the notes and our credit facilities.

(e) Pro forma cash interest expense reflects debt reductions in 2000 and 2001
    and is calculated based on the level of our pro forma debt and interest
    rates at December 31, 2000 and March 31, 2001, respectively, excluding
    amortization of net deferred financing costs of approximately $3 million
    and $0.5 million, respectively, and as if the offering of the Series A
    Notes and the replacement of our then-existing bank credit facility and the
    application of the net proceeds had occurred on January 1 of each year.
    Actual cash paid for interest was $118 million in 2000, reflecting the
    higher debt levels during 2000. Actual cash paid for interest was
    $16 million in the first quarter of 2001.

                                       8


                                  RISK FACTORS

     In evaluating the exchange offer, you should carefully consider the
following factors in addition to the other information contained in this
prospectus. The terms "note" or "notes" refer to both the Series A Notes and
the Series B Notes.

            Risks Relating to our Debt, including the Series B Notes

We may not have sufficient cash flow from our business to pay our substantial
debt.

     As of May 4, 2001 we had total consolidated debt of approximately $957
million, including $250 million outstanding under our refinanced credit
facilities and $225 million new senior subordinated debt, and, for the quarter
ended March 31, 2001, we had a ratio of earnings to fixed charges of 3.27:1.

     The following table shows the aggregate interest and principal payments
due on all of our currently outstanding debt for each of the next five fiscal
years. Also, because the interest rate under our credit facilities is based
upon a variable market rate plus a margin determined by the amount of debt we
incur relative to our earnings before income taxes, depreciation and
amortization, the amount of these interest payments could fluctuate
substantially in the future. Also, we are not prohibited from incurring
additional debt.



   Scheduled payments                                         Interest Principal
   ------------------                                         -------- ---------
                                                                 (dollars in
                                                                  thousands)
                                                                 
   For the year ending December 31:
     2002.................................................... $75,125  $ 17,815
     2003....................................................  73,950    12,700
     2004....................................................  72,745    12,250
     2005....................................................  71,545    12,250
     2006....................................................  57,970   318,250


     Due to the large amount of these principal and interest payments, we may
not generate enough cash from our operations to meet these obligations or to
fund other liquidity needs. Our ability to generate cash in the future is, to
some extent, subject to risks and uncertainties that are beyond our control. If
we are unable to meet our debt obligations, we may need to refinance all or a
portion of our indebtedness, sell assets or raise funds in the capital markets.
We may not be able to engage in any of these activities on desirable terms or
at all, which could result in a default on our debt obligations.

The large amount and terms of our outstanding debt may prevent us from taking
actions we would otherwise consider in our best interest.

     Our credit facilities contain numerous financial and operating covenants
that limit our ability to engage in activities such as incurring additional
debt, acquiring and developing new dialysis centers, disposing of assets, or
repurchasing our common stock. These covenants require that we meet financial
ratios including interest coverage, net worth and leverage tests.

     The large amount of our outstanding debt and the limitations our credit
facilities impose on us could have other important consequences, including:

   .  It may be difficult for us to satisfy our obligations under the notes;

   .  We will have to use much of our cash flow for scheduled debt service
      rather than for operations;

   .  We may not be able to increase our borrowings under the credit
      facilities or obtain other debt financing for future working capital,
      capital expenditures, acquisitions or other corporate purposes;

                                       9


   .  We could be less able to take advantage of significant business
      opportunities, including acquisitions or divestitures;

   .  Our vulnerability to general adverse economic and industry conditions
      could be increased; and

   .  We could be at a competitive disadvantage to competitors with less
      debt.

Despite our substantial debt, we and our subsidiaries may incur additional
indebtedness, including senior debt, which would intensify the risks described
above.

     We and our subsidiaries may be able to incur substantial additional debt,
including senior debt, in the future. The terms of our debt will not fully
prohibit us or our subsidiaries from doing so. Our credit facilities permit
additional borrowings of up to $150 million, and all of those borrowings would
be senior to the notes and the subsidiary guarantees. If new debt is added to
our and our subsidiaries' current debt levels, the related risks that we and
they now face could intensify.

Your right to receive payment on the notes from us or our subsidiary guarantors
will be junior to our and their existing and future senior debt.

     The Series A Notes and the guarantees rank, and the Series B Notes will
rank, junior to all of our and the subsidiary guarantors' existing and future
senior indebtedness, including all indebtedness under our credit facilities. As
a result of the subordination of the notes, if we or our subsidiary guarantors
become insolvent or enter into a bankruptcy or similar proceeding, then the
holders of our senior indebtedness must be paid in full before you are paid. In
addition, we cannot make any cash payments to you if we have failed to make
payments to holders of designated senior indebtedness. In addition, the notes
will rank equal to our guarantee of RTC's 5 5/8% convertible subordinated
notes.

     At March 31, 2001, assuming we had completed the offering of the Series A
Notes and the refinancing of our credit facilities on that day, the notes and
the subsidiary guarantees ranked junior in right of payment to $263 million of
senior indebtedness, and $150 million was available for borrowing as additional
senior debt under our credit facilities.

Our ability to repay the notes and our other debt depends on cash flow from our
subsidiaries.

     We are a holding company. Our only material non-cash assets are our
ownership interests in our subsidiaries and our investments in third-party
dialysis businesses. Consequently, we depend on distributions or other
intercompany transfers of funds from our subsidiaries to meet our debt service
and other obligations, including with respect to the notes. Our non-guarantor
subsidiaries are not obligated to make funds available to us for payment on the
notes. Generally, only our wholly owned domestic subsidiaries will guarantee
the notes. We cannot assure you that the operating results of our subsidiaries
will be sufficient to enable us to make payments on the notes. In addition, our
rights and the rights of our creditors, including holders of the notes, to
participate in the assets of any of our non-guarantor subsidiaries upon their
liquidation or recapitalization will generally be subject to the prior claims
of those subsidiaries' creditors.

If a change of control occurs, we may not have sufficient funds to repurchase
your notes.

     Upon specified change of control events, you may require us to repurchase
all or a portion of your notes. If a change of control occurs, we may not be
able to pay the repurchase price for all of the notes submitted for repurchase.
In addition, the terms of our credit facilities generally prohibit us from
purchasing any notes until we have repaid all debt outstanding under these
credit facilities. Future credit agreements or other agreements relating to
debt may contain similar provisions. We may not be able to secure the consent
of our lenders to repurchase the notes or refinance the borrowings that
prohibit us from repurchasing the notes. If we do not obtain a consent or repay
the borrowings, we could not repurchase the notes. In addition, some

                                       10


important corporate events, such as leveraged recapitalizations that would
increase the level of our debt, would not constitute a change of control under
the indenture for the notes.

     For more details, see the heading "Certain covenants--Repurchase of Series
B Notes at the option of the holder upon a change of control" in the
"Description of Series B Notes" section.

Fraudulent transfer statutes may limit your rights as a noteholder.

     Federal and state fraudulent transfer laws permit a court, in some
instances, to

   .  Avoid all or a portion of our obligations to you;

   .  Subordinate our obligations to you to our other existing and future
      indebtedness, entitling other creditors to be paid in full before any
      payment is made on the notes; and

   .  Take other action detrimental to you, including invalidating the notes
      and directing the return of any amounts paid thereunder to us or to a
      fund for the benefit of our creditors. In that event, we cannot assure
      you that you would ever be repaid.

     Under federal and state fraudulent transfer laws, in order to take any of
those actions, courts will typically need to find that, at the time the notes
were issued, or, in some states, when payments became due thereunder, we:

     (1) Issued the notes with the intent of hindering, delaying or
         defrauding current or future creditors; or

     (2) Received less than fair consideration or reasonably equivalent
         value for incurring the indebtedness represented by the notes; and
         either

            (a) Were insolvent or were rendered insolvent by reason of the
                issuance of the notes;

            (b) Were engaged, or about to engage, in a business or transaction
                for which our assets were unreasonably small; or

            (c) Intended to incur, or believed or should have believed we
                would incur, debts beyond our ability to pay as such debts
                mature.

     Many of the foregoing terms are defined in or interpreted under those
fraudulent transfer statutes. To the extent that proceeds from the sale of the
notes were used to make payments to our former stockholders or to refinance
debt incurred to make such payments, a court could find that we did not receive
fair consideration or reasonably equivalent value for the incurrence of the
debt represented by the notes.

     Various jurisdictions define "insolvency" differently. However, we
generally would be considered insolvent at the time we issued the notes if (1)
our liabilities exceeded our assets, at a fair valuation, or (2) the present
saleable value of our assets is less than the amount required to pay our total
existing debts and liabilities, including the probable liability related to
contingent liabilities, as they become absolute or matured. We cannot assure
you as to what standard a court would apply to determine whether we were
"insolvent" as of the date the notes were issued. Regardless of the method of
valuation, a court may determine that we were insolvent on that date or,
regardless of whether we were insolvent on the date the notes were issued, that
the payments constituted fraudulent transfers on another ground.

     In addition, the subsidiary guarantees may also be subject to review under
various laws for the protection of creditors. It is possible that creditors of
the subsidiary guarantors may challenge the guarantees as a fraudulent transfer
or conveyance, applying the analysis set forth above. In addition, the
guarantees could also be subject to the claim that, because the guarantees were
incurred for our benefit, and only indirectly for the benefit of the
guarantors, the obligations of the guarantors were incurred for less than
reasonably equivalent

                                       11


value or fair consideration. A court could void a guarantor's obligation under
its guarantee, subordinate the guarantee to the other indebtedness of a
guarantor, direct that holders of the notes return any amounts paid under a
guarantee to the relevant guarantor or to a fund for the benefit of its
creditors, or take other action detrimental to the holders of the notes. In
addition, the liability of each guarantor under the indenture will be limited
to the amount that will result in its guarantee not constituting a fraudulent
conveyance or improper corporate distribution, and there can be no assurance as
to what standard a court would apply in determining the maximum liability of
each guarantor.

No public trading market for the Series B Notes exists which could result in an
illiquid trading market and/or lower sales prices for your notes.

     The Series B Notes are being offered to the holders of Series A Notes.
Prior to this exchange offer, there has been no public market for the Series A
Notes. There is currently no public market for the Series B Notes. An active
public market will likely never develop for the Series B Notes because the
Series B Notes are not investment grade and we will not apply to list the
Series B Notes on any exchange or Nasdaq. As a result, you may be required to
bear the financial risk of your investment in the Series B Notes indefinitely.
Any Series B Notes traded after they are initially issued may trade at a
discount from their initial offering price. The trading price of the Series B
Notes depends on prevailing interest rates, the market for similar securities
and other factors, including economic conditions and our financial condition,
performance and prospects. Historically, the market for noninvestment grade
debt has been subject to disruptions that have caused substantial fluctuations
in the prices of the securities.

Our obligation to register the Series A Notes will expire upon consummation of
the exchange offer.

     Upon consummation of the exchange offer, we will have no further
obligation to register the Series A Notes. Thereafter, any holder of Series A
Notes who does not tender its Series A Notes in the exchange offer, including
any holder which is an affiliate, as that term is defined in Rule 405 of the
Securities Act, of us which cannot tender its Series A Notes in the exchange
offer, will continue to hold restricted securities which may not be offered,
sold or otherwise transferred, pledged or hypothecated except pursuant to Rule
144 and Rule 144A under the Securities Act or pursuant to any other exemption
from registration under the Securities Act relating to the disposition of
securities, provided that an opinion of counsel is furnished to us that such an
exemption is available.

                         Risks Relating to our Business

If the percentage of our patients paying at or near our list prices declines,
then our revenues, cash flows and net income would be substantially reduced.

     Approximately 41% of our continental U.S. dialysis revenues in 1999 and
42% in 2000 were generated from patients who had private payors as the primary
payor. A minority of these patients have insurance policies that reimburse us
at or near our list prices, which are significantly higher than Medicare rates.
The remainder of these patients have insurance policies that reimburse us at
rates that are below our list prices but, in most cases, higher than Medicare
rates. We believe that pressure from private payors to decrease the rates at
which they pay us will increase. If the percentage of patients who have
insurance that pays us at or near our list prices decreases significantly, it
would have an adverse effect on our revenues, cash flows and net income.

If we are unable to renegotiate material contracts with managed care plans on
acceptable terms, we may experience a decline in same center growth.

     We have contracts with some large managed care plans that include
unfavorable terms. Although we are attempting to renegotiate the terms of these
contracts, we cannot predict whether we will reach agreement on new terms or
whether we will renew these contracts. As a result, we may lose numerous
patients of these managed care plans and experience a decline in our same
center growth, which will negatively impact our revenues.

                                       12


Over the long term, we expect the profit margins in the dialysis industry to
decline, which will have a negative impact on our net income and cash flows.

     During the past few years, industry operating margins have increased due
to:

   .  Increased provision of ancillary services that have higher profit
      margins;

   .  The extension of the period for which private payors remain the
      primary insurer, until Medicare becomes the primary insurer; and

   .  Pricing increases for private pay patients.

     We believe that the profit margins in ancillary services will not continue
to grow and that the additional profit from the extension of the private
insurance coverage period was a one-time event. Accordingly, we expect to see
declining profit margins in the dialysis industry.

     Other forces that also may result in long-term industry margin compression
include increases in labor and supply costs at a faster rate than reimbursement
rate increases, reimbursement cuts for ancillary services and an inability to
achieve future pricing increases, or maintain current pricing, for both private
pay and managed care patients. We expect that our margins will decrease as a
result of these industry trends. Any significant decrease in our margins would
have a negative impact on our net income and cash flows.

Future declines, or the lack of further increases, in Medicare reimbursement
rates would reduce our net income and cash flows.

     Approximately 54% of our continental U.S. dialysis revenues in 1999 and
53% in 2000 were generated from patients who had Medicare as their primary
payor. The Medicare ESRD program reimburses us for dialysis and ancillary
services at fixed rates. Unlike many other Medicare programs, the Medicare ESRD
program does not provide for periodic inflation increases in reimbursement
rates. These rates have declined over 70% in real dollars since 1972. Congress
recently enacted two separate increases of 1.2% to the Medicare composite
reimbursement rate for dialysis effective January 1, 2000 and January 1, 2001.
An additional 1.2% increase became effective April 1, 2001, plus an adjustment
factor designed to provide the benefits of the increase as if it had become
effective on January 1, 2001. These were the first increases in the composite
rate since 1991 and are significantly less than the cumulative rate of
inflation since 1991. The Medicare Payment Advisory Commission has also
recommended to Congress that there be no increase in the composite rate for
2002. Increases in operating costs that are subject to inflation, such as labor
and supply costs, have occurred and are expected to continue to occur without a
compensating increase in reimbursement rates. We cannot predict the nature or
extent of future rate changes, if any. To the extent these rates are not
adjusted for inflation, our net income and cash flows would be adversely
affected.

Future changes in the structure of, and reimbursement rates under, the Medicare
ESRD program could substantially reduce our net income and cash flows.

     In legislation enacted in December 2000, Congress mandated government
studies on whether:

   .  The Medicare composite rate for dialysis should be modified to include
      an annual inflation increase--study due July 2002;

   .  The Medicare composite rate for dialysis should be modified to include
      additional services, such as laboratory and other diagnostic tests,
      and the administration of EPO and other pharmaceuticals, in the
      composite rate--study due July 2002; and

   .  Reimbursement for many outpatient prescription drugs that we
      administer to dialysis patients should be reduced from the current
      rate of 95% of the average wholesale price of each drug--study due
      September 2001.

                                       13


     If Medicare began to include in its composite reimbursement rate any
ancillary services that it currently reimburses separately, our revenue would
decrease to the extent there was not a corresponding increase in that composite
rate. In particular, Medicare revenue from EPO was approximately 13% of our net
revenue in 1999 and 2000. If EPO were included in the composite rate, and if
the composite rate were not increased sufficiently, our revenue would decrease
substantially. Reductions in current reimbursement rates for EPO or other
outpatient prescription drugs would also reduce our revenue.

If a significant number of physicians were to cease referring patients to our
dialysis centers, whether due to regulatory or other reasons, our revenue and
earnings would decline.

     If a significant number of physicians stop referring patients to our
centers, it could have a material adverse effect on our revenue and earnings.
Most physicians prefer to have their patients treated at centers where they or
other members of their practice supervise the overall care provided as medical
directors of the centers. As a result, the primary referral source for our
centers is typically the physician or physician group providing medical
director services to the center. If a medical director agreement terminates,
whether before or at the end of its term, it may negatively impact the former
medical director's decision to treat his or her patients at our centers.

     Medical directors contract with us for fixed periods, generally five to
ten years. Unless extended, the agreements with medical directors at centers
serving approximately 3,600 patients will expire on or before December 31,
2002. Medical directors have no obligation to extend their agreements with us.

     We also may take actions to restructure existing relationships or take
positions in negotiating extensions of relationships in order to assure
compliance with anti-kickback and similar laws. These actions could negatively
impact physicians' decisions to extend their medical director agreements with
us. For example, we have recalled stock options and we require monthly
statements from our medical directors certifying that they have performed their
contractual obligations. To our knowledge, we are the only major dialysis
provider to have done this. In addition, if the terms of an existing agreement
were found to violate applicable laws, we may not be successful in
restructuring the relationship, which could lead to the early termination of
the agreement.

Our rollout of new information technology systems will disrupt our billing and
collection activity, may not work as planned and could have a negative impact
on our results of operations and financial condition.

     We intend to roll out new information technology systems in each of our
dialysis centers over the next few years. It is likely that this rollout will
disrupt our billing and collection activity and may cause other disruptions to
our business operations, which may negatively impact our cash flows.

     We have experienced disruption of our billing and collection activity in
the past. From the time of our formation in 1994 through 1998, we expanded
aggressively through acquisitions. We experienced difficulty integrating our
operations with the newly acquired businesses, which negatively impacted
administrative functions, including billing and collection activity.

     Also, the new systems may not work as planned or improve our billing and
collection processes. If they do not, we may have to spend substantial amounts
to enhance or replace these systems.

If the current shortage of skilled clinical personnel or our high level of
personnel turnover continues, we may experience disruptions in our business
operations.

     We are experiencing difficulties in hiring nurses due to a nationwide
shortage of skilled clinical personnel. This shortage limits our ability to
expand our operations. We also have a high personnel turnover rate in our
dialysis centers and central billing and accounting offices. Turnover has been
the highest among our

                                       14


reuse technicians, patient care technicians and unit secretaries. Recent
efforts to reduce this turnover may not succeed. If we are not successful, or
if we are unable to hire skilled clinical personnel when needed, our operations
and our same center growth will be negatively impacted.

Adverse developments with respect to EPO could materially reduce our net income
and cash flows and affect our ability to care for our patients.

     Amgen is the sole supplier of EPO and may unilaterally decide to increase
its price for EPO. For example, Amgen increased its base price for EPO by 3.9%
effective March 1, 2000 and by an additional 3.9% effective May 9, 2001. Also,
we cannot predict whether we will continue to receive the same discount
structure for EPO that we currently receive, or whether we will continue to
achieve the same levels of discounts within that structure as we have
historically achieved. Recent developments in accepted clinical procedures with
respect to the administration of EPO may also decrease the frequency of EPO
administration, increase our administration costs or require us to purchase EPO
with preservative at a higher price. In addition, Amgen is developing a new
product that may replace EPO or reduce its use. We cannot predict when this
product may be introduced to the dialysis market, nor what its cost and
reimbursement structure will be. Increases in the cost of EPO, whether through
net price increases or higher administration costs, or the introduction of
Amgen's new product, could have a material adverse effect on our net income and
cash flows.

The cost of our medical supplies on a per-treatment basis has been increasing.
If this trend continues it could negatively impact our net income and cash
flows.

     During the past two years, we have experienced an increase in the cost per
treatment of our medical supplies due to an increase in our utilization of
supplies and increases in pricing from suppliers. Two of our major competitors
are also major providers of medical supplies and equipment, and our largest
supplier, Fresenius Medical Care, is also the largest provider of dialysis
services in the world. In the past few years, the number of suppliers of
dialysis-specific medical supplies has declined due to consolidation among
these suppliers. If we are not able to manage our medical supply utilization
better or achieve cost savings from our suppliers, we may experience a
reduction in our net income and cash flows.

If we fail to adhere to all of the complex government regulations that apply to
our business, we could incur substantial fines or be excluded from
participating in government reimbursement programs.

     Our dialysis operations are subject to extensive federal, state and local
government regulations, including federal and state anti-kickback laws. We
endeavor to structure all of our relationships with referring physicians to
comply with these laws. In many cases, our physician arrangements do not
satisfy all of the elements of the safe harbor protections from the anti-
kickback laws and could be found to violate these laws. If any of our
operations are found to violate these or other government regulations, we could
suffer severe penalties, including:

  .  Suspension of payments from government programs;

  .  Loss of required government certifications;

  .  Loss of authorizations to participate in or exclusion from government
     reimbursement programs, such as the Medicare ESRD program and Medicaid
     programs;

  .  Loss of licenses required to operate health care facilities in some of
     the states in which we operate; and

  .  Fines or monetary penalties for anti-kickback law violations, submission
     of false claims or other failures to meet reimbursement program
     requirements.

                                       15


     The regulatory scrutiny of healthcare providers, including dialysis
providers, has increased significantly in recent years. For the fiscal year
ended September 30, 2000, the Department of Justice, or DOJ, announced total
recoveries of $840 million from healthcare civil fraud cases, including a $486
million settlement with one of our competitors as a result of an investigation
by the Office of the Inspector General of the Department of Health and Human
Services, or OIG, and DOJ into some of its business practices.

     In addition, the frequency and intensity of Medicare certification surveys
and inspections of dialysis centers has markedly increased, consistent with
recommendations of the OIG included in its June 2000 testimony before the
Senate Special Committee on Aging regarding Medicare's system for the external
quality review of kidney dialysis centers. We have incurred increases in
administrative costs as a result of this regulatory activity. We expect this
regulatory scrutiny to continue, if not increase, which will result in
additional administrative expenses and could lead to penalties being assessed
against us or the loss of Medicare certification at affected centers.

The pending federal review of some of our historical practices could result in
substantial penalties against us.

     We are voluntarily cooperating with the Civil Division of the United
States Attorney's Office for the Eastern District of Pennsylvania in a review
of some of our historical practices, including billing and other operating
procedures and our financial relationships with physicians. We are unable to
determine when this matter will be resolved, whether any additional areas of
inquiry will be opened or any outcome of this inquiry, financial or otherwise.
Any negative findings from this review could result in substantial financial
penalties against us and exclusion from future participation in the Medicare
and Medicaid programs.

We may never collect the payments suspended as a result of a third-party
carrier review of our laboratory subsidiary.

     Our Florida-based laboratory subsidiary is the subject of a third-party
carrier review relating to claims the laboratory submitted for Medicare
reimbursement. In May 1998, the carrier suspended all further Medicare payments
to this laboratory. For the first six months of 2000, Medicare revenue from
this laboratory represented approximately 1% of our net revenues. Beginning in
the third quarter of 2000, we ceased recognizing current Medicare revenue from
this laboratory. Based on the carrier's overpayment determinations to date, we
estimate that our maximum potential cash exposure at March 31, 2001 was
$15 million. We may never recover the amounts withheld and we cannot predict
what action DOJ or the OIG may take in this matter. The government could impose
additional penalties or fines against us, which could be substantial.

Total assets, shareholders' equity and earnings could be materially reduced if
goodwill balances become impaired.

     Our balance sheet includes an amount designated as "goodwill" that
represents 51% of our total assets and 213% of our shareholders' equity at
March 31, 2001. Goodwill arises when an acquiror pays more for a business than
the fair value of the tangible and separately measurable intangible net assets.
Generally accepted accounting principles require the amortization of goodwill
and all other intangible assets over the period benefitted. The current average
amortization period is 35 years for our goodwill. We routinely review cash
flows for the specific operations associated with the respective goodwill
balances to determine whether there are potential impairments of the
unamortized goodwill balances. If goodwill balances are determined to be
impaired and impairment losses are recorded, total assets, shareholders' equity
and earnings could be materially reduced.

                                       16


                                USE OF PROCEEDS

     We will not receive any cash proceeds from the issuance of the Series B
Notes offered in the exchange offer. The Series B Notes will be exchanged for
Series A Notes as described in this prospectus upon our receipt of the Series A
Notes. The Series A Notes surrendered in exchange for Series B Notes will be
retired and canceled and cannot be reissued. Accordingly, issuance of the
Series B Notes will not result in any increase in our indebtedness.

     Net proceeds from the offering of the Series A Notes were approximately
$218.4 million, after deducting discounts, commissions and estimated expenses
related to the offering. We used the net proceeds of the offering to pay down
approximately $107.6 million outstanding under our revolving credit facility,
of which $156 million was outstanding as of March 31, 2001 and approximately
$110.8 million outstanding under our term loan facility, of which $300 million
was outstanding as of March 31, 2001. The outstanding borrowings under our
revolving credit facility accrued interest at an average rate of 9.8% and 9.4%
as of December 31, 2000 and March 31, 2001, respectively. The outstanding
borrowings under our term loan facility accrued interest at an average rate of
10.5% and 8.8% as of December 31, 2000 and March 31, 2001, respectively. These
outstanding borrowings were refinanced on May 4, 2001. See "Description of
Debt" for additional information about our credit facilities.

                                 CAPITALIZATION

     The following table sets forth our capitalization as of December 31, 2000
and March 31, 2001 (1) on an actual basis and (2) pro forma to reflect the sale
of the Series A Notes and the application of the estimated net proceeds as
described under "Use of Proceeds" as well as the refinancing of our bank credit
facilities. The following should be read together with "Management's Discussion
and Analysis of Financial Condition and Results of Operations" incorporated by
reference from our Annual Report on Form 10-K for the year ended December 31,
2000, as amended on Form 10-K/A and our consolidated financial statements and
related notes included elsewhere in this prospectus.



                                  December 31, 2000        March 31, 2001
                                ----------------------  ----------------------
                                  Actual    Pro forma     Actual    Pro forma
                                ----------  ----------  ----------  ----------
                                          (dollars in thousands)
                                                        
Cash and cash equivalents...... $   31,207  $   31,207  $   17,443  $   20,174
                                ==========  ==========  ==========  ==========
Long-term debt (including
 current maturities):
  Credit facilities (1)........    498,800      35,625     456,300         --
  Other debt...................      6,882       6,882      13,305      13,305
  Notes offered hereby.........        --      225,000         --      225,000
  New credit facilities........                250,000         --      250,000
  Convertible notes............    470,000     470,000     470,000     470,000
                                ----------  ----------  ----------  ----------
    Total long-term debt.......    975,682     987,507     939,605     958,305
                                ----------  ----------  ----------  ----------
Minority interests.............     18,876      18,876      21,045      21,045
Shareholders' equity:
  Common stock, $0.001 par
   value, 195,000,000 shares
   authorized; 82,135,634 and
   82,943,817 shares issued and
   outstanding.................         82          82          83          83
  Additional paid-in capital...    430,676     430,676     438,509     438,509
  Notes receivable from
   shareholders................        (83)        (83)        --          --
  Accumulated deficit..........    (81,307)    (81,307)    (50,373)    (50,373)
                                ----------  ----------  ----------  ----------
    Total shareholders'
     equity....................    349,368     349,368     388,219     388,219
                                ----------  ----------  ----------  ----------
    Total capitalization....... $1,343,926  $1,355,751  $1,348,869  $1,367,569
                                ==========  ==========  ==========  ==========

- --------
(1) As of December 31, 2000 and March 31, 2001, the available balance of $150
    million under our then-existing revolving credit facility was unused.

  On May 4, 2001, we completed a refinancing of our existing senior credit
  facilities. The new credit facilities include $250 million of term loan
  borrowings and a $150 million revolving credit facility, none of which was
  initially drawn. With the refinancing, we paid off $223 million,
  representing all of the remaining outstanding balances, on the then-
  existing credit facilities.

                                       17


                                 EXCHANGE OFFER

    In a registration rights agreement between us and the initial purchasers of
the Series A Notes, we agreed to:

   .  File a registration statement on or prior to 90 days after the closing
      of the offering of the Series A Notes with respect to an offer to
      exchange the Series A Notes for a new issue of securities, with terms
      substantially the same as the Series A Notes but registered under the
      Securities Act;

   .  Use our reasonable best efforts to cause the registration statement to
      be declared effective by the Commission on or prior to 180 days after
      the closing of the Series A Notes offering; and

   .  Use our reasonable best efforts to consummate the exchange offer and
      issue the Series B Notes within 30 business days after the registration
      statement is declared effective.

    The registration rights agreement provides that, in the event we fail to
file the registration statement within 90 days after the closing date, have it
declared effective within 180 days after the closing date or consummate the
exchange offer within 30 business days thereafter, we will be required to pay
liquidated damages on the Series A Notes over and above the regular interest on
the Series A Notes. Once we complete this exchange offer, we will no longer be
required to pay liquidated damages on the Series A Notes.

    The exchange offer is not being made to, nor will we accept tenders for
exchange from, holders of Series A Notes in any jurisdiction in which the
exchange offer or acceptance of the exchange offer would violate the securities
or blue sky laws of that jurisdiction.

Terms of the exchange offer; Period for tendering Series A Notes

    This prospectus and the accompanying letter of transmittal contain the
terms and conditions of the exchange offer. Upon the terms and subject to the
conditions included in this prospectus and in the accompanying letter of
transmittal, which together are the exchange offer, we will accept for exchange
Series A Notes which are properly tendered on or prior to the expiration date,
unless you have previously withdrawn them.

   .  When you tender Series A Notes as provided below, our acceptance of the
      Series A Notes will constitute a binding agreement between you and us
      upon the terms and subject to the conditions in this prospectus and in
      the accompanying letter of transmittal.

   .  For each $1,000 principal amount of Series A Notes surrendered to us in
      the exchange offer, we will give you $1,000 principal amount of Series
      B Notes.

   .  We will keep the exchange offer open for not less than 20 business
      days, or longer if required by applicable law, after the date that we
      first mail notice of the exchange offer to the holders of the Series A
      Notes. We are sending this prospectus, together with the letter of
      transmittal, on or about the date of this prospectus to all of the
      registered holders of Series A Notes at their addresses listed in the
      trustee's security register with respect to the Series A Notes.

   .  The exchange offer expires at 5:00 p.m., New York City time, on , 2001;
      provided, however, that we, in our sole discretion, may extend the
      period of time for which the exchange offer is open. The term
      "expiration date" means , 2001 or, if extended by us, the latest time
      and date to which the exchange offer is extended.

   .  As of the date of this prospectus, $225 million in aggregate principal
      amount of the Series A Notes were outstanding. The exchange offer is
      not conditioned upon any minimum principal amount of Series A Notes
      being tendered.

   .  Our obligation to accept Series A Notes for exchange in the exchange
      offer is subject to the conditions that we describe in the section
      called "Conditions to the exchange offer" below.

                                       18


   .  We expressly reserve the right, at any time, to extend the period of
      time during which the exchange offer is open, and thereby delay
      acceptance of any Series A Notes, by giving oral or written notice of
      an extension to the exchange agent and notice of that extension to the
      holders as described below. During any extension, all Series A Notes
      previously tendered will remain subject to the exchange offer unless
      withdrawal rights are exercised. Any Series A Notes not accepted for
      exchange for any reason will be returned without expense to the
      tendering holder as promptly as practicable after the expiration or
      termination of the exchange offer.

   .  We expressly reserve the right to amend or terminate the exchange
      offer, and not to accept for exchange any Series A Notes that we have
      not yet accepted for exchange, if any of the conditions of the
      exchange offer specified below under "Conditions to the exchange
      offer" are not satisfied.

   .  We will give oral or written notice of any extension, amendment,
      termination or non-acceptance described above to holders of the Series
      A Notes as promptly as practicable. If we extend the expiration date,
      we will give notice by means of a press release or other public
      announcement no later than 9:00 a.m., New York City time, on the
      business day after the previously scheduled expiration date. Without
      limiting the manner in which we may choose to make any public
      announcement and subject to applicable law, we will have no obligation
      to publish, advertise or otherwise communicate any public announcement
      other than by issuing a release to the New York Stock Exchange.

   .  Holders of Series A Notes do not have any appraisal or dissenters'
      rights in connection with the exchange offer.

   .  Series A Notes which are not tendered for exchange or are tendered but
      not accepted in connection with the exchange offer will remain
      outstanding and be entitled to the benefits of the indenture, but will
      not be entitled to any further registration rights under the
      registration rights agreement.

   .  We intend to conduct the exchange offer in accordance with the
      applicable requirements of the Exchange Act and the rules and
      regulations of the Commission thereunder.

   .  By executing, or otherwise becoming bound by, the letter of
      transmittal, you will be making the representations described below to
      us. See "--Resales of the Series B Notes."

Important rules concerning the exchange offer

     You should note that:

   .  All questions as to the validity, form, eligibility, time of receipt
      and acceptance of Series A Notes tendered for exchange will be
      determined by us in our sole discretion.

   .  We reserve the absolute right to reject any and all tenders of any
      particular Series A Notes not properly tendered or to not accept any
      particular Series A Notes for which acceptance might, in our judgment
      or the judgment of our counsel, be unlawful.

   .  We also reserve the absolute right to waive any defects or
      irregularities or conditions of the exchange offer as to any
      particular Series A Notes either before or after the expiration date,
      including the right to waive the ineligibility of any holder who seeks
      to tender Series A Notes in the exchange offer. Unless we agree to
      waive any defect or irregularity in connection with the tender of
      Series A Notes for exchange, you must cure any defect or irregularity
      within any reasonable period of time that we determine.

   .  Our interpretation of the terms and conditions of the exchange offer
      as to any particular Series A Notes either before or after the
      expiration date shall be final and binding on all parties.

   .  Neither we, the exchange agent nor any other person shall be under any
      duty to give notification of any defect or irregularity with respect
      to any tender of Series A Notes for exchange, nor shall we or they
      incur any liability for failure to give any notification.

                                       19


Procedures for tendering Series A Notes

 What to submit and how

     If you, as the registered holder of a Series A Note, wish to tender your
Series A Note for exchange in the exchange offer, you must transmit a properly
completed and duly executed letter of transmittal to U.S. Trust Company of
Texas, National Association at the address set forth below under "Exchange
agent" on or prior to the expiration date of the exchange offer.

     In addition,

   .  Certificates for Series A Notes must be received by the exchange agent
      along with the letter of transmittal; or

   .  A timely confirmation of a book-entry transfer of Series A Notes, if
      such procedure is available, into the exchange agent's account at the
      Depository Trust Corporation, or DTC, using the procedure for book-
      entry transfer described below, must be received by the exchange agent
      prior to the expiration date; or

   .  You must comply with the guaranteed delivery procedures described
      below.

     The method of delivery of Series A Notes, letters of transmittal and
notices of guaranteed delivery is at your election and risk. If delivery is by
mail, we recommend that registered mail, properly insured, with return receipt
requested, be used. In all cases, sufficient time should be allowed to assure
timely delivery. No letters of transmittal or Series A Notes should be sent to
us.

 Beneficial owners

     If you hold Series A Notes and your Series A Notes are registered in the
name of a broker-dealer, commercial bank, trust company or other nominee and
you wish to tender your Series A Notes, you should contact the registered
holder promptly and instruct it to tender on your behalf.

     If you hold Series A Notes that are registered as described above and you
want to tender on your own behalf, you must, before completing and executing
the letter of transmittal and delivering your Series A Notes, either make
appropriate arrangements to register ownership of the Series A Notes in your
name or obtain a properly completed bond power from the registered holder. The
transfer of registered ownership may take a long time.

 How to sign your letter of transmittal and other documents

     Signatures on a letter of transmittal or a notice of withdrawal must be
guaranteed unless the Series A Notes being surrendered for exchange are
tendered:

   .  By a registered holder of the Series A Notes who has not completed the
      box entitled "Special Issuance Instructions" or "Special Delivery
      Instructions" on the letter of transmittal; or

   .  For the account of an eligible institution.

     If signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, are required to be guaranteed, the guarantees must be by any of
the following eligible institutions:

   .  A firm which is a member of a registered national securities exchange
      or a member of the National Association of Securities Dealers, Inc.;
      or

   .  A commercial bank or trust company having an office or correspondent
      in the United States.

     If the letter of transmittal is signed by a person or persons other than
the registered holder or holders of Series A Notes, the Series A Notes must be
endorsed or accompanied by appropriate powers of attorney, in

                                       20


either case signed exactly as the name or names of the registered holder or
holders that appear on the Series A Notes and with the signature guaranteed.

     If the letter of transmittal or any Series A Notes or powers of attorney
are signed by trustees, executors, administrators, guardians, attorneys-in-
fact, officers or corporations or others acting in a fiduciary or
representative capacity, the person should so indicate when signing and, unless
waived by us, proper evidence satisfactory to us of our authority to so act
must be submitted.

Acceptance of Series A Notes for exchange; Delivery of Series B Notes

     Once all of the conditions to the exchange offer are satisfied or waived,
we will accept, promptly after the expiration date, all Series A Notes properly
tendered and will issue the Series B Notes promptly after acceptance of the
Series A Notes. See "Conditions to the exchange offer" below. For purposes of
the exchange offer, our giving of oral or written notice of our acceptance to
the exchange agent will be considered our acceptance of the Series A Notes.

     In all cases, we will issue Series B Notes in exchange for Series A Notes
that are accepted for exchange only after timely receipt by the exchange agent
of:

   .  Certificates for Series A Notes; or

   .  A timely book-entry confirmation of transfer of Series A Notes into
      the exchange agent's account at DTC using the book-entry transfer
      procedures described below; and

   .  A properly completed and duly executed letter of transmittal.

     If we do not accept any of your tendered Series A Notes for any reason
included in the terms and conditions of the exchange offer or if you submit
certificates representing Series A Notes in a greater principal amount than you
wish to exchange, we will return any unaccepted or non-exchanged Series A Notes
without expense to you or, in the case of Series A Notes tendered by book-entry
transfer into the exchange agent's account at DTC using the book-entry transfer
procedures described below, non-exchanged Series A Notes will be credited to an
account maintained with DTC as promptly as practicable after the expiration or
termination of the exchange offer.

Book-entry transfer

     The exchange agent will make a request to establish an account with
respect to the Series A Notes at DTC for purposes of the exchange offer
promptly after the date of this prospectus. Any financial institution that is a
participant in DTC's systems may make book-entry delivery of Series A Notes by
causing DTC to transfer Series A Notes into the exchange agent's account in
accordance with DTC's Automated Tender Offer Program procedures for transfer.
However, the exchange for the Series A Notes so tendered will only be made
after timely confirmation of book-entry transfer of Series A Notes into the
exchange agent's account, and timely receipt by the exchange agent of an
agent's message, transmitted by DTC and received by the exchange agent and
forming a part of a book-entry confirmation. The agent's message must state
that DTC has received an express acknowledgment from the participant tendering
Series A Notes that are the subject of that book-entry confirmation that the
participant has received, and agrees to be bound by the terms of, the letter of
transmittal, and that we may enforce the agreement against that participant.

     Although delivery of Series A Notes may be effected through book-entry
transfer into the exchange agent's account at DTC, the letter of transmittal,
or a facsimile copy, properly completed and duly executed, with any required
signature guarantees, must in any case be received by the exchange agent at its
address listed in this prospectus under "--Exchange Agent" on or prior to the
expiration date.

     If your Series A Notes are held through DTC, you must complete a form
called "instructions to registered holder and/or book-entry participant," which
will instruct the DTC participant through whom you

                                       21


hold your securities of your intention to tender your Series A Notes or not
tender your Series A Notes. Please note that delivery of documents to DTC in
accordance with its procedures does not constitute delivery to the exchange
agent and we will not be able to accept your tender of securities until the
exchange agent receives a letter of transmittal and a book-entry confirmation
from DTC with respect to your securities. A copy of that form is available from
the exchange agent.

Guaranteed delivery procedures

     If you are a registered holder of Series A Notes and you want to tender
your Series A Notes but your Series A Notes are not immediately available, or
time will not permit your Series A Notes to reach the exchange agent before the
expiration date, or the procedure for book-entry transfer cannot be completed
on a timely basis, a tender may be effected if

   .  The tender is made through an eligible institution;

   .  Prior to the expiration date, the exchange agent receives, by
      facsimile transmission, mail or hand delivery, from that eligible
      institution a properly completed and duly executed letter of
      transmittal and notice of guaranteed delivery, substantially in the
      form provided by us, stating:

     (1) The name and address of the holder of Series A Notes;

     (2) The amount of Series A Notes tendered; and

     (3) That tender is being made by delivering that notice and
         guarantying that within three New York Stock Exchange trading days
         after the date of execution of the notice of guaranteed delivery,
         the certificates of all physically tendered Series A Notes, in
         proper form for transfer, or a book-entry confirmation, as the
         case may be, will be deposited by that eligible institution with
         the exchange agent; and

   .  The certificates for all physically tendered Series A Notes, in proper
      form for transfer, or a book-entry confirmation, as the case may be,
      are received by the exchange agent within three New York Stock
      Exchange trading days after the date of execution of the notice of
      guaranteed delivery.

Withdrawal rights

     You can withdraw your tender of Series A Notes at any time on or prior to
the expiration date.

     For a withdrawal to be effective, a written notice of withdrawal must be
received by the exchange agent at one of the addresses listed below under
"Exchange agent." Any notice of withdrawal must specify:

   .  The name of the person having tendered the Series A Notes to be
      withdrawn;

   .  The Series A Notes to be withdrawn;

   .  The principal amount of the Series A Notes to be withdrawn; and

   .  If certificates for Series A Notes have been delivered to the exchange
      agent, the name in which the Series A Notes are registered, if
      different from that of the withdrawing holder.

     If certificates for Series A Notes have been delivered or otherwise
identified to the exchange agent, then, prior to the release of those
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 institution.

     If Series A Notes have been tendered using the procedure for book-entry
transfer described above, any notice of withdrawal must also specify the name
and number of the account at DTC to be credited with the withdrawn Series A
Notes and otherwise comply with the procedures of that facility.

                                       22


     Please note that all questions as to the validity, form, eligibility and
time of receipt of notices of withdrawal will be determined by us, and our
determination will be final and binding on all parties. Any Series A Notes so
withdrawn will be considered not to have been validly tendered for exchange for
purposes of the exchange offer.

     If you have properly withdrawn Series A Notes and wish to re-tender them,
you may do so by following one of the procedures described under "Procedures
for tendering Series A Notes" above at any time on or prior to the expiration
date.

Conditions to the exchange offer

     Notwithstanding any other provisions of the exchange offer, we will not be
required to accept for exchange, or to issue Series B Notes in exchange for,
any Series A Notes and may terminate or amend the exchange offer, if at any
time before the acceptance of Series A Notes for exchange or the exchange of
the Series B Notes for Series A Notes, that acceptance or issuance would
violate applicable law or any interpretation of the staff of the Commission.

     The condition above is for our sole benefit and may be asserted by us
regardless of the circumstances giving rise to that condition. Our failure at
any time to exercise the foregoing rights shall not be considered a waiver by
us of that right. Our rights described in the prior paragraph are ongoing
rights which we may assert at any time and from time to time.

     In addition, we will not accept for exchange any Series A Notes tendered,
and no Series B Notes will be issued in exchange for any Series A Notes, if at
that time any stop order shall be threatened or in effect with respect to the
exchange offer to which this prospectus relates or the qualification of the
indenture under the Trust Indenture Act.

Exchange agent

     U.S. Trust Company of Texas, National Association, has been appointed as
the exchange agent for the exchange offer. All executed letters of transmittal
should be directed to the exchange agent at the address set forth below.
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 should be directed to the exchange agent, addressed as
follows:

    By Registered Mail, Certified Mail, Overnight Delivery or Regular Mail:

               U.S. Trust Company of Texas, National Association
                         Corporate Trust Administration
                          2001 Ross Avenue, Suite 2700
                              Dallas, Texas 75201

                            FACSIMILE TRANSMISSIONS:
                                 (214) 754-1301
                            TO CONFIRM BY TELEPHONE
                              OR FOR INFORMATION:
                                 1-800-829-5653

     Delivery to an address other than as listed above or transmission of
instructions via facsimile other than as listed above does not constitute a
valid delivery.

                                       23


Fees and expenses

     The principal solicitation is being made by mail; however, additional
solicitation may be made by facsimile, telephone or in person by our officers,
regular employees and affiliates. We will not pay any additional compensation
to any of our officers and employees who engage in soliciting tenders. We will
not make any payment to brokers, dealers, or others soliciting acceptances of
the exchange offer. However, we will pay the exchange agent reasonable and
customary fees for its services and will reimburse it for its reasonable out-
of-pocket expenses in connection with the exchange offer.

     The estimated cash expenses to be incurred in connection with the exchange
offer, including legal, accounting, Commission filing, printing and exchange
agent expenses, will be paid by us and are estimated in the aggregate to be
$     .

Accounting treatment

     We will record the Series B Notes at the same carrying value as the Series
A Notes as reflected in our accounting records on the date of exchange.
Therefore, we will not recognize a gain or loss for accounting purposes. We
will amortize the expenses of the exchange offer and the unamortized expenses
related to the issuance of the Series A Notes over the term of the notes.

Transfer taxes

     Holders who tender their Series A Notes for exchange will not be obligated
to pay any transfer taxes in connection therewith, except that holders who
instruct us to register Series B Notes in the name of, or request that Series A
Notes not tendered or not accepted in the exchange offer be returned to, a
person other than the registered tendering holder will be responsible for the
payment of any applicable transfer tax thereon.

No appraisal or dissenters' rights

     In connection with the exchange offer, you do not have any appraisal or
dissenters' rights under the General Corporation Law of the State of Delaware
or the indenture governing the Series A Notes. We intend to conduct the
exchange offer in accordance with the registration rights agreement, the
applicable requirements of the Exchange Act and the rules and regulations of
the Commission related to exchange offers.

Resale of the Series B Notes

     Under existing interpretations of the staff of the Commission contained in
several no-action letters to third parties, the Series B Notes would in general
be freely transferable after the exchange offer without further registration
under the Securities Act. The relevant no-action letters include the Exxon
Capital Holdings Corporation letter, which was made available by the Commission
on May 13, 1988, and the Morgan Stanley & Co. Incorporated letter, made
available on June 5, 1991.

     However, any purchaser of Series A Notes who is our "affiliate" under the
Securities Act or who intends to participate in the exchange offer for the
purpose of distributing the Series B Notes:

   .  Will not be able to rely on the interpretation of the staff of the
      Commission;

   .  Will not be able to tender its Series A Notes in the exchange offer;
      and

   .  Must comply with the registration and prospectus delivery requirements
      of the Securities Act in connection with any sale or transfer of the
      securities unless that sale or transfer is made using an exemption
      from those requirements.

                                       24


     By executing, or otherwise becoming bound by, the Letter of Transmittal
each holder of the Series A Notes will represent that:

   .  It is not our "affiliate;"

   .  Any Series B Notes to be received by it were acquired in the ordinary
      course of its business; and

   .  It has no arrangement or understanding with any person to participate,
      and is not engaged in and does not intend to engage, in the
      "distribution," within the meaning of the Securities Act, of the
      Series B Notes.

     In addition, in connection with any resales of Series B Notes, any broker-
dealer participating in the exchange offer who acquired securities for its own
account as a result of market-making or other trading activities must deliver a
prospectus meeting the requirements of the Securities Act. The Commission has
taken the position in the Shearman & Sterling no-action letter, which it made
available on July 2, 1993, that participating broker-dealers may fulfill their
prospectus delivery requirements with respect to the Series B Notes, other than
a resale of an unsold allotment from the original sale of the Series A Notes,
with the prospectus contained in the exchange offer registration statement.
Under the registration rights agreement, we are required to allow participating
broker-dealers and other persons, if any, subject to similar prospectus
delivery requirements to use this prospectus as it may be amended or
supplemented from time to time, in connection with the resale of Series B
Notes.

     We have agreed to pay all expenses incidental to the exchange offer other
than commissions and concessions of any brokers or dealers and will indemnify
holders of the notes, including any broker-dealers, against some liabilities,
including liabilities under the Securities Act, as set forth in the
registration rights agreement.

                                       25


                            SELECTED FINANCIAL DATA

     The following tables present our selected financial data. The statement of
income data for each of the years ended December 31, 1998, 1999 and 2000 and
the summary balance sheet data as of December 31, 1999 and 2000 have been
derived from our audited consolidated financial statements and related notes
for the year ended December 31, 2000 included elsewhere in this prospectus. The
statement of income data for each of the years ended December 31, 1996 and 1997
and the balance sheet data as of December 31, 1996, 1997 and 1998 have been
derived from our audited consolidated financial statements and related notes
that are not included in this prospectus. The statement of income data and the
summary balance sheet data for the quarter ended March 31, 2001 have been
derived from our unaudited condensed consolidated financial statements and
related notes from our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2001 included elsewhere in this prospectus. The pro forma income
statement data is calculated as if the offering of the Series A Notes and the
refinancing of our bank credit facilities and the application of the estimated
net proceeds had occurred on January 1 of each year. The pro forma balance
sheet data is calculated as if the offering of the Series A Notes and the
refinancing of our bank credit facilities and application of the estimated net
proceeds had occurred on such dates.

                                       26


    You should read the following information together with "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
incorporated by reference from our Annual Report on Form 10-K for the year
ended December 31, 2000, as amended on Form 10-K/A, and our historical
consolidated financial statements and related notes included elsewhere in this
prospectus.



                                           Year ended December 31,                               Quarter ended March 31,
                       ---------------------------------------------------------------------  --------------------------------
                                                                                  Pro forma                         Pro forma
                         1996       1997        1998        1999         2000        2000       2000       2001        2001
                       --------  ----------  ----------  -----------  ----------  ----------  --------  ----------  ----------
                                                (dollars in thousands, except per share data)
                                                                                         
Income statement
 data:
Net operating
 revenues............  $496,651  $  758,403  $1,203,738  $ 1,445,351  $1,486,302  $1,486,302  $372,113  $  386,217  $  386,217
Total operating
 expenses(1).........   428,698     646,816   1,068,825    1,509,333   1,311,587   1,311,587   331,796     310,750     310,750
                       --------  ----------  ----------  -----------  ----------  ----------  --------  ----------  ----------
Operating income
 (loss)..............    67,953     111,587     134,913      (63,982)    174,715     174,715    40,317      75,467      75,467
Other income (loss)..     3,858       3,175       4,894       (1,895)     (7,201)     (7,201)    1,395       1,348       1,348
Debt expense(2)......    13,670      29,082      84,003      110,797     116,637     106,333    33,165      19,724      19,273
Minority interests in
 income of
 consolidated
 subsidiaries........    (3,578)     (4,502)     (7,163)      (5,152)     (5,942)     (5,942)     (998)     (2,457)     (2,457)
                       --------  ----------  ----------  -----------  ----------  ----------  --------  ----------  ----------
Income (loss) before
 income taxes,
 extraordinary item
 and cumulative
 effect of change in
 accounting
 principle...........    54,563      81,178      48,641     (181,826)     44,935      55,239     7,549      54,634      55,085
Income tax expense
 (benefit)...........    22,031      35,654      38,449      (34,570)     27,960      32,169     3,702      23,700      23,884
                       --------  ----------  ----------  -----------  ----------  ----------  --------  ----------  ----------
Income (loss) before
 extraordinary item
 and cumulative
 effect of change in
 accounting
 principle...........  $ 32,532  $   45,524  $   10,192  $  (147,256) $   16,975  $   23,070  $  3,847  $   30,934  $   31,201
                       ========  ==========  ==========  ===========  ==========  ==========  ========  ==========  ==========
Net income
 (loss)(3)...........  $ 24,832  $   45,524  $   (9,448) $  (147,256) $   13,485              $  3,847  $   30,934
                       ========  ==========  ==========  ===========  ==========              ========  ==========
Earnings (loss) per
 common share:
Income (loss) before
 extraordinary item
 and cumulative
 effect of change in
 accounting
 principle...........  $   0.43  $     0.59  $     0.12  $     (1.81) $     0.21  $     0.28  $   0.05  $     0.37  $     0.38
                       ========  ==========  ==========  ===========  ==========  ==========  ========  ==========  ==========
Net income
 (loss)(3)...........  $   0.33  $     0.59  $    (0.12) $     (1.81) $     0.17              $   0.05  $     0.37
                       ========  ==========  ==========  ===========  ==========              ========  ==========
Earnings (loss) per
 common share
 assuming dilution:
Income (loss) before
 extraordinary item
 and cumulative
 effect of change in
 accounting
 principle...........  $   0.42  $     0.57  $     0.12  $     (1.81) $     0.20  $     0.27  $   0.05  $     0.35  $     0.35
                       ========  ==========  ==========  ===========  ==========  ==========  ========  ==========  ==========
Net income
 (loss)(3)...........  $   0.32  $     0.57  $    (0.12) $     (1.81) $     0.16              $   0.05  $     0.35
                       ========  ==========  ==========  ===========  ==========              ========  ==========
Ratio of earnings to
 fixed charges(4)....    3.88:1      3.18:1      1.50:1  (See note 5)     1.34:1                1:20:1      3.27:1

Balance sheet data:
Working capital(6)...  $185,904  $  205,798  $  388,064  $(1,043,796) $  148,348  $  148,348            $  139,264  $  141,995
Cash and cash
 equivalents.........    21,327       6,700      41,487      107,981      31,207      31,207                17,443      20,174
Working capital
 excluding cash and
 cash equivalents....   164,577     199,098     346,577   (1,151,777)    117,141     117,141               121,821     121,821
Total assets.........   664,799   1,279,261   1,911,619    2,056,718   1,596,632   1,608,457             1,625,737   1,637,562
Long-term debt(7)....   233,126     731,192   1,225,781        5,696     974,006     977,975               932,025     938,725
Shareholders'
 equity..............   358,677     422,446     473,864      326,404     349,368     349,368               388,219     388,219

- -------
(1) Total operating expenses include impairments and valuation losses of $4,556
    in 2000 and $139,805 in 1999 and merger related costs of $78,188 in 1998.

(2) Debt expense includes a write-off of deferred financing costs of $1,601 in
    1999 and $1,192 in 2000 and a loss of $9,823 on termination of interest
    rate swap agreements related to refinanced debt in 1998.

                                       27


(3) Extraordinary losses associated with early extinguishment of debt were
    $7,700 ($0.10 per share) in 1996, $12,744 ($0.16 per share) in 1998 and
    $3,490 ($0.04 per share) in 2000.

    In 1998 we adopted Statement of Position No. 98-5, Reporting on the Costs
    for Start-up Activities, or SOP 98-5, which requires that pre-opening and
    organization costs be expensed as incurred. As a result, unamortized
    deferred pre-opening and organizational costs of $6,896 ($0.08 per share)
    were written-off as a cumulative effect of a change in accounting principle
    in 1998.

(4) The ratio of earnings to fixed charges is computed by dividing fixed
    charges into earnings. Earnings for this purpose is defined as pretax
    income from continuing operations adjusted by adding non-capitalized fixed
    charges during the period. Fixed charges is defined for this purpose as the
    total of interest expense, amortization of deferred financing costs and the
    estimated interest component of rental expense on operating leases.

(5) Due to our loss in 1999, the ratio coverage in 1999 was less than 1:1. We
    would have had to generate additional earnings of $181,826 to achieve a
    coverage of 1:1.

(6) The working capital calculation as of December 31, 1999 includes long-term
    debt that was potentially callable under covenant provisions of $1,425,610.

(7) Long-term debt excludes $1,425,610 as of December 31, 1999 that was
    potentially callable under covenant provisions. In July 2000, the debt was
    restructured and the subsequent periods long-term debt reflects scheduled
    debt maturities, consistent with periods presented prior to December 31,
    1999.

                                       28


                              DESCRIPTION OF DEBT

    This summary highlights certain provisions of our debt instruments except
for our Series A Notes, which are described in the "Description of Series B
Notes" section of this prospectus.

Credit facilities

    Our credit facilities are with Credit Suisse First Boston, as syndication
agent, Bank of America, N.A., as administrative agent, and various banks, as
lenders. The following is a summary description of the principal terms of our
credit facilities.

 Structure

    Our credit facilities consist of two term loans and a revolving facility.
The outstanding balances of the Term A loan and Term B loan as of May 4, 2001
were $50 million and $200 million, respectively. The revolving facility
currently provides for revolving credit commitments of $150 million, none of
which had been drawn upon by us as of May 4, 2001. Under the revolving credit
facility, up to $25 million in short-term funds may be borrowed the same day
that notice is given to the banks under a "swing line" facility.

 Security; Guarantees

    Each of our existing direct and indirect wholly owned domestic
subsidiaries and future direct and indirect wholly owned domestic subsidiaries
have guaranteed the obligations under our credit facilities. Our credit
facilities and the guarantees are secured by substantially all of the personal
property assets of the guarantor subsidiaries. In addition, our credit
facilities are secured by a pledge of all of the capital stock, or similar
equity interests, of our wholly owned subsidiaries and, subject to a few
exceptions, the capital stock, or similar equity interests we, or our wholly
owned subsidiaries, own in our existing direct and indirect non-wholly owned
subsidiaries and future direct and indirect non-wholly owned subsidiaries.

 Interest rate

    In general, borrowings under our credit facilities bear interest at one of
two floating rates selected by us:

   .  The base rate, defined as the higher of Bank of America's prime rate or
      the federal funds rate plus 0.5%, plus a margin ranging from .75% to
      2.00% for borrowings under the revolving credit facility and the Term A
      facility and a margin of 1.75% for borrowings under the Term B
      facility.

   .  The eurodollar rate, defined generally as the rate at which deposits in
      U.S. Dollars appear on the Dow Jones Telerate Screen two business days
      before the first day of the applicable interest period, adjusted for
      statutory reserves, plus a margin ranging from 1.75% to 3.00% for
      borrowings under the revolving credit facility and the Term A loan and
      a margin of 2.75% for borrowings under the Term B loan.

    The applicable margin used in determining the interest rate for borrowings
under the revolving facility and the Term A loan is based on our leverage
ratio. Currently, the applicable margin is near the top of the ranges listed
above. The applicable margin used in determining the interest rate for
borrowings under the Term B loan is fixed for the term of the loan.

    Swing line borrowings bear interest at a rate negotiated by us and Bank of
America as the swing line lender.

 Maturity

    We are required to repay the entire amount borrowed under the Term A loan
in equal quarterly installments of $2.5 million due at the end of each
calender quarter through March 31, 2006. Payments of $500,000 each are due at
the end of each calendar quarter through December 31, 2005 under the Term B
loan,

                                      29


with the remaining balance of $190,500,000 to be paid when the Term B loan
matures on March 31, 2006. However, if the maturity of the 5 5/8% convertible
notes described below has been extended on or before March 1, 2006 to a date
not earlier than June 1, 2007, or if those notes are converted into equity
interests by March 1, 2006, then the maturity date of the Term B loan will be
extended one year. In that case, the quarterly payments of $500,000 will
continue through December 31, 2006 and the remaining balance of $188,500,000
will be due on March 31, 2007.

     Any scheduled quarterly payment due under the term loans may be fully or
partially prepaid at any time upon proper notice.

 Fees

     We are required to pay the lenders under our revolving facility a
commitment fee based on the daily average unused portion of the revolving
credit commitments and the outstanding balances under the swing line facility.
We are also obligated to pay letter of credit fees on the aggregate stated
amount of outstanding letters of credit.

 Covenants

     Our credit facilities contain a number of covenants, in addition to the
financial covenants, that, among other things, restrict our ability and that of
our subsidiaries to:

   .  Dispose of assets;

   .  Incur additional debt;

   .  Prepay other debt, subject to specified exceptions, or amend specified
      debt instruments;

   .  Pay dividends;

   .  Create liens on assets;

   .  Issue additional equity interests;

   .  Make investments, loans or advances;

   .  Make acquisitions;

   .  Engage in mergers or consolidations;

   .  Change the business conducted by us or our subsidiaries;

   .  Purchase shares of our outstanding common stock or equity interests of
      our subsidiaries; and

   .  Otherwise undertake various corporate activities.

     In addition, our credit facilities contain financial covenants that
require us to satisfy, on a consolidated basis, specified financial tests
including a minimum fixed charge coverage ratio, a minimum net worth test and a
maximum leverage ratio.

 Events of default

     Our credit facilities contain customary events of default, including:

   .  Nonpayment of principal, interest or fees;

   .  Material inaccuracy of representations and warranties;

   .  Violation of covenants;

   .  Cross-defaults to other debt;

                                       30


   .  Events of bankruptcy and insolvency;

   .  Employee Retirement Income Security Act of 1974 matters;

   .  Material judgments; and

   .  Invalidity of any guarantee or security interest.

     In addition, if we or any of our subsidiaries become ineligible for
participation in, or are suspended from receiving reimbursement under, Medicare
or Medicaid programs resulting in a material adverse effect on our business or
a decrease of more than 5% in our consolidated net operating revenues, we will
be in default under our credit facilities.

 Mandatory prepayment

     In addition, the term loans and the revolving facility must each be repaid
in full upon a change of control of us. Based upon formulas stated in the
credit agreement, all or a portion of the proceeds from our issuance of public
debt, subordinated debt or preferred stock or our sale of a material amount of
our assets must be used to pay down the outstanding balances under our credit
facilities.

7% convertible notes

     In November 1998 we issued $345 million principal amount of 7% convertible
subordinated notes due 2009 in a private placement offering. These notes are
convertible into shares of our common stock at a conversion price of $32.81 per
share. They are general unsecured obligations that rank junior to all of our
existing and future senior debt and, effectively, all existing and future
liabilities of our subsidiaries. The Series B Notes will rank senior to these
convertible notes. All of the notes issued are currently outstanding and,
although they do not mature until 2009, we may repurchase any or all of them at
our option at any time after November 14, 2001. The repurchase price, expressed
as a percentage of the principal amount of the notes, is shown below for the
12-month periods beginning November 15:



   Year                          Percentage Year                          Percentage
   ----                          ---------- ----                          ----------
                                                                 
   2001........................   104.90%   2005........................   102.10%
   2002........................   104.20%   2006........................   101.40%
   2003........................   103.50%   2007........................   100.70%
   2004........................   102.80%   2008 and thereafter.........   100.00%


     In addition, upon a change of control of us, we generally must make an
irrevocable and unconditional offer to purchase all of these notes.

5 5/8% convertible notes and related guaranty

     We have guaranteed the $125 million outstanding 5 5/8% convertible
subordinated notes due 2006 of Renal Treatment Centers, Inc., or RTC, our
wholly-owned subsidiary. These notes are convertible into shares of our common
stock at an effective conversion price of $25.62 per share. Although these
notes do not mature until 2006, RTC may repurchase them at its option at any
time. The repurchase price, expressed as a percentage of the principal amount
of the notes, is shown below for 12-month periods beginning July 15:



   Year                          Percentage Year                          Percentage
   ----                          ---------- ----                          ----------
                                                                 
   2001........................   102.81%   2004........................   101.13%
   2002........................   102.25%   2005........................   100.56%
   2003........................   101.69%   2006........................   100.00%


     Our guarantee of these notes ranks equally with trade payables and is
junior to our credit facilities and any future debt we may incur, other than
debt that is expressly subordinated to senior debt, unless it otherwise states.
The Series B Notes will rank equally with our guarantee.

                                       31


                         DESCRIPTION OF SERIES B NOTES

     The Series A Notes were, and the Series B Notes will be, issued pursuant
to an indenture dated April 11, 2001, among us, our subsidiaries acting as
guarantors and U.S. Trust Company of Texas, National Association, as trustee.

     You can find the definitions of certain capitalized terms in this section
under the subheading "--Certain definitions." For purposes of this section,
references to "we," "our," or "us" include only DaVita Inc., not its
subsidiaries, except pursuant to the terms of the Guarantees.

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

     The terms of the Series B Notes and the Series A Notes are identical in
all material respects, except the Series B Notes will:

   .  Have a different CUSIP number;

   .  Have been registered under the Securities Act;

   .  Not contain transfer restrictions and registration rights that relate
      to the Series A Notes; and

   .  Not contain provisions relating to the payment of liquidated damages
      to be made to the holders of the Series A Notes under circumstances
      related to the timing of the exchange offer.

     Any Series A Notes that remain outstanding after the exchange offer,
together with Series B Notes, will be treated as a single class of securities
under the indenture for voting purposes. Holders of the Series B Notes will not
be entitled to any registration rights under the registration rights agreement
because these rights will terminate when the exchange offer is completed.

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

Brief description of the Series B Notes and the Guarantees

 The Series B Notes

     The Series B Notes will be:

   .  Our unsecured general obligations;

   .  Ranked junior in right of payment with all of our existing and future
      Senior Debt;

   .  Ranked equal in right of payment to all of our existing and future
      senior subordinated indebtedness;

   .  Ranked senior in right of payment to all of our existing and future
      Subordinated Indebtedness; and

   .  Unconditionally guaranteed by the Guarantors.

     The Series B Notes will rank junior to debt outstanding under the Credit
Agreement. The Series B Notes are guaranteed on a senior subordinated basis by
all of our wholly owned domestic subsidiaries, including RTC. RTC's guarantee
of the Series B Notes is senior to RTC's obligations under its 5 5/8%
convertible subordinated notes. We, but none of our operating subsidiaries,
have guaranteed RTC's notes. Our guarantee of RTC's notes is equal to our
obligations under the Series B Notes offered hereby. The Series B

                                       32


Notes will be issued in fully registered form only, without coupons, in
denominations of $1,000 and integral multiples thereof.

     The term "Subsidiaries" as used in this section does not include
Unrestricted Subsidiaries. As of the date of the indenture, none of our
Subsidiaries will be Unrestricted Subsidiaries. However, under certain
circumstances, we will be able to designate current or future Subsidiaries as
Unrestricted Subsidiaries. Unrestricted Subsidiaries will not be subject to the
restrictive covenants set forth in the indenture. Substantially all of our
operations are conducted through our Subsidiaries and Unrestricted
Subsidiaries.

 The guarantees

     The Series B Notes will be jointly and severally irrevocably and
unconditionally guaranteed on a senior subordinated basis by each of our
present and future Subsidiaries, other than Non-Guarantor Subsidiaries and
Foreign Subsidiaries. If we create a Non-Guarantor Subsidiary, our Consolidated
Minority Adjusted EBITDA Ratio for the four fiscal quarters immediately
preceding such creation must be at least 0.80 to 1.00. For the year ended
December 31, 2000, our Consolidated Minority Adjusted EBITDA Ratio was 0.98 to
1.00. The obligations of each Guarantor under its Guarantee, however, will be
limited in a manner intended to avoid it being deemed a fraudulent conveyance
under applicable law. See "Certain bankruptcy limitations" below.

Principal maturity and interest

     We will issue Series B Notes with a maximum aggregate principal amount of
$225 million. The indenture provides, in addition to the $225 million aggregate
principal amount of Series B Notes being issued on the Issue Date, for the
issuance of additional Series B Notes having identical terms and conditions to
the Series B Notes offered hereby, subject to compliance with the terms of the
indenture, including the covenant "Limitation on incurrence of additional
indebtedness." Interest will accrue on the additional notes issued pursuant to
the indenture from and including the date of issuance of such additional notes.
Any such additional notes will be issued on the same terms as the Series B
Notes and will constitute part of the same series of securities as the Series B
Notes and will vote together as one series on all matters with respect to the
Series B Notes. All references to Series B Notes herein include the additional
notes. We will issue Series B Notes in denominations of $1,000 and integral
multiples of $1,000.

     The Series B Notes will mature on April 15, 2011. The Series B Notes will
bear interest at the rate per annum stated on the cover page hereof from the
date of issuance or from the most recent date to which interest has been paid
or provided for, payable semi-annually in arrears on April 15 and October 15 of
each year, commencing October 15, 2001 to the Persons in whose names such
Series B Notes are registered at the close of business on the April 1 or
October 1 immediately preceding such interest payment date. Interest will be
calculated on the basis of a 360-day year consisting of twelve 30-day months.

Methods of receiving payments on the Series B Notes

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

                                       33


Subordination

    The Series B Notes and the Guarantees will be our and the Guarantor's
general, unsecured obligations, respectively, contractually subordinated in
right of payment to all of our Senior Debt and the Senior Debt of the
Guarantors, as applicable. This effectively means that holders of Senior Debt
must be paid in full before any amounts are paid to the holders of the Series
B Notes in the event we become bankrupt or are liquidated and that holders of
Senior Debt can block payments to the holders of the Series B Notes in the
event of a default by us on such Senior Debt, all as more fully described
below.

    On a pro forma basis, as of March 31, 2001, after giving effect to the
issuance of the Series B Notes and the application of the proceeds therefrom,
we would have had outstanding an aggregate of approximately $287 million of
Senior Debt, $280 million of which Indebtedness is secured. We also would have
been able to borrow an additional $150 million under our Credit Agreement, all
of which would have been Senior Debt. The Guarantors would have had
outstanding an aggregate of approximately $287 million of Senior Debt,
$280 million of which Indebtedness is secured, all of which constituted
guarantees of our Indebtedness.

    The rights of holders will be subordinated by operation of law to all
existing and future indebtedness and preferred stock of our subsidiaries that
are not Guarantors, of which, on a pro forma basis as of March 31, 2001, there
was none.

    We may not, and the Guarantors may not, make payment, by set-off or
otherwise, as applicable, on account of the principal of, premium, if any, or
interest on the Series B Notes, or Liquidated Damages, or on account of the
redemption provisions of the Series B Notes, including any repurchases of
Series B Notes, for cash or property, other than Junior Securities:

    (1) Upon the maturity of any of our Senior Debt or any Senior Debt of such
Guarantor, as applicable, by lapse of time, acceleration, unless waived, or
otherwise, unless and until all principal of, premium, if any, and the
interest on, and all other amounts owing in respect of, such Senior Debt are
first paid in full in cash or Cash Equivalents, or such payment is duly
provided for, or otherwise to the extent holders accept satisfaction of
amounts due by settlement in other than cash or Cash Equivalents; or

    (2) In the event of default in the payment of any principal of, premium,
if any, or interest on our Senior Debt or Senior Debt of such Guarantor, as
applicable, when it becomes due and payable, whether at maturity or at a date
fixed for prepayment or by declaration or otherwise, unless and until such
payment default has been cured or waived or otherwise has ceased to exist.

    Upon (1) the happening of an event of default other than a payment default
that permits the holders of any Designated Senior Debt to declare such
Designated Senior Debt to be due and payable and (2) written notice of such
event of default given to us and the Trustee by the holders of such Designated
Senior Debt or their representative, then, unless and until such event of
default has been cured or waived or otherwise has ceased to exist, no payment,
by set-off or otherwise, may be made by us or on our behalf or by or on behalf
of any Guarantor which is an obligor under such Designated Senior Debt on
account of the principal of, premium, if any, or interest, or Liquidated
Damages, on the Series B Notes, including any repurchases of any of the Series
B Notes, or on account of the redemption provisions of the Series B Notes, in
any such case, other than payments made with Junior Securities.
Notwithstanding the foregoing, unless the Designated Senior Debt in respect of
which such event of default exists has been declared due and payable in its
entirety within 179 days after the payment notice is delivered as set forth
above, and such declaration has not been rescinded or waived, at the end of
the payment blockage period, we shall and the Guarantors shall be required to
pay all sums not previously paid to the holders of the Series B Notes during
the payment blockage period due to the foregoing prohibitions and to resume
all other payments as and when due on the Series B Notes.

    Any number of payment notices may be given; provided, however, that:

    (1) Not more than one payment notice shall be given within a period of any
360 consecutive days; and

                                      34


     (2) No non-payment default that existed upon the date of such payment
notice or the commencement of such payment blockage period, whether or not such
event of default is on the same issue of Designated Senior Debt, shall be made
the basis for the commencement of any other payment blockage period, for
purposes of this provision, any subsequent action, or any subsequent breach of
any financial covenant for a period commencing after the expiration of such
payment blockage period that, in either case, would give rise to a new event of
default, even though it is an event that would also have been a separate breach
pursuant to any provision under which a prior event of default previously
existed, shall constitute a new event of default.

     Upon any distribution of our assets or any Guarantor's assets upon any
dissolution, winding up, total or partial liquidation or reorganization of us
or a Guarantor, whether voluntary or involuntary, in bankruptcy, insolvency,
receivership or a similar proceeding or upon assignment for the benefit of
creditors or any marshaling of assets or liabilities:

     (1) The holders of all of our or such Guarantor's Senior Debt, as
applicable, will first be entitled to receive payment in full in cash or Cash
Equivalents, or have such payment duly provided for, or otherwise to the extent
holders accept satisfaction of amounts due by settlement in other than cash or
Cash Equivalents before the holders are entitled to receive any payment on
account of the principal of, premium, if any, and interest on the Series B
Notes or Liquidated Damages, other than Junior Securities; and

     (2) Any payment or distribution of our or such Guarantor's assets of any
kind or character from any source, whether in cash, property or securities,
other than Junior Securities, to which the holders or the Trustee on behalf of
the holders would be entitled, by set-off or otherwise, except for the
subordination provisions contained in the indenture, will be paid by the
liquidating trustee or agent or other Person making such a payment or
distribution directly to the holders of such Senior Debt or their
representative to the extent necessary to make payment in full, or have such
payment duly provided for, on all such Senior Debt remaining unpaid, after
giving effect to any concurrent payment or distribution to the holders of such
Senior Debt.

     In the event that, notwithstanding the foregoing, any payment or
distribution of our or any Guarantor's assets, other than Junior Securities,
shall be received by the Trustee or the holders at a time when such payment or
distribution is prohibited by the foregoing provisions, such payment or
distribution shall be held for the benefit of the holders of such Senior Debt,
and shall be paid or delivered by the Trustee or such holders, as the case may
be, to the holders of such Senior Debt remaining unpaid or unprovided for or to
their representative or representatives, or to the trustee or trustees under
any indenture pursuant to which any instruments evidencing any of such Senior
Debt may have been issued, ratably according to the aggregate principal amounts
remaining unpaid on account of such Senior Debt held or represented by each,
for application to the payment of all such Senior Debt remaining unpaid, to the
extent necessary to pay or to provide for the payment of all such Senior Debt
in full in cash or Cash Equivalents or otherwise to the extent holders accept
satisfaction of amounts due by settlement in other than cash or Cash
Equivalents after giving effect to any concurrent payment or distribution to
the holders of such Senior Debt.

     No provision contained in the indenture or the Series B Notes will affect
our obligation or the obligation of the Guarantors, which is absolute and
unconditional, to pay, when due, principal of, premium, if any, and interest
and Liquidated Damages, if any, on, the Series B Notes. The subordination
provisions of the indenture and the Series B Notes will not prevent the
occurrence of any Default or Event of Default under the indenture or limit the
rights of the Trustee or any holder to pursue any other rights or remedies with
respect to the Series B Notes.

     As a result of these subordination provisions, in the event of the
liquidation, bankruptcy, reorganization, insolvency, receivership or similar
proceeding or an assignment for the benefit of our creditors or a marshaling of
our assets and liabilities, holders of the Series B Notes may receive ratably
less than other creditors.

                                       35


Certain bankruptcy limitations

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

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

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

Optional redemption

     We will not have the right to redeem any Series B Notes prior to April 15,
2006, other than out of the Net Cash Proceeds of any Public Equity Offering of
our common stock, as described below.

     At any time on or after April 15, 2006, we may redeem the Series B Notes
for cash at our option, in whole or in part, upon not less than 30 days nor
more than 60 days notice to each holder of Series B Notes, at the following
redemption prices, expressed as percentages of the principal amount, if
redeemed during the 12-month period commencing April 15 of the years indicated
below, in each case together with accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of redemption of the Series B Notes:



    Year                                                              Percentage
    ----                                                              ----------
                                                                   
    2006.............................................................  104.625%
    2007.............................................................  103.083%
    2008.............................................................  101.542%
    2009 and thereafter..............................................  100.000%


     At any time on or prior to April 15, 2004, upon any Public Equity Offering
of our common stock for cash, up to 35% of the aggregate principal amount of
the Series B Notes issued pursuant to the indenture may be redeemed at our
option within 90 days of such Public Equity Offering, on not less than 30 days,
but not more than 60 days, notice to each holder of the Series B Notes to be
redeemed, with cash received by us from the Net Cash Proceeds of such Public
Equity Offering, at a redemption price equal to 109.25% of principal, together
with accrued and unpaid interest and Liquidated Damages, if any, thereon to the
redemption date;

                                       36


provided, however, that immediately following such redemption not less than 65%
of the aggregate principal amount of the Series B Notes originally issued
pursuant to the indenture on the Issue Date remain outstanding.

     If the Redemption Date hereunder is on or after an interest record date on
which the holders of record have a right to receive the corresponding Interest
due and Liquidated Damages, if any, and on or before the associated Interest
Payment Date, any accrued and unpaid interest and Liquidated Damages, if any,
due on such Interest Payment Date will be paid to the Person in whose name a
Series B Note is registered at the close of business on such record date on the
corresponding Interest Payment Date.

Mandatory redemption

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

Selection and notice

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

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

Certain covenants

     The indenture contains certain covenants that will, among other things,
restrict our ability to borrow money, pay dividends on or repurchase capital
stock, make investments and sell assets or enter into mergers or
consolidations.

 Repurchase of Series B Notes at the option of the holder upon a change of
 control

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

     The change of control offer shall be made within 30 days following a
change of control and shall remain open for 20 business days following its
commencement. Upon expiration of the change of control offer period, we shall
promptly purchase all Series B Notes properly tendered in response to the
change of control offer.

     As used herein, a "change of control" means:

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

                                       37


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

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

     (4) We adopt a plan of liquidation.

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

     Notwithstanding the foregoing, we will not be required to make a change of
control offer upon a change of control if a third party makes the change of
control offer in the manner, at the times and otherwise in compliance with the
requirements set forth in the indenture applicable to a change of control offer
made by us, including any requirements to repay in full all Indebtedness under
the Credit Agreement, any Senior Debt or Senior Debt of any Guarantor or
obtains the consents of such lenders to such change of control offer as set
forth in the following paragraph of this section, and purchases all Series B
Notes validly tendered and not withdrawn under such change of control offer.

     The indenture provides that, prior to the commencement of a change of
control offer, but in any event within 30 days following any change of control,
we will:

     (1) (a) repay in full, and terminate all commitments under, all
Indebtedness under the Credit Agreement and all other Senior Debt the terms of
which require repayment upon a change of control or (b) offer to repay in full,
and terminate all commitments under, all Indebtedness under the Credit
Agreement and all such other Senior Debt and repay the Indebtedness owed to
each lender that has accepted such offer in full; or

     (2) Obtain the requisite consents under the Credit Agreement and all such
other Senior Debt to permit the repurchase of the Series B Notes as provided
herein.

     Our failure to comply with the preceding sentence shall constitute an
Event of Default described in clause (3) under "Events of default" below, but
without giving effect to the stated exceptions in such clause.

     The occurrence of the events that would constitute a change of control
would also constitute a default under the Credit Agreement. Our future Senior
Debt and our Subsidiaries, future Senior Debt may also contain prohibitions of,
or defaults by virtue of, certain events that would constitute a change of
control or require such Senior Debt to be repurchased upon a change of control.
Moreover, the exercise by the holders of their right to require us to
repurchase the Series B Notes could cause a default under such Senior Debt,
even if the change of control itself did not, due to the financial effect of
such repurchase on us. Finally, our ability to pay cash to the holders upon a
repurchase may be limited by our then existing financial resources. There can
be no assurance that sufficient funds will be available when necessary to make
any required repurchases. Even if sufficient funds were otherwise available,
the terms of the Credit Agreement will, and other Senior Debt may, prohibit our
repurchase of the Series B Notes prior to their scheduled maturity.
Consequently, if we are not able to prepay the Credit Agreement and any other
Senior Debt containing similar restrictions or obtain requisite consents, as
described above, we will be unable to fulfill our repurchase obligations if
holders of the Series B Notes exercise their repurchase rights following a
change of control, thereby resulting in a default under the indenture.

     On or before the change of control purchase date, we will:

     (1) Accept for payment Series B Notes or portions thereof properly
tendered pursuant to the change of control offer,

                                       38


     (2) Deposit with the paying agent for us cash sufficient to pay the change
of control purchase price, together with accrued and unpaid interest and
Liquidated Damages, if any, of all Series B Notes so tendered, and

     (3) Deliver to the Trustee the Series B Notes so accepted together with an
officers' certificate listing the Series B Notes or portions thereof being
purchased by us.

     The paying agent promptly will pay the holders of Series B Notes so
accepted an amount equal to the change of control purchase price, together with
accrued and unpaid interest and Liquidated Damages, if any, and the Trustee
promptly will authenticate and deliver to such holders a new Series B Note
equal in principal amount to any unpurchased portion of the Series B Note
surrendered. Any Series B Notes not so accepted will be delivered promptly by
us to the holder thereof. We publicly will announce the results of the change
of control offer on or as soon as practicable after the change of control
purchase date.

     The change of control purchase feature of the Series B Notes may make more
difficult or discourage a takeover of us, and, thus, the removal of incumbent
management.

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

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

     If the change of control purchase date is on or after an interest payment
record date and on or before the associated Interest Payment Date, any accrued
and unpaid interest, and Liquidated Damages, if any, due on such Interest
Payment Date will be paid to the Person in whose name a Series B Note is
registered at the close of business on such record date on the corresponding
Interest Payment Date.

 Limitation on incurrence of additional indebtedness

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

     Notwithstanding the foregoing if:

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

     (2) On the date of such incurrence, our Consolidated Coverage Ratio for
the Reference Period immediately preceding the incurrence date, after giving
effect on a pro forma basis to such incurrence of such Indebtedness and, to the
extent set forth in the definition of Consolidated Coverage Ratio, the use of
proceeds thereof, would be at least 2.5 to 1.0,

then we and the Guarantors may incur such Indebtedness, including Disqualified
Capital Stock.

                                       39


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

     (a) Our incurrence or the incurrence by any Guarantor or Non-Guarantor
Subsidiary of Capital Expenditure Indebtedness; provided, that:

          (1) The aggregate amount of such Indebtedness incurred and
outstanding at any time pursuant to this paragraph (a), plus any Refinancing
Indebtedness issued to retire, defease, refinance, replace or refund such
Indebtedness, shall not exceed $25 million; and

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

     (b) If no Event of Default shall have occurred and be continuing, our
incurrence or the incurrence by any Guarantor or Non-Guarantor Subsidiary of
Indebtedness in an aggregate amount incurred and outstanding at any time
pursuant to this paragraph (b), plus any Refinancing Indebtedness incurred to
retire, defease, refinance, replace or refund such Indebtedness, of up to $25
million; and

     (c) Our incurrence or the incurrence by any Guarantor of Indebtedness
pursuant to the Credit Agreement in an aggregate amount incurred and
outstanding at any time pursuant to this paragraph (c), plus any Refinancing
Indebtedness incurred to retire, defease, refinance, replace or refund such
Indebtedness, of up to $600 million, minus the amount of any such Indebtedness
(1) retired with the Net Cash Proceeds from any asset sale applied to
permanently reduce the outstanding amounts or the commitments with respect to
such Indebtedness pursuant to clause (1)(b)(ii) of the first paragraph of the
covenant "Limitation on sale of assets and subsidiary stock" or (2) assumed by
a transferee in an asset sale so long as neither we nor such Guarantor
continues to be an obligor under such Indebtedness.

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

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

 Limitation on restricted payments

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

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

     (2) We are not permitted to incur at least $1.00 of additional
Indebtedness pursuant to the debt incurrence ratio in the covenant "Limitation
on incurrence of additional indebtedness;" or

                                       40


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

     (a) $25 million; plus

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

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

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

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

     (v) Restricted Payments in an amount not to exceed $25 million in the
aggregate, exclusive of any accrued and unpaid interest payable in connection
with repurchases of Subordinated Indebtedness, consisting solely of
repurchases of our Capital Stock and our Subordinated Indebtedness on and
after the Issue Date;

     (w) In addition to the amounts permitted under clause (v) above,
Restricted Payments in an amount not to exceed $50 million in the aggregate,
excluding accrued and unpaid interest, consisting solely of repurchases of our
Capital Stock and our Subordinated Indebtedness on and after the Issue Date,
provided, that, after giving effect to any such repurchase on a pro forma
basis, on the date of any such repurchase, our Consolidated Coverage Ratio for
the Reference Period immediately preceding the date of repurchase would be at
least 3.25 to 1.0;
and the provisions of the immediately preceding paragraph will not prohibit,

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

     (y) A Qualified Exchange; or

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

     The full amount of any Restricted Payment made pursuant to the foregoing
clauses (x) and (z), but not pursuant to clause (v) or (w) or (y), of the
immediately preceding sentence, however, will be counted as Restricted
Payments made for purposes of the calculation of the aggregate amount of
Restricted Payments available to be made referred to in clause (3) of the
first paragraph under the heading "--Limitation on restricted payments."

                                      41


     For purposes of this covenant, the amount of any Restricted Payment made
or returned, if other than in cash, shall be the fair market value thereof, as
determined in the good faith reasonable judgment of our board of directors,
unless stated otherwise, at the time made or returned, as applicable.
Additionally, (a) concurrently with each Restricted Payment in excess of $10
million and (b) on February 15 of each year, or if such day is not a Business
Day, the next succeeding Business Day, with respect to all Restricted Payments
made during the preceding 12-month period and not previously reported pursuant
to clause (a) of this paragraph, we shall deliver an Officers' Certificate to
the Trustee describing in reasonable detail the nature of such Restricted
Payment, stating that the Restricted Payment is permitted and setting forth the
basis upon which the calculations required by this covenant were computed.

 Limitation on dividends and other payment restrictions affecting subsidiaries

     The indenture provides that we will not and the Guarantors will not, and
neither we nor the Guarantors will permit any of our Subsidiaries to, directly
or indirectly, create, assume or suffer to exist any consensual restriction on
the ability of any of our Subsidiaries (w) to pay dividends or make other
distributions to or on behalf of, or (x) to pay any obligation to or on behalf
of, or (y) otherwise to transfer assets or property to or on behalf of, or (z)
to make or pay loans or advances to or on behalf of, us or any of our
Subsidiaries, except:

     (1) Restrictions imposed by the Series B Notes or the indenture or by our
other Indebtedness, which may also be guaranteed by the Guarantors, ranking
senior to the Series B Notes or the Guarantees, as applicable; provided, that
such restrictions are no more restrictive than those imposed by the indenture
and the Series B Notes;

     (2) Restrictions imposed by applicable law;

     (3) Existing restrictions under Existing Indebtedness;

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

     (5) Any restriction imposed by Indebtedness incurred under the Credit
Agreement pursuant to clause (c) of the covenant "Limitation on incurrence of
additional indebtedness;" provided, that such restriction or requirement is no
more restrictive than that imposed by the Credit Agreement as of the Issue
Date;

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

     (7) Restrictions on transfer contained in Capital Expenditure Indebtedness
incurred pursuant to clause (a) of the covenant "Limitation on incurrence of
additional indebtedness;" provided, that such restrictions relate only to the
transfer of the property financed with the proceeds of such Capital Expenditure
Indebtedness; and

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

     (9) Solely with respect to Non-Guarantor Subsidiaries, restrictions under
the organizational documents governing such Subsidiary:

        (a) With respect to existing Non-Guarantor Subsidiaries, existing on
the Issue Date; and

                                       42


        (b) With respect to Non-Guarantor Subsidiaries created after the Issue
Date:

           (i) Prohibiting such Subsidiary from guaranteeing our Indebtedness
or another Subsidiary's Indebtedness;

           (ii) On dividend payments and other distributions solely to permit
pro rata dividends and other distributions in respect of any Equity Interests
of such Subsidiary; and

           (iii) With respect to clauses (y) and (z) above, limiting such
transactions to those with terms that are fair and reasonable to such
Subsidiary and no less favorable to such Subsidiary than could have been
obtained in an arm's length transaction with an unrelated third party.

     Notwithstanding the foregoing, in the case of clause (y) above,
encumbrances or restrictions (A) that restrict in a customary manner the
subletting, assignment or transfer of any property or asset that is subject to
a lease, license or similar contract entered into in the ordinary course of
business, or the assignment or transfer of any lease, license or contract
entered into in the ordinary course of business, (B) by virtue of any transfer
of, agreement to transfer, option or right with respect to, or Lien on, any of
our Subsidiaries' property or assets not otherwise prohibited by the indenture
in respect of the assets subject thereto or (C) contained in security
agreements or mortgages securing Indebtedness to the extent such encumbrances
or restrictions restrict the transfer of the property subject to such security
agreements or mortgages may be subject to customary restrictions on the
transfer or disposition thereof pursuant to such Lien.

 Limitations on layering indebtedness

     The indenture provides that we will not and the Guarantors will not, and
neither we nor the Guarantors will permit any of our Subsidiaries to, directly
or indirectly, incur, create, issue, assume, guarantee or otherwise become
liable for any Indebtedness that is contractually subordinate in right of
payment to any of our other Indebtedness or any other Indebtedness of a
Guarantor unless, by its terms, such Indebtedness is contractually subordinate
in right of payment to, or ranks pari passu with, the Series B Notes or the
Guarantee, as applicable.

 Limitation on liens securing indebtedness

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

                                       43


 Limitation on sale of assets and subsidiary stock

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

     (1) (a) The Net Cash Proceeds therefrom are applied within 365 days after
the date of such asset sale, to the extent not applied in accordance with
paragraph (b) below, to the:

              (i) Optional redemption of the Series B Notes in accordance with
the terms of the indenture and our other Indebtedness ranking on a parity with
the Series B Notes and with similar provisions requiring us to redeem such
Indebtedness with the proceeds from such asset sale, pro rata in proportion to
the respective principal amounts (or accreted values in the case of
Indebtedness issued with an original issue discount) of the Series B Notes and
such other Indebtedness then outstanding; or

              (ii) Repurchase of the Series B Notes and such other Indebtedness
ranking on a parity with the Series B Notes and with similar provisions
requiring us to make an offer to purchase such Indebtedness with the proceeds
from such asset sale pursuant to a cash offer, subject only to conditions
required by applicable law, if any, pro rata in proportion to the respective
principal amounts, or accreted values in the case of Indebtedness issued with
an original issue discount, of the Series B Notes and such other Indebtedness
then outstanding, at a purchase price of 100% of the principal amount, or
accreted value in the case of Indebtedness issued with an original issue
discount, together with accrued and unpaid interest and Liquidated Damages, if
any, to the date of payment, made within 335 days of such asset sale; or

        (b) Within 365 days following such asset sale, the asset sale offer
amount is:

              (i) Invested in assets or property, other than notes, bonds,
obligations and securities, except in connection with the acquisition of a
Wholly Owned Subsidiary that immediately becomes a Guarantor in a Related
Business, which will constitute or be a part of a Related Business of ours or
such Subsidiary, if it continues to be a Subsidiary, immediately following such
transaction; or

              (ii) Used to retire Senior Debt and to permanently reduce the
amount of such Senior Debt outstanding on the Issue Date or permitted pursuant
to paragraphs (b) and (c) of the covenant "Limitation on incurrence of
additional indebtedness," including that in the case of a revolver or similar
arrangement that makes credit available, such commitment is so permanently
reduced by such amount;

provided, however, that with respect to any asset sale occurring during 2001,
the asset sale offer amount received therefrom may be applied as provided in
(a) or (b) above at any time prior to December 31, 2002, and any asset sale
offer made in accordance with (a)(ii) above may be made at any time prior to
December 1, 2002,

     (2) At least 75% of the total consideration for such asset sale or series
of related asset sales consists of cash or Cash Equivalents, provided, that up
to one-third of such 75% may consist of notes or other obligations received by
us or such Subsidiary from such transferee that are converted by us or such
Subsidiary into cash, to the extent of the cash received, within 365 days after
receipt, which shall constitute Net Cash Proceeds attributable to the original
asset sale for which such notes or other obligations were received, and
provided further that any of our Indebtedness or of any Subsidiary, as shown on
our or such Subsidiary's most recent balance sheet, other than Subordinated
Indebtedness, that is assumed by the transferee of any such assets shall
constitute cash for purposes hereof, so long as we and all of our Subsidiaries
are fully and unconditionally released therefrom; and

     (3) We receive, or such Subsidiary receives, fair market value for such
asset sale, such determination to be made in good faith by our board of
directors for asset sales exceeding $25 million.

                                       44


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

     The indenture provides that an acquisition of Series B Notes pursuant to
an asset sale offer may be deferred until the accumulated Net Cash Proceeds
from asset sales not applied as set forth in 1(a)(i) or 1(b) above exceeds $10
million and that each asset sale offer shall remain open for at least 20
Business Days following its commencement.

     Upon expiration of the asset sale offer period, we shall apply the asset
sale offer amount plus an amount equal to accrued and unpaid interest and
Liquidated Damages, if any, to the purchase of all Indebtedness properly
tendered in accordance with the provisions hereof, on a pro rata basis if the
asset sale offer amount is insufficient to purchase all Indebtedness so
tendered at the asset sale offer price, together with accrued interest and
Liquidated Damages, if any. To the extent that the aggregate amount of Series B
Notes and such other pari passu Indebtedness tendered pursuant to an asset sale
offer is less than the asset sale offer amount, we may use any remaining Net
Cash Proceeds for general corporate purposes as otherwise permitted by the
indenture and following the consummation of each asset sale offer the excess
proceeds amount shall be reset to zero.

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

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

     (2) We may and our Subsidiaries may convey, sell, transfer, assign or
otherwise dispose of assets pursuant to and in accordance with the covenant
"Limitation on merger, sale or consolidation;"

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

     (4) We may and our Subsidiaries may convey, sell, lease, transfer, assign
or otherwise dispose of assets to us or any of the Guarantors;

     (5) We may and our Subsidiaries may, in the ordinary course of business,
convey, sell, lease, transfer, assign, or otherwise dispose of assets, or
related assets in related transactions, with a fair market value of less than
$1 million;

     (6) We may and each of our Subsidiaries may settle or release litigation
claims in the ordinary course of business or grant Liens not prohibited by the
indenture;

     (7) We may and our Subsidiaries may exchange assets held by us or such
Subsidiaries for assets held by any Person or entity; provided, that (a) at the
time of or when entering into any such exchange of assets and immediately after
giving effect thereto, no Default or Event of Default shall have occurred and
be continuing or would occur as a consequence thereof, (b) the assets received
by us or such Subsidiaries in any such exchange will immediately constitute, be
a part of, or be used in, a Related Business of ours or such Subsidiaries,
(c) with respect to transactions involving assets with a fair market value of
$25 million or more, our board of directors has determined that the terms of
any exchange are fair and reasonable, and (d) any such exchange shall be deemed
to be an asset sale to the extent that we or any of our Subsidiaries receives
cash or Cash Equivalents in such exchange; and

     (8) We and our Subsidiaries may enter into operating leases of real or
personal property in the ordinary course of business.

                                       45


    In addition to the foregoing and notwithstanding anything herein to the
contrary, we will not, and will not permit any of our Subsidiaries to,
directly or indirectly, make any asset sale of any of the Equity Interests of
any of our Subsidiaries (other than to us or to a Wholly Owned Subsidiary that
is a Guarantor) except:

            (i) Pursuant to an asset sale of all the Equity Interests of such
Subsidiary; or

            (ii) Provided, that after such sale we or our Subsidiaries own a
majority of the voting and economic Equity Interests of such Subsidiary, an
asset sale of Equity Interests with no preferences or special rights or
privileges and with no redemption or prepayment provisions; or

            (iii) Up to $10 million in the aggregate per fiscal year, not to
exceed $50 million in the aggregate, of sales of Equity Interests in excess of
50% of the Equity Interests of such Subsidiary, provided, that (x) such
Subsidiary exists solely for the purpose of owning and operating one or more
dialysis centers and providing services related thereto, (y) we or our
Subsidiaries own at least 20% of the voting and economic Equity Interests in
such Subsidiary after such asset sale, and (z) we or a Subsidiary of ours
enters into a management contract with respect to all of the dialysis centers
owned by the Subsidiary that was the subject of the asset sale.

In the case of clause (iii) of the preceding sentence, to the extent that the
aggregate amount available for sales of Equity Interests has been reduced as a
result of such sales, and we, a Guarantor or a Non-Guarantor Subsidiary
thereafter shall either (A) sell in an asset sale in compliance with the
provisions of this covenant all of the remaining Equity Interests in such
Subsidiary owned by us and our Subsidiaries or (B) repurchase Equity Interests
of such Subsidiary such that we, a Guarantor and/or a Non-Guarantor Subsidiary
own(s) in the aggregate in excess of 50% of the Equity Interests of such
Subsidiary upon repurchase, then an amount equal to the sales price received
for such Equity Interests sold in the case of clause (A), or the purchase
price paid for such Equity Interests so repurchased in the case of clause (B),
in either case as determined in good faith, shall increase the aggregate
amount available for future sales under such clause (iii); provided, that

       (a) The amount added back to the aggregate amount shall not exceed the
amount originally deducted therefrom upon the original sale of the Equity
Interests in such Subsidiary;

       (b) The aggregate amount available shall in no event exceed $50 million
at any time;

       (c) The aggregate amount available per year shall in no event exceed
$10 million in any year; and

       (d) To the extent a Non-Guarantor Subsidiary repurchases such Equity
Interests, such repurchase shall be deemed a formation of a Non-Guarantor
Subsidiary on the date of repurchase for purposes of the definition of Non-
Guarantor Subsidiary.

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

    If the payment date in connection with an asset sale offer hereunder is on
or after an interest payment record date and on or before the associated
Interest Payment Date, any accrued and unpaid interest, and Liquidated
Damages, if any, due on such Interest Payment Date will be paid to the Person
in whose name a Series B Note is registered at the close of business on such
record date on the corresponding Interest Payment Date.

                                      46


 Limitation on transactions with affiliates

     The indenture provides that neither we nor any of our Subsidiaries will be
permitted on or after the Issue Date to enter into or suffer to exist any
contract, agreement, arrangement or transaction with any Affiliate, or any
series of related Affiliate transactions, other than Exempted Affiliate
Transactions:

     (1) Unless it is determined that the terms of such Affiliate transaction
are fair and reasonable to us, and no less favorable to us than could have been
obtained in an arm's length transaction with a non-Affiliate; and

     (2) If involving consideration to either party in excess of $5 million,
unless such Affiliate transaction(s) is evidenced by an Officers' Certificate
addressed and delivered to the Trustee certifying that such Affiliate
transaction(s) has been approved by a majority of the members of our board of
directors who are disinterested in such transaction, if there are any directors
who are so disinterested; and

     (3) If involving consideration to either party in excess of $10 million,
unless in addition we, prior to the consummation thereof, obtain a written
favorable opinion as to the fairness of such transaction to us from a financial
point of view from an independent investment banking firm of national
reputation in the United States or, if pertaining to a matter for which such
investment banking firms do not customarily render such opinions, an
accounting, appraisal or valuation firm of national reputation in the United
States.

 Limitation on merger, sale or consolidation

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

     (1) Either (a) we are the continuing entity or (b) the resulting,
surviving or transferee entity is a corporation organized under the laws of the
United States, any state thereof or the District of Columbia and expressly
assumes by supplemental indenture all of our obligations in connection with the
Series B Notes and the indenture;

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

     (3) Unless such transaction is solely the merger of us and one of our
previously existing Subsidiaries and which transaction is not for the purpose
of evading this provision and not in connection with any other transaction,
immediately after giving effect to such transaction on a pro forma basis, the
consolidated resulting, surviving or transferee entity would immediately
thereafter be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the debt incurrence ratio set forth in the first paragraph of the
covenant "Limitation on incurrence of additional indebtedness;" and

     (4) Each Guarantor shall have by amendment to the indenture confirmed that
its Guarantee shall apply to our obligations or the surviving entity in
accordance with the Series B Notes and the indenture.

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

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

                                       47


 Limitation on lines of business

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

 Subsidiary guarantors

     The indenture provides that all of our present and future Subsidiaries,
other than Non-Guarantor Subsidiaries and Foreign Subsidiaries, jointly and
severally will guarantee all principal, premium, if any, and interest, and
Liquidated Damages, if any, on the Series B Notes on a senior subordinated
basis. If we create a Non-Guarantor Subsidiary, our Consolidated Minority
Adjusted EBITDA Ratio for the four fiscal quarters immediately preceding such
creation must be at least 0.80 to 1.00. As of March 31, 2001, our Consolidated
Minority Adjusted EBITDA Ratio was 0.98 to 1.00.

     Notwithstanding anything herein or in the indenture to the contrary, if
any of our Subsidiaries that is not a Guarantor guarantees any of our other
Indebtedness or any other Indebtedness of any of our Subsidiaries, or we or any
of our Subsidiaries, individually or collectively, pledges, directly or
indirectly, more than 65% of the Voting Equity Interests of such Subsidiary to
a lender, other than pledges of Equity Interests of Non-Guarantor Subsidiaries
pursuant to the Credit Agreement, then such Subsidiary must become a Guarantor.

 Release of guarantors

     The indenture provides that no Guarantor will consolidate or merge with or
into, whether or not such Guarantor is the surviving Person, another Person
unless, subject to the provisions of the following paragraph and the other
provisions of the indenture, (1) the Person formed by or surviving any such
consolidation or merger, if other than such Guarantor, assumes all the
obligations of such Guarantor pursuant to a supplemental indenture in form
reasonably satisfactory to the Trustee, pursuant to which such Person shall
guarantee, on a senior subordinated basis, all of such Guarantor's obligations
under such Guarantor's Guarantee on the terms set forth in the indenture; and
(2) immediately before and immediately after giving effect to such transaction
on a pro forma basis, no Default or Event of Default shall have occurred or be
continuing. The provisions of the covenant shall not apply to the merger of any
Guarantors with and into each other or with or into us.

     Upon the sale or disposition, whether by merger, stock purchase, Asset
Sale or otherwise, of a Guarantor, as an entity, to an entity which is not, and
is not required to become, a Guarantor, or the designation of a Subsidiary to
become an Unrestricted Subsidiary, or upon a Guarantor becoming a Non-Guarantor
Subsidiary which transaction is otherwise in compliance with the indenture,
including, without limitation, the provisions of the covenant Limitations on
Sale of Assets and Subsidiary Stock, such Guarantor will be deemed released
from its obligations under its Guarantee of the Series B Notes and such
Guarantee will terminate; provided, however, that any such termination shall
occur only to the extent that all obligations of such Guarantor under all of
its guarantees of, and under all of its pledges of assets or other security
interests that secure, any of our Indebtedness or any Indebtedness of any other
of our Subsidiaries shall also terminate upon such release, sale or transfer
and none of such Guarantor's Equity Interests are pledged for the benefit of
any holder of any of our Indebtedness or any Indebtedness of any of our
Subsidiaries, other than pledges of Equity Interests of Non-Guarantor
Subsidiaries pursuant to the Credit Agreement.

 Limitation on status as investment company

     The indenture prohibits us and our Subsidiaries from being required to
register as an "investment company," as that term is defined in the Investment
Company Act of 1940, as amended.

                                       48


Reports

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

Events of default and remedies

     The indenture defines an "Event of Default" as:

     (1) Our failure to pay any installment of interest, or Liquidated Damages,
if any, on the Series B Notes as and when the same becomes due and payable and
the continuance of any such failure for 30 days;

     (2) Our failure to pay all or any part of the principal, or premium, if
any, on the Series B Notes when and as the same becomes due and payable at
maturity, redemption, by acceleration or otherwise, including, without
limitation, payment of the change of control purchase price or the asset sale
offer price on Series B Notes validly tendered and not properly withdrawn
pursuant to a change of control offer or asset sale offer, as applicable;

     (3) Our failure or the failure by any of our Subsidiaries to observe or
perform any other covenant or agreement contained in the Series B Notes or the
indenture and, except for the provisions under "Limitation on merger, sale or
consolidation" and "Limitation on restricted payments," the continuance of such
failure for a period of 30 days after written notice is given to us by the
Trustee or to us and the Trustee by the holders of at least 25% in aggregate
principal amount of the Series B Notes outstanding;

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

     (5) A default in our Indebtedness or the Indebtedness any of our
Subsidiaries with an aggregate amount outstanding in excess of $10 million (a)
resulting from the failure to pay principal at the stated maturity of such
Indebtedness or (b) as a result of which the maturity of such Indebtedness has
been accelerated prior to its stated maturity;

     (6) Final unsatisfied judgments not covered by insurance aggregating in
excess of $5 million, at any one time rendered against us or any of our
Subsidiaries and not stayed, bonded or discharged within 60 days; and

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

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

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

                                       49


and Liquidated Damages, if any, thereon to be due and payable immediately;
provided, however, that if any Senior Debt is outstanding pursuant to the
Credit Agreement, upon a declaration of such acceleration, such principal and
interest shall be due and payable upon the earlier of (x) the fifth Business
Day after sending us and the representative such written notice, unless such
Event of Default is cured or waived prior to such date and (y) the date of
acceleration of any Senior Debt under the Credit Agreement. In the event a
declaration of acceleration resulting from an Event of Default described in
clause (5) above with respect to any Senior Debt has occurred and is
continuing, such declaration of acceleration shall be automatically annulled if
such default is cured or waived or the holders of the Indebtedness which is the
subject of such default have rescinded their declaration of acceleration in
respect of such indebtedness within 10 days thereof and the Trustee has
received written notice of such cure, waiver or rescission and no other Event
of Default described in clause (5) above has occurred that has not been cured
or waived within 10 days of the declaration of such acceleration in respect of
such Indebtedness. If an Event of Default specified in clause (4) above
relating to us or any of our Significant Subsidiaries occurs, all principal and
accrued interest, and Liquidated Damages, if any, thereon will be immediately
due and payable on all outstanding Series B Notes without any declaration or
other act on the part of the Trustee or the holders. The holders of a majority
in aggregate principal amount of Series B Notes generally are authorized to
rescind such acceleration if all existing Events of Default, other than the
non-payment of the principal of, premium, if any, and interest on the Series B
Notes which have become due solely by such acceleration, have been cured or
waived.

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

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

Legal defeasance and covenant defeasance

     The indenture provides that we may, at our option and at any time, elect
to have our obligations and the obligations of the Guarantors discharged with
respect to the outstanding Series B Notes. Such legal defeasance means that we
shall be deemed to have paid and discharged the entire indebtedness represented
by the Series B Notes, and the indenture shall cease to be of further effect as
to all outstanding Series B Notes and Guarantees, except as to:

     (1) Rights of holders to receive payments in respect of the principal of,
premium, if any, and interest, and Liquidated Damages, if any, on such Series B
Notes when such payments are due from the defeasance trust funds;

     (2) Our obligations with respect to such Series B Notes concerning issuing
temporary Series B Notes, registration of Series B Notes, mutilated, destroyed,
lost or stolen Series B Notes, and the maintenance of an office or agency for
payment and money for security payments held in trust;

     (3) The rights, powers, trust, duties, and immunities of the Trustee, and
our obligations in connection therewith; and

     (4) The legal defeasance provisions of the indenture.

                                       50


    In addition, we may, at our option and at any time, elect to have our
obligations and the obligations of the Guarantors released with respect to
most of the covenants under the indenture, except as described otherwise in
the indenture, and thereafter any omission to comply with such obligations
shall not constitute a Default or Event of Default with respect to the Series
B Notes. In the event covenant defeasance occurs, certain events, not
including non-payment, non-payment of guarantees, and bankruptcy,
receivership, rehabilitation and insolvency events, described under "Events of
Default" will no longer constitute an Event of Default with respect to the
Series B Notes. We may exercise our legal defeasance option regardless of
whether we previously exercised covenant defeasance.

    In order to exercise either legal defeasance or covenant defeasance:

    (1) We must irrevocably deposit with the Trustee, in trust, for the
benefit of the holders of the Series B Notes, U.S. legal tender, U.S.
Government Obligations or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, premium, if any, and interest,
and Liquidated Damages, if any, on such Series B Notes on the stated date for
payment thereof or on the redemption date of such principal or installment of
principal of, premium, if any, or interest, and Liquidated Damages, if any, on
such Series B Notes, and the holders of Series B Notes must have a valid,
perfected, exclusive security interest in such trust;

    (2) In the case of legal defeasance, we shall have delivered to the
Trustee an opinion of counsel in the United States reasonably acceptable to
the Trustee confirming that:

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

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

in either case to the effect that, and based thereon such opinion of counsel
shall confirm that, the holders of such Series B 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, we shall have delivered to the
Trustee an opinion of counsel in the United States reasonably acceptable to
such Trustee confirming that the holders of such Series B 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) No Default or Event of Default shall have occurred and be continuing
on the date of such deposit or insofar as Events of Default from bankruptcy or
insolvency events are concerned, at any time in the period ending on the 91st
day after the date of deposit;

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

    (6) We shall have delivered to the Trustee an Officers' Certificate
stating that the deposit was not made by us with the intent of preferring the
holders of such Series B Notes over any other of our creditors or with the
intent of defeating, hindering, delaying or defrauding any other of our
creditors or others; and

    (7) We shall have delivered to the Trustee an Officers' Certificate and an
opinion of counsel, each stating that the conditions precedent provided for
in, in the case of the Officers' Certificate, (1) through (6) and, in the case
of the opinion of counsel, clauses (1), with respect to the validity and
perfection of the security interest, (2), (3) and (5) of this paragraph have
been complied with and we shall have delivered to the Trustee an Officers'
Certificate, subject to such qualifications and exceptions as the Trustee
deems appropriate, to the effect that, assuming no holder of the Series B
Notes is an insider of ours, the trust funds will not be subject to the effect
of any applicable federal bankruptcy, insolvency, reorganization or similar
laws affecting creditors' right generally.

                                      51


     If the funds deposited with the Trustee to effect covenant defeasance are
insufficient to pay the principal of, premium, if any, and interest, and
Liquidated Damages, if any, on the Series B Notes when due, then our
obligations and the obligations of Guarantors under the indenture will be
revived and no such defeasance will be deemed to have occurred.

Amendments and supplements

     The indenture contains provisions permitting us, the Guarantors and the
Trustee to enter into a supplemental indenture for certain limited purposes
without the consent of the holders, including to:

     (a) Cure any ambiguity, defect, or inconsistency;

     (b) Add to our covenants or the Guarantors' covenants for the benefit of
the holders, or to surrender any right or power conferred upon us or the
Guarantors by the indenture or the Series B Notes or make any other change that
does not materially adversely affect the rights of any holder;

     (c) Provide for collateral for or additional Guarantors of the Series B
Notes;

     (d) Evidence the succession of another Person to us, and the assumption by
any such successor of our obligations under the indenture and the Series B
Notes, in accordance with the terms of the indenture;

     (e) Comply with the Trust Indenture Act;

     (f) Evidence the succession of another corporation to any Guarantor and
assumption by any such successor of the Guarantee of such Guarantor pursuant to
the indenture;

     (g) Evidence the release of any Guarantor; or

     (h) Evidence and provide for the acceptance of appointment of a successor
Trustee with respect to the Series B Notes.

However, no amendment may be made to the subordination provisions of the
indenture that adversely affects the rights of any holder of Senior Debt then
outstanding unless the holders of such Senior Debt, or any group or
representative thereof authorized to give a consent, consent to such amendment.
With the consent of the holders of not less than a majority in aggregate
principal amount of the Series B Notes at the time outstanding, we, the
Guarantors and the Trustee are permitted to amend or supplement the indenture
or any supplemental indenture or modify the rights of the holders; provided,
that no such modification may, without the consent of each holder affected by
the modification:

     (1) Change the Stated Maturity on any Series B Note, or reduce the
principal amount thereof or the rate, or extend the time for payment, of
interest thereon or any premium payable upon the redemption thereof at our
option, or change the city of payment where, or the coin or currency in which,
any Series B Note or any premium or the interest thereon is payable, or impair
the right to institute suit for the enforcement of any such payment on or after
the Stated Maturity thereof, or, in the case of redemption at our option, on or
after the Redemption Date, or reduce the change of control purchase price or
the asset sale offer price after the corresponding asset sale or change of
control has occurred or alter the provisions, including the defined terms used
therein, regarding our right to redeem the Series B Notes as a right, or at our
option or the provisions, including the defined terms used therein, of the
"Repurchase of Series B Notes at the option of the holder upon a change of
control" covenant in a manner adverse to the holders; or

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

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

                                       52


Governing law

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

No personal liability

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

Certain definitions

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

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

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

     "Attributable Indebtedness" means in respect of a Sale-Leaseback
Transaction, as at the time of determination, the present value, discounted at
the interest rate borne by the Series B Notes, compounded annually, of the
total obligations of the lessee for rental payments during the remaining term
of the lease included in such Sale-Leaseback Transaction, including any period
for which such lease has been extended.

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

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

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

                                       53


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

     "Capital Expenditure Indebtedness" of any Person means any Indebtedness of
such Person to any seller or other Person incurred solely to finance the
acquisition, including in the case of a Capitalized Lease Obligation, the
lease, construction, installation or improvement of any real or personal
tangible property or computer software which is directly related to a Related
Business of ours and which is incurred within 180 days of such acquisition or
concurrently with completion of such construction, installation or improvement
and which is secured only by the assets so financed and any attachments thereto
or proceeds thereof.

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

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

     "Cash Equivalent" means:

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

     (2) U.S. dollar denominated and Eurodollar time deposits, bankers'
acceptances and certificates of deposit and commercial paper issued by the
parent corporation of any domestic commercial bank of recognized standing
having capital and surplus in excess of $500 million; or

     (3) Commercial paper issued by others rated at least A-2 or the equivalent
thereof by S&P or at least P-2 or the equivalent thereof by Moody's; or

     (4) Readily marketable direct obligations issued by any state of the
United States of America or any political subdivision thereof having one of the
two highest rating categories obtainable from either Moody's or S&P; or

     (5) Repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (1) and (2) above
entered into with any financial institution meeting the qualifications
specified in clause (2) above; or

     (6) Interests in regulated money market mutual funds that invest at least
95% of their funds in assets or securities of the type described in clauses (1)
through (5) above,

and in the case of each of (1), (2), (3) and (4) maturing within one year after
the date of acquisition.

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

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

                                       54


without regard to the effect of clause (c) of the definition of "Consolidated
Net Income," and any pro forma adjustments shall be made in accordance with
Regulation S-X promulgated by the Commission;

     (2) Transactions giving rise to the need to calculate the Consolidated
Coverage Ratio shall be assumed to have occurred on the first day of the
Reference Period without regard to the effect of clause (c) of the definition
of "Consolidated Net Income;"

     (3) Other than with respect to Indebtedness under revolving credit
facilities incurred in the ordinary course of business for general corporate
purposes and not for Acquisitions, (i) the incurrence of any Indebtedness,
including issuance of any Disqualified Capital Stock, and the application of
proceeds therefrom to the extent used to refinance or retire other
Indebtedness, or (ii) the repayment of any Indebtedness with the Net Cash
Proceeds from any Asset Sale applied to permanently reduce the outstanding
amounts or the commitments with respect to such Indebtedness pursuant to clause
(1)(b)(ii) of the first paragraph of the covenant "Limitation on sale of assets
and subsidiary stock," in each case, during the Reference Period or subsequent
to the Reference Period and on or prior to the Transaction Date shall be
assumed to have occurred on the first day of the Reference Period; and

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

     "Consolidated EBITDA" means, with respect to any Person, for any period,
the Consolidated Net Income of such Person for such period adjusted to exclude
all losses that are either extraordinary, as determined in accordance with
GAAP, or are either unusual or nonrecurring and to add thereto, to the extent
deducted from net revenues in determining Consolidated Net Income, without
duplication, the sum of

     (1) Consolidated income tax expense;

     (2) Consolidated depreciation and amortization expense;

     (3) Consolidated Fixed Charges;

     (4) All other non-recurring non-cash charges of such Person and its
Consolidated Subsidiaries;

     (5) Goodwill Impairment Charges; and

     (6) Minority Interest,

less the amount of all cash payments made by such Person or any of its
Subsidiaries during such period to the extent such payments relate to non-
recurring non-cash charges that were added back in determining Consolidated
EBITDA for such period or any prior period; provided, that consolidated income
tax expense and depreciation and amortization and other non-recurring non-cash
charges of a Subsidiary that is a less than Wholly Owned Subsidiary shall only
be added to the extent of the equity interest of such Person in such
Subsidiary, and with respect to the Company, any cash payments made by us or
one of our Subsidiaries, not exceeding $15 million in the aggregate, paid to
settle or otherwise finally resolve the Florida Overpayment Dispute shall not
be so subtracted.

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

     (a) Interest expensed or capitalized, paid, accrued, or scheduled to be
paid or accrued, including, in accordance with the following sentence, interest
attributable to Capitalized Lease Obligations, of such Person and its
Consolidated Subsidiaries during such period, including (1) original issue
discount and non-cash interest payments or accruals on any Indebtedness, (2)
the interest portion of all deferred payment obligations, and

                                       55


(3) all commissions, discounts and other fees and charges owed with respect to
bankers' acceptances and letters of credit financings and currency and
Interest Swap and Hedging Obligations, in each case to the extent attributable
to such period; and

     (b) The amount of dividends accrued or payable or guaranteed, by such
Person or any of its Consolidated Subsidiaries in respect of Preferred Stock,
other than by Subsidiaries of such Person to such Person or such Person's
Consolidated Subsidiaries, excluding all non-cash dividends which, pursuant to
the terms of the Preferred Stock in respect thereof, may not be converted to
or otherwise paid in cash prior to 91 days after the Stated Maturity.

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

     "Consolidated Minority Adjusted EBITDA Ratio" of any Person on any date
of determination means the ratio, on a pro forma basis, of (a) the aggregate
amount of Consolidated EBITDA of such Person attributable to continuing
operations and businesses, exclusive of amounts attributable to operations and
businesses permanently discontinued or disposed of, for the Reference Period,
less the Minority Interest of such Person, to (b) the aggregate amount of
Consolidated EBITDA of such Person attributable to continuing operations and
businesses, exclusive of amounts attributable to operations and businesses
permanently discontinued or disposed of, for the Reference Period.

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

     (a) All gains, but not losses, that are either extraordinary, as
determined in accordance with GAAP, or are either unusual or nonrecurring,
including any gain from the sale or other disposition of assets outside the
ordinary course of business or from the issuance or sale of any capital stock;

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

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

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

     (e) The net income of, and all dividends and distributions from, any
Unrestricted Subsidiary; and

     (f) The cumulative effect of a change in accounting principles.

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

                                      56


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

     "Continuing Director" means during any period of 12 consecutive months
after the Issue Date, individuals who at the beginning of any such 12-month
period constituted our board of directors, together with any new directors
whose election by such board of directors or whose nomination for election by
our stockholders was approved by a vote of a majority of the directors then
still in office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved, including
new directors designated in or provided for in an agreement regarding the
merger, consolidation or sale, transfer or other conveyance, of all or
substantially all of our assets, if such agreement was approved by a vote of
such majority of directors.

     "Credit Agreement" means the Second Amended and Restated Revolving Credit
Agreement and the Second Amended and Restated Term Loan Agreement, each dated
as of July 14, 2000, by and among us and certain financial institutions and
agents party thereto, and, in each case, any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, as such credit agreement and/or related documents may be amended,
restated, supplemented, renewed, replaced or otherwise modified from time to
time whether or not with the same agent, trustee, representative lenders or
holders, and, subject to the proviso to the next succeeding sentence,
irrespective of any changes in the terms and conditions thereof. Without
limiting the generality of the foregoing, the term "Credit Agreement" shall
include agreements in respect of Interest Swap and Hedging Obligations with
lenders party to the Credit Agreement, or any Affiliate of such lenders, and
shall also include any amendment, amendment and restatement, renewal,
extension, restructuring, supplement or modification to any Credit Agreement
and all refundings, refinancings and replacements in whole or in part of any
Credit Agreement with any other credit agreement, including any credit
agreement:

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

     (2) Adding or deleting borrowers or guarantors thereunder, so long as
borrowers and issuers include one or more of us and our Subsidiaries and our or
their respective successors and assigns;

     (3) Increasing the amount of Indebtedness incurred thereunder or available
to be borrowed thereunder; provided, that on the date such Indebtedness is
incurred it would not be prohibited by paragraph (c) of the covenant
"Limitation on incurrence of additional indebtedness;" or

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

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

     "Designated Senior Debt" means (i) all Indebtedness outstanding under the
Credit Agreement and (ii) any other Senior Indebtedness permitted to be
incurred under this indenture that (a) at the time of determination exceeds $20
million in aggregate principal amount outstanding and (b) is specifically
designated in the instrument evidencing such Senior Indebtedness as "Designated
Senior Indebtedness" by us.

     "Disqualified Capital Stock" means with respect to any Person, (a) Equity
Interests of such Person that, by its terms or by the terms of any security
into which it is convertible, exercisable or exchangeable, is, or upon the
happening of an event or the passage of time or both would be, required to be
redeemed or repurchased (including at the option of the holder thereof) by such
Person or any of its Subsidiaries, in whole or in part, on or prior to 91 days
following the Stated Maturity of the Series B Notes and (b) any Equity
Interests of any Subsidiary of such Person other than any common equity with no
preferences, privileges, and no redemption or repayment provisions; provided,
however, that any Equity Interest that would constitute

                                       57


Disqualified Capital Stock solely because the holders thereof have the right to
require the issuer to repurchase such Disqualified Capital Stock upon the
occurrence of a change of control shall not constitute Disqualified Capital
Stock if the terms of such Equity Interest provide that (i) any such
repurchases may not be made sooner than 10 days after the change of control
purchase date for the Series B Notes and (ii) such Equity Interests so
repurchased are fully and absolutely subordinated to the indefeasible payment
in full of all principal, interest and other amounts due under the Series B
Notes repurchased on such change of control purchase date, and any Equity
Interest not so repurchased shall remain so fully and absolutely subordinated
to the Series B Notes not so repurchased.

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

     "Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.

     "Exempted Affiliate Transaction" means:

   .  The payment of reasonable fees and compensation to and indemnity
      provided for the benefit of our or any Guarantor's directors, officers
      or employees in the ordinary course of business;

   .  Transactions solely between us and any of our Consolidated
      Subsidiaries or solely among our Consolidated Subsidiaries;

   .  Any issuance of securities pursuant to, or other payments, awards or
      grants in cash, securities or otherwise pursuant to, or the funding
      of, employment arrangements, stock option and stock ownership plans
      approved by our board of directors;

   .  Loans or advances to employees in the ordinary course of business in
      accordance with our past practices of or those of any Guarantor, but
      in any event not to exceed $10 million in the aggregate outstanding at
      any one time;

   .  The issuance or sale of any of our Qualified Capital Stock approved by
      a majority of the members of the board of directors and, if any, a
      majority of the independent members of such board of directors;

   .  Restricted Payments and Investments permitted by the provisions of the
      indenture described above under the caption "Limitation on restricted
      payments;" and

   .  Transactions between us and any owner of a Special Purpose Licensed
      Entity or between any Special Purpose Licensed Entity and any of its
      owners, in each case, in the ordinary course of business to facilitate
      the operations of such Special Purpose Licensed Entity.

     "Existing Indebtedness" means our or any of our Subsidiaries'
Indebtedness, other than Indebtedness under the Credit Agreement, in existence
on the Issue Date, reduced to the extent such amounts are repaid, refinanced or
retired.

     "Florida Overpayment Dispute" means the third-party carrier review
relating to claims that our Florida-based laboratory subsidiary submitted for
Medicare reimbursement, pursuant to which the carrier has suspended Medicare
payments and issued formal overpayment determinations.

     "Foreign Subsidiary" means any Subsidiary of ours which (a) is not
organized under the laws of the United States, any state thereof or the
District of Columbia and (b) conducts substantially all of its business
operations outside the United States of America.

                                       58


     "GAAP" means United States generally accepted accounting principles as in
effect on the Issue Date as set forth in:

     (1) The opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants;

     (2) Statements and pronouncements of the Financial Accounting Standards
Board;

     (3) Such other statements by such other entity as approved by a
significant segment of the accounting profession in the United States; and

     (4) The rules and regulations of the Commission governing the inclusion of
financial statements, including pro forma financial statements, in periodic
reports required to be filed pursuant to Section 13 of the Exchange Act,
including opinions and pronouncements in staff accounting bulletins and similar
written statements from the accounting staff of the Commission.

All ratios and computations based on GAAP contained in the indenture shall be
computed in conformity with GAAP.

     "Goodwill Impairment Charges" means with respect to any Person, impairment
and valuation losses, as reflected on such Person's consolidated financial
statements.

     "Guarantor" means each of our present and future Subsidiaries, other than
Non-Guarantor Subsidiaries and Foreign Subsidiaries, that at the time are
guarantors of the Series B Notes in accordance with the indenture.

     "Indebtedness" of any Person means, without duplication,

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

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

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

     (d) All Capitalized Lease Obligations and Attributable Indebtedness of
such Person;

     (e) All liabilities and obligations of others of the kind described in the
preceding clause (a), (b) (c) or (d) to the extent that such Person has
guaranteed or provided credit support or that is otherwise its legal liability;

     (f) All liabilities and obligations of others of the kind described in the
preceding clause (a), (b), (c), (d) or (e) secured by any Lien on any property
or assets of such Person, whether or not such obligation is assumed by such
Person, the amount of such obligation being deemed to be the lesser of the
value of such property or assets or the amount of the obligation so secured;

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

     (h) All Disqualified Capital Stock of such Person, measured at the greater
of its voluntary or involuntary maximum fixed repurchase price plus accrued and
unpaid dividends.

                                       59


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

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

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

     "Investment" by any Person in any other Person means, without duplication:

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

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

     (c) Other than guarantees of our Indebtedness or Indebtedness of any
Guarantor to the extent permitted by the covenant "Limitation on incurrence of
additional indebtedness," the entering into by such Person of any guarantee of,
or other credit support or contingent obligation with respect to, Indebtedness
or other liability of such other Person;

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

     (e) The designation by our board of directors of any Person to be an
Unrestricted Subsidiary.

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

                                       60


     "Issue Date" means the date of first issuance of the Series B Notes under
the indenture.

     "Junior Security" means any Qualified Capital Stock and any of our
Indebtedness or Indebtedness of a Guarantor, as applicable, that is
contractually subordinated in right of payment to Senior Debt at least to the
same extent as the Series B Notes or the Guarantee, as applicable, and has no
scheduled installment of principal due, by redemption, sinking fund payment or
otherwise, on or prior to the Stated Maturity of the Series B Notes; provided,
that in the case of subordination in respect of Senior Debt under the Credit
Agreement, "Junior Security" shall mean any Qualified Capital Stock and any of
our Indebtedness or Indebtedness of a Guarantor, as applicable, that:

     (1) Has a final maturity date occurring after the final maturity date of,
all Senior Debt outstanding under the Credit Agreement on the date of issuance
of such Qualified Capital Stock or Indebtedness;

     (2) Is unsecured;

     (3) Has an Average Life longer than the security for which such Qualified
Capital Stock or Indebtedness is being exchanged; and

     (4) By their terms or by law are subordinated to Senior Debt outstanding
under the Credit Agreement on the date of issuance of such Qualified Capital
Stock or Indebtedness at least to the same extent as the Series B Notes.

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

     "Liquidated Damages" means all liquidated damages then owing pursuant to
the registration rights agreement.

     "Minority Interest" means, with respect to any Person, interests in income
of such Person's Consolidated Subsidiaries held by Persons other than such
Person or another Subsidiary of such Person, as reflected on such Person's
consolidated financial statements.

     "Moody's" means Moody's Investors Service, Inc. and its successors.

     "Net Cash Proceeds" means the aggregate amount of cash or Cash Equivalents
received by us in the case of a sale of Qualified Capital Stock and by us and
our Subsidiaries in respect of an asset sale plus, in the case of an issuance
of Qualified Capital Stock upon any exercise, exchange or conversion of our
securities, including options, warrants, rights and convertible or exchangeable
debt, that were issued for cash on or after the Issue Date, the amount of cash
originally received by us upon the issuance of such securities, including
options, warrants, rights and convertible or exchangeable debt, less, (1) in
each case, the sum of all payments, fees, commissions and, in the case of asset
sales, reasonable, expenses, including, without limitation, the fees and
expenses of legal counsel and investment banking fees and expenses, incurred in
connection with such asset sale or sale of Qualified Capital Stock, and (2) in
the case of an asset sale only, less

     (a) The amount, estimated reasonably and in good faith by us, of income,
franchise, sales and other applicable taxes required to be paid by us or any of
our respective Subsidiaries in connection with such asset sale in the taxable
year that such sale is consummated or in the immediately succeeding taxable
year the computation of which shall take into account, estimated reasonably and
in good faith by us, the reduction in tax liability resulting from any
available operating losses and net operating loss carryovers, tax credits and
tax credit carryforwards, and similar tax attributes. The determination of the
available tax attributes shall be estimated reasonably and in good faith by us
and, in connection therewith, we may exclude from its determination those
available tax attributes as to which there exists an issue of law or fact which
may ultimately result in such attributes not being available to effectuate a
reduction in the asset sale tax liability,

                                       61


     (b) Amounts used to retire Indebtedness, other than Subordinated
Indebtedness, secured by the asset that was the subject of the asset sale,

     (c) 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,

     (d) Appropriate amounts to be provided by us or any Subsidiary as a
reserve against any liabilities, other than tax liabilities, associated with
such asset sale, including, without limitation, pension and other post-
employment benefit liabilities, liabilities related to environmental matters
and liabilities under any indemnification obligations associated with such
asset sale, all as determined in conformity with GAAP.

     "Non-Guarantor Subsidiary" means each non-Wholly Owned Subsidiary of ours
that is not a Foreign Subsidiary, provided, that

     (a) Any Equity Interest in such Subsidiary not owned by us or any
Guarantor is owned by a physician, physician group or other strategic joint
venture partner;

     (b) Such Subsidiary was formed to and exists solely for the purpose of
owning and operating one or more dialysis centers and providing services
related thereto; and

     (c) On each date that a non-Wholly Owned Subsidiary is formed or a Wholly
Owned Subsidiary becomes a non-Wholly Owned Subsidiary, our Consolidated
Minority Adjusted EBITDA Ratio for the Reference Period immediately preceding
such date would be at least 0.80 to 1.00, on a pro forma basis after giving
effect to such formation or transformation to a non-Wholly Owned Subsidiary.

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

     "Offering" means the offering of the Series B Notes by us.

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

     "Permitted Indebtedness" means that:

     (a) We and the Guarantors may incur Indebtedness evidenced by the Series B
Notes and the Guarantees issued pursuant to the indenture up to the amounts
being issued on the original Issue Date, less any amounts repaid or retired;

     (b) We and the Guarantors, as applicable, may incur Refinancing
Indebtedness with respect to any Existing Indebtedness or any Indebtedness,
including Disqualified Capital Stock, described in clause (a) of this
definition or incurred pursuant to the debt incurrence ratio test of the
covenant "Limitation on incurrence of additional indebtedness," or which was
refinanced pursuant to this clause (b);

     (c) We and our Subsidiaries may incur Indebtedness solely in respect of
bankers' acceptances, performance bonds and letters of credit to the extent not
drawn upon, to the extent that such incurrence does not result in the
incurrence of any obligation to repay any obligation relating to borrowed money
or other Indebtedness, all in the ordinary course of business in accordance
with customary industry practices, in amounts and for the purposes customary in
our industry; provided, that the aggregate principal amount outstanding of such
Indebtedness, including any Refinancing Indebtedness and any other Indebtedness
issued to retire, refinance, refund, defease or replace such Indebtedness,
shall at no time exceed $15 million;

                                       62


     (d) We may incur Indebtedness owed to, borrowed from, any Subsidiary, and
any Subsidiary may incur Indebtedness owed to, borrowed from, any other
Subsidiary or us; provided, that (i) the aggregate amount of Indebtedness that
may be incurred and outstanding at any one time, including any Refinancing
Indebtedness issued to retire, defease, refinance, replace or refund such
Indebtedness, pursuant to this clause (d) by Subsidiaries that are not
Guarantors shall not exceed $35 million, and (ii) in the case of our
indebtedness, such obligations shall be unsecured and contractually
subordinated in all respects to our obligations pursuant to the Series B Notes
and any event that causes any Guarantor no longer to be a Guarantor, including
by designation to be an Unrestricted Subsidiary, shall be deemed to be a new
incurrence by such issuer of such Indebtedness and any guarantor thereof
subject to the covenant "Limitation on incurrence of additional indebtedness;"
and

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

     "Permitted Investment" means:

     (a) Any Investment in any of the Series B Notes;

     (b) Any Investment in Cash Equivalents;

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

     (d) Any Investment in us or in a Guarantor, or by us or any Guarantor in a
Person in a Related Business if as a result of such Investment such Person
immediately becomes a Guarantor or a Non-Guarantor Subsidiary or such Person is
immediately merged with or into us or a Guarantor;

     (e) Other Investments in any Person or Persons, provided, that after
giving pro forma effect to each such Investment, the aggregate amount of all
such Investments made on and after the Issue Date pursuant to this clause (e)
that are outstanding, after giving effect to any such Investments that are
returned to us or the Guarantor that made such prior Investment, without
restriction, in cash on or prior to the date of any such calculation, but only
up to the amount of the Investment made under this clause (e) in such Person,
at any time does not in the aggregate exceed $35 million, measured by the value
attributed to the Investment at the time made or returned, as applicable; and

     (f) Any asset exchange permitted under clause (7) of the covenant "--
Limitation on sale of assets and subsidiary stock."

     "Permitted Lien" means:

     (a) Liens existing on the Issue Date;

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

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

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

                                       63


     (e) Easements, rights-of-way, zoning, similar restrictions and other
similar encumbrances or title defects which, singly or in the aggregate, do not
in any case materially detract from the value of the property, subject thereto,
as such property is used by us or any of our Subsidiaries, or materially
interfere with the ordinary conduct of our or any of our Subsidiaries'
business;

     (f) Liens arising from the rendering of a final judgment, only to the
extent, for an amount and for a period not resulting in an Event of Default
with respect thereto;

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

     (h) Liens securing the Series B Notes;

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

     (j) Liens arising from Capital Expenditure Indebtedness permitted to be
incurred pursuant to clause (a) of the covenant "Limitation on incurrence of
additional indebtedness" provided such Liens relate solely to the property
which is subject to such Capital Expenditure Indebtedness or the proceeds
thereof;

     (k) Leases or subleases granted to other Persons in the ordinary course of
business not materially interfering with the conduct of our or any of our
Subsidiaries' business or materially detracting from the value of the relative
assets of us or any Subsidiary;

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

     (m) Liens securing Refinancing Indebtedness incurred to refinance any
Indebtedness that was previously so secured in a manner no more adverse to the
holders of the Series B Notes than the terms of the Liens securing such
refinanced Indebtedness, and provided that the Indebtedness secured is not
increased and the Lien is not extended to any additional assets or property
that would not have been security for the Indebtedness refinanced;

     (n) Liens securing our or any Guarantor's Senior Debt or any Guarantor,
including Indebtedness incurred under the Credit Agreement in accordance with
the terms of the covenant "Limitation on incurrence of additional
indebtedness;" and

     (o) Liens securing reimbursement obligations with respect to letters of
credit that encumber only documents and other property relating to such letters
of credit and the products and proceeds thereof.

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

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

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

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

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

                                       64


    "Qualified Exchange" means:

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

    (2) Any issuance of our Qualified Capital Stock in exchange for any
Capital Stock or our Indebtedness.

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

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

    "Registration Rights Agreement" means the registration rights agreement,
dated as of the Issue Date, by and among us and the other parties named on the
signature pages thereof, as such agreement may be amended, modified or
supplemented from time to time.

    "Related Business" means the business conducted, or proposed to be
conducted, by us and our Subsidiaries as of the Issue Date and any and all
businesses that in the good faith judgment of our board of directors are
related businesses.

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

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

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

                                      65


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

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

     (d) Any Restricted Investment by such Person;

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

     "S&P" means Standard & Poor's, a division of The McGraw-Hill Companies,
and its successors.

     "Sale-Leaseback Transaction" means any arrangement with any Person
providing for the leasing, other than operating leases in the ordinary course
of business, by us or any Subsidiary of any real or tangible personal property
owned by us or a Subsidiary of ours as of the Issue Date or thereafter
acquired, which property has been or is to be sold or transferred by us or
such Subsidiary to a Person and leased back from such Person.

     "Senior Debt" of ours or of any Guarantor means Indebtedness, including
any monetary obligation in respect of the Credit Agreement, and interest,
whether or not allowable, accruing on Indebtedness incurred pursuant to the
Credit Agreement after the filing of a petition initiating any proceeding
under any bankruptcy, insolvency or similar law, of us or such Guarantor,
including Indebtedness arising under the Credit Agreement, unless by the terms
of the instrument creating or evidencing such Indebtedness, such Indebtedness
is expressly designated equal or junior in right of payment to the Series B
Notes or the applicable Guarantee; provided, that in no event shall Senior
Debt include:

     (a) Indebtedness to any Subsidiary of us or any officer, director or
employee of us or any Subsidiary of us;

     (b) Indebtedness incurred in violation of the terms of the indenture;

     (c) Indebtedness to trade creditors;

     (d) Disqualified Capital Stock; and

     (e) Any liability for taxes owed or owing by us or such Guarantor.

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

     "Special Purpose Licensed Entity" means any Person in a Related Business
that (i) we and our Subsidiaries are prohibited from engaging in directly
under applicable law, including provisions of state law (a) prohibiting the
ownership of healthcare facilities by public companies, (b) prohibiting the
corporate practice of medicine or (c) otherwise restricting our ability or the
ability of one of our Subsidiaries to acquire directly a required license to
operate a healthcare facility, and (ii) has entered into a transaction or
series of transactions with us or any of our Subsidiaries under which

     (x) We or any of our Subsidiaries provides management, administrative or
consulting services to the Special Purpose Licensed Entity;

                                      66


     (y) The owners of the Special Purpose Licensed Entity are prohibited from
transferring any of their interests in the Special Purpose Licensed Entity
without our consent or the consent of one of our Subsidiaries; and

     (z) We or one of our Subsidiaries has the right to require the owners of
the Special Purpose Licensed Entity to transfer all of their interests in the
Special Purpose Licensed Entity to a Person designated by us or one of our
Subsidiaries.

     "Stated Maturity," when used with respect to any Series B Note, means
April 15, 2011.

     "Subordinated Indebtedness" means Indebtedness of us or a Guarantor that
is subordinated in right of payment by its terms or the terms of any document
or instrument relating thereto to the Series B Notes or such Guarantee, as
applicable, in any respect.

     "Subsidiary," with respect to any Person, means:

     (1) A corporation a majority of whose Equity Interests with voting power,
under ordinary circumstances, to elect directors is at the time, directly or
indirectly, owned by such Person, by such Person and one or more Subsidiaries
of such Person or by one or more Subsidiaries of such Person;

     (2) Any other Person, other than a corporation, in which such Person, one
or more Subsidiaries of such Person, or such Person and one or more
Subsidiaries of such Person, directly or indirectly, at the date of
determination thereof has a majority ownership interest; or

     (3) A partnership in which such Person or a Subsidiary of such Person is,
at the time, a general partner. Notwithstanding the foregoing, an Unrestricted
Subsidiary shall not be a Subsidiary of ours or of any of our Subsidiaries and
any Special Purpose Licensed Entity shall be considered a Subsidiary of ours.
Unless the context requires otherwise, Subsidiary means each direct and
indirect Subsidiary of ours.

     "Unrestricted Subsidiary" means any subsidiary of ours that does not own
any Capital Stock of, or own or hold any Lien on any property of, ours or of
any other Subsidiary of ours and that, at the time of determination, shall be
an Unrestricted Subsidiary, as designated by our board of directors; provided,
that such Subsidiary at the time of such designation:

     (a) Has no Indebtedness other than Non-Recourse Indebtedness;

     (b) Is not party to any agreement, contract, arrangement or understanding
with us or any Subsidiary of ours unless the terms of any such agreement,
contract, arrangement or understanding are no less favorable to us or such
Subsidiary than those that might be obtained at the time from Persons who are
not Affiliates of ours;

     (c) Is a Person with respect to which neither we nor any of our
Subsidiaries has any direct or indirect obligation (x) to subscribe for
additional Equity Interests or (y) to maintain or preserve such Person's
financial condition or to cause such Person to achieve any specified levels of
operating results; and

     (d) Has not guaranteed or otherwise directly or indirectly provided credit
support for any Indebtedness of us or any of our Subsidiaries. Our board of
directors may designate any Unrestricted Subsidiary to be a Subsidiary,
provided, that (1) no Default or Event of Default is existing or will occur as
a consequence thereof and (2) immediately after giving effect to such
designation, on a pro forma basis, we could incur at least $1.00 of
Indebtedness pursuant to the debt incurrence ratio of the covenant "Limitation
on incurrence of additional indebtedness."

Each such designation shall be evidenced by filing with the Trustee a certified
copy of the resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
conditions. Any subsidiary of an Unrestricted Subsidiary must also be an
Unrestricted Subsidiary.

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

                                       67


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

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

Book-entry; Delivery; Form and transfer

     The Series B Notes will be in the form of one or more registered global
notes without interest coupons. Upon issuance, the U.S. Global Notes will be
deposited with the Trustee, as custodian for The Depository Trust Company, or
DTC, in New York, New York, and registered in the name of DTC or its nominee
for credit to the accounts of DTC's Direct and Indirect Participants, as
defined below.

     The Global Notes may be transferred, in whole and not in part, only to
another nominee of DTC or to a successor of DTC or its nominee in certain
limited circumstances. Beneficial interests in the Global Notes may be
exchanged for Series B Notes in certificated form in certain limited
circumstances. See "--Transfer of interests in Global Notes for Certificated
Notes."

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

 Depositary procedures

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

     DTC has advised us that, pursuant to DTC's procedures:

     (i) Upon deposit of the Global Notes, DTC will credit the accounts of the
Direct Participants designated by the initial purchasers with portions of the
principal amount of the Global Notes that have been allocated to them by the
initial purchasers; and

     (ii) DTC will maintain records of the ownership interests of such Direct
Participants in the Global Notes and the transfer of ownership interests by and
between Direct Participants.

DTC will not maintain records of the ownership interests of, or the transfer of
ownership interests by and between, Indirect Participants or other owners of
beneficial interests in the Global Notes. Direct Participants and Indirect
Participants must maintain their own records of the ownership interests of, and
the transfer of ownership interests by and between, Indirect Participants and
other owners of beneficial interests in the Global Notes. Investors in the U.S.
Global Notes may hold their interests therein directly through DTC if they are
Direct Participants in DTC or indirectly through organizations that are Direct
Participants in DTC.

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

                                       68


certificates evidencing such interests. For certain other restrictions on the
transferability of the Series B Notes see "--Transfers of interests in Global
Notes for Certificated Notes."

     Except as described in "--Transfers of interests in Global Notes for
Certificated Notes," owners of beneficial interests in the Global Notes will
not have Series B Notes registered in their names, will not receive physical
delivery of Series B Notes in certificated form and will not be considered the
registered owners or holders thereof under the indenture for any purpose.

     Under the terms of the indenture, we, the Guarantors and the Trustee will
treat the persons in whose names the Series B Notes are registered, including
Series B Notes represented by Global Notes, as the owners thereof for the
purpose of receiving payments and for any and all other purposes whatsoever.
Payments in respect of the principal, premium, Liquidated Damages, if any, and
interest on Global Notes registered in the name of DTC or its nominee will be
payable by the Trustee to DTC or its nominee as the registered holder under the
indenture. Consequently, neither we, the Trustee nor any of our or the
Trustee's agents has or will have any responsibility or liability for (i) any
aspect of DTC's records or any Direct Participant's or Indirect Participant's
records relating to or payments made on account of beneficial ownership
interests in the Global Notes or for maintaining, supervising or reviewing any
of DTC's records or any Direct Participant's or Indirect Participant's records
relating to the beneficial ownership interests in any Global Note or (ii) any
other matter relating to the actions and practices of DTC or any of its Direct
Participants or Indirect Participants.

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

     The Global Notes will trade in DTC's Same-Day Funds Settlement System and,
therefore, transfers between Direct Participants in DTC will be effected in
accordance with DTC's procedures, and will be settled in immediately available
funds. Transfers between Indirect Participants, other than Indirect
Participants who hold an interest in the Series B Notes through Euroclear or
Clearstream, who hold an interest through a Direct Participant will be effected
in accordance with the procedures of such Direct Participant but generally will
settle in immediately available funds. Transfers between and among Indirect
Participants who hold interests in the Series B Notes through Euroclear and
Clearstream will be effected in the ordinary way in accordance with their
respective rules and operating procedures.

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

     Although DTC has agreed to the foregoing procedures to facilitate
transfers of interests in the U.S. Global Notes among Direct Participants, they
are under no obligation to perform or to continue to perform such procedures,
and such procedures may be discontinued at any time. Neither we, the
Guarantors, the initial purchasers nor the Trustee shall have any
responsibility for the performance by DTC or its respective Direct

                                       69


and Indirect Participants of its respective obligations under the rules and
procedures governing any of their operations.

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

 Transfers of interests in Global Notes for Certificated Notes

     An entire Global Note may be exchanged for definitive Series B Notes in
registered, certificated form without interest coupons, or Certificated Notes,
if

     (i) DTC (x) notifies us that it is unwilling or unable to continue as
depositary for the Global Notes and we thereupon fail to appoint a successor
depositary within 90 days or (y) has ceased to be a clearing agency registered
under the Exchange Act;

     (ii) We, at our option, notify the Trustee in writing that we elect to
cause the issuance of Certificated Notes; or

     (iii) There shall have occurred and be continuing a Default or an Event of
Default with respect to the Series B Notes.

In any such case, we will notify the Trustee in writing that, upon surrender by
the Direct and Indirect Participants of their interest in such Global Note,
Certificated Notes will be issued to each person that such Direct and Indirect
Participants and the DTC identify as being the beneficial owner of the related
Series B Notes.

     Beneficial interests in Global Notes held by any Direct or Indirect
Participant may be exchanged for Certificated Notes upon request to DTC, by
such Direct Participant, for itself or on behalf of an Indirect Participant, to
the Trustee in accordance with customary DTC procedures. Certificated Notes
delivered in exchange for any beneficial interest in any Global Note will be
registered in the names, and issued in any approved denominations, requested by
DTC on behalf of such Direct or Indirect Participants, in accordance with DTC's
customary procedures.

     Neither we, the guarantors nor the Trustee will be liable for any delay by
the holder of any Global Note or DTC in identifying the beneficial owners of
Series B Notes, and we and the Trustee may conclusively rely on, and will be
protected in relying on, instructions from the holder of the Global Note or DTC
for all purposes.

 Same day settlement and payment

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

                                       70


            CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

     The exchange of your Series A Notes for Series B Notes in the exchange
offer should not constitute a taxable event for United States federal income
tax purposes. Consequently, you should not recognize gain or loss upon your
receipt of Series B Notes, the holding period of the Series B Notes you receive
should include the holding period of your Series A Notes and the basis of the
Series B Notes you receive should be the same as the basis of your Series A
Notes immediately before the exchange.

     IN ANY EVENT, YOU SHOULD CONSULT YOUR OWN TAX ADVISOR CONCERNING THE
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES IN LIGHT OF YOUR PARTICULAR
SITUATION AS WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER
TAXING JURISDICTION.

                              PLAN OF DISTRIBUTION

     Each broker-dealer that receives Series B Notes for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Series B 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 Series B Notes received in
exchange for Series A Notes where such Series A Notes were acquired as a result
of market-making activities or other trading activities and not acquired
directly from us. We have agreed that for a period of one year after the date
of effectiveness of the exchange offer or until all Series B Notes covered by
the registration statement of which this prospectus is a part have been sold
pursuant thereto, we will make this prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale. In
addition, until            , 2001, all dealers effecting transactions in the
Series B Notes may be required to deliver a prospectus.

     We will not receive any proceeds from any sale of Series B Notes by
broker-dealers.

     Series B Notes received by broker-dealers for their own account 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 Series B Notes or a combination
      of such methods of resale; or

   .  At market prices prevailing at the time of resale, at prices related
      to such prevailing market prices or negotiated prices.

     Any resale may be made

   .  Directly to purchasers; or

   .  To or through brokers or dealers who may receive compensation in the
      form of commissions or concessions from any broker-dealer and/or
      purchasers of any such Series B Notes.

     Any broker-dealer that resells Series B 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 Series B Notes may be deemed to be an
underwriter within the meaning of the Securities Act, and any profit on any
resale of Series B Notes and any commissions or concessions received by any
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.

     For a period of one year after the date of effectiveness of the exchange
offer, we will promptly send additional copies of this prospectus and any
amendment or supplement to this prospectus to any broker-dealer

                                       71


that requests them in the letter of transmittal. We have agreed to pay the
expenses incident to the exchange offer and to our performance of, or
compliance with, the registration rights agreement other than commissions or
concessions of any brokers or dealers and will indemnify the holders of the
Series B Notes against certain liabilities, including liabilities under the
Securities Act, in connection with the exchange offer. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and persons controlling the registrant
pursuant to the foregoing provisions, or otherwise, we have been advised that
in the opinion of the Commission the indemnification is against public policy
as expressed in the Securities Act and is therefore unenforceable. In the event
that a claim for indemnification against 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 a director, officer or controlling person in
connection with the securities being registered, we will, unless in the opinion
of our counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such indemnification
by us is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of the issue.

                                 LEGAL MATTERS

     The validity of the Series B Notes offered hereby will be passed upon for
us by Riordan & McKinzie, Los Angeles, California.

                                    EXPERTS

     The consolidated financial statements of DaVita Inc. as of December 31,
2000 and for the year then ended are included in this prospectus and in the
registration statement in reliance upon the report of KPMG LLP, independent
certified public accountants, included herein upon the authority of said firm
as experts in accounting and auditing.

     The financial statements of DaVita Inc. (formerly Total Renal Care
Holdings, Inc.) as of December 31, 1999 and for each of the two years in the
period ended December 31, 1999, included in this prospectus, have been audited
by PricewaterhouseCoopers LLP, independent accountants, as stated in their
report appearing herein.

                      WHERE YOU CAN FIND MORE INFORMATION

     We are subject to the informational requirements of the Exchange Act and
we file reports, proxy statements and other information with the Commission.
You may inspect and copy these reports, proxy statements and other information
at the Commission's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549, its public reference rooms in New York, New York or
Chicago, Illinois, or on the Commission's web site located at
http://www.sec.gov. You may obtain information on the operation of the Public
Reference Room by calling the Commission at 1-800-SEC-0330. You may also
inspect these reports, proxy statements and other information at the office of
the New York Stock Exchange, 20 Broad Street, New York, New York 10005.

     We are incorporating by reference our annual report on Form 10-K for the
fiscal year ended December 31, 2000, as amended on Form 10-K/A, our quarterly
report on Form 10-Q for the quarter ended March 31, 2001 and our current report
on Form 8-K dated February 5, 2001, each of which we have filed with the
Commission. All documents filed by us pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this prospectus and prior
to the termination of this exchange offer shall be deemed to be incorporated by
reference into this prospectus and to be a part hereof from the date of filing
of such documents. This means that we are disclosing important information to
you by referring you to these documents. The information incorporated by
reference is an important part of this prospectus. The information that we file
later with the Commission will automatically update and supersede information
in this prospectus.

     We will provide without charge, upon written or oral request, a copy of
any of the documents that are incorporated by reference into this prospectus.
Requests should be directed to: DaVita Inc., Attention: Secretary, 21250
Hawthorne Boulevard, Suite 800, Torrance, California, 90503, telephone number:
(310) 792-2600.

                                       72


                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



                                                                            Page
                                                                            ----
                                                                         
Year ended December 31, 2000
- ----------------------------

Reports of Independent Accountants........................................   F-2

Consolidated Balance Sheets as of December 31, 2000 and December 31,
 1999.....................................................................   F-3

Consolidated Statements of Income and Comprehensive Income for the years
 ended December 31, 2000, December 31, 1999 and December 31, 1998.........   F-4

Consolidated Statements of Cash Flows for the years ended December 31,
 2000, December 31, 1999 and December 31, 1998............................   F-5

Consolidated Statements of Shareholders' Equity...........................   F-6

Notes to Consolidated Financial Statements................................   F-7

Quarter ended March 31, 2001
- ----------------------------

Consolidated Balance Sheets as of March 31, 2001 and December 31, 2000....  F-34

Consolidated Statements of Income and Comprehensive Income for the three
 months ended
 March 31, 2001 and March 31, 2000........................................  F-35

Consolidated Statements of Cash Flows for the three months ended March 31,
 2001 and
 March 31, 2000...........................................................  F-36

Notes to Condensed Consolidated Financial Statements......................  F-37



                                      F-1


                       REPORTS OF INDEPENDENT ACCOUNTANTS

The Board of Directors and Shareholders
DaVita Inc.:

     We have audited the accompanying consolidated balance sheet of DaVita Inc.
and subsidiaries as of December 31, 2000, and the related consolidated
statements of income and comprehensive income, shareholders' equity, and cash
flows for the year ended December 31, 2000. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on the consolidated financial
statements based on our audit.

     We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. 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
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides 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 DaVita Inc.
and subsidiaries as of December 31, 2000, and the results of their operations
and their cash flows for the year ended December 31, 2000, in conformity with
accounting principles generally accepted in the United States of America.

KPMG LLP

Seattle, Washington
February 20, 2001, except for Note 20 which is as of April 6, 2001

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

To the Board of Directors and Shareholders of
DaVita Inc.

     In our opinion, the accompanying consolidated balance sheet and the
related consolidated statements of income and comprehensive income, of
shareholders' equity and of cash flows present fairly, in all material
respects, the financial position of DaVita Inc. (formerly Total Renal Care
Holdings, Inc.) and its subsidiaries at December 31, 1999, and the results of
their operations and their cash flows for each of the two years in the period
ended December 31, 1999 in conformity with accounting principles generally
accepted in the United States of America. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States of America which 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 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, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.

     Our report dated March 22, 2000, included an explanatory paragraph
indicating the Company was out of compliance with several debt covenants which
raised substantial doubt about the Company's ability to continue as a going
concern. As discussed in Note 10, on July 14, 2000, the Company restructured
its primary borrowing arrangements resulting in the elimination of the debt
covenant violations and the associated uncertainty about the Company's ability
to continue as a going concern. Accordingly, our present opinion on the 1999
financial statements as presented herein is different from that expressed in
our previous report in that the explanatory paragraph is no longer required.

PricewaterhouseCoopers LLP

Seattle, Washington
March 22, 2000, except for the first paragraph of
Note 10 as to which the date is July 14, 2000

                                      F-2


                                  DAVITA INC.

                          CONSOLIDATED BALANCE SHEETS
                             (dollars in thousands)



                                                            December 31,
                                                        ----------------------
                                                           2000        1999
                                                        ----------  ----------
                                                              
                        ASSETS
                        ------

Cash and cash equivalents.............................. $   31,207  $  107,981
Accounts receivable, less allowance of $61,619 and
 $67,315...............................................    290,412     390,329
Inventories............................................     20,641      32,916
Other current assets...................................     10,293      32,082
Income taxes receivable................................      2,830      45,645
Deferred income taxes..................................     42,492      45,795
                                                        ----------  ----------
    Total current assets...............................    397,875     654,748
Property and equipment, net............................    236,659     285,449
Intangible assets, net.................................    921,623   1,069,672
Investments in third-party dialysis businesses.........     34,194      35,552
Other long-term assets.................................      1,979       4,744
Deferred income taxes..................................      4,302       6,553
                                                        ----------  ----------
                                                        $1,596,632  $2,056,718
                                                        ==========  ==========
         LIABILITIES AND SHAREHOLDERS' EQUITY
         ------------------------------------

Accounts payable....................................... $   74,882  $  121,561
Other liabilities......................................    102,563      77,141
Accrued compensation and benefits......................     70,406      47,647
Current portion of long-term debt......................      1,676      26,585
Long-term debt potentially callable under covenant
 provisions............................................              1,425,610
                                                        ----------  ----------
    Total current liabilities..........................    249,527   1,698,544
Long-term debt, less $1,425,610 potentially callable
 classified as current in 1999.........................    974,006       5,696
Other long-term liabilities............................      4,855       3,497
Minority interests.....................................     18,876      22,577
Commitments and contingencies
Shareholders' equity:
  Preferred stock ($0.001 par value; 5,000,000 shares
   authorized; none issued or outstanding).............
  Common stock ($0.001 par value, 195,000,000 shares
   authorized; 82,135,634 and 81,193,011 shares issued
   and outstanding)....................................         82          81
  Additional paid-in capital...........................    430,676     426,025
  Notes receivable from shareholders ..................        (83)       (192)
  Accumulated other comprehensive loss.................                 (4,718)
  Accumulated deficit..................................    (81,307)    (94,792)
                                                        ----------  ----------
    Total shareholders' equity.........................    349,368     326,404
                                                        ----------  ----------
                                                        $1,596,632  $2,056,718
                                                        ==========  ==========


                See notes to consolidated financial statements.

                                      F-3


                                  DAVITA INC.

           CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                 (dollars in thousands, except per share data)



                                                Year ended December 31,
                                            ----------------------------------
                                               2000        1999        1998
                                            ----------  ----------  ----------
                                                           
Net operating revenues....................  $1,486,302  $1,445,351  $1,203,738
Operating expenses:
  Dialysis centers and labs...............   1,032,153     993,239     779,740
  General and administrative..............     123,624     130,555      75,686
  Depreciation and amortization...........     111,605     112,481      90,353
  Provision for uncollectible accounts....      39,649     133,253      44,858
  Impairment and valuation losses.........       4,556     139,805
  Merger related costs....................                              78,188
                                            ----------  ----------  ----------
    Total operating expenses..............   1,311,587   1,509,333   1,068,825
                                            ----------  ----------  ----------
Operating income (loss)...................     174,715     (63,982)    134,913
Other income (loss).......................      (7,201)     (1,895)      4,894
Debt expense..............................     116,637     110,797      84,003
Minority interests in income of
 consolidated subsidiaries................      (5,942)     (5,152)     (7,163)
                                            ----------  ----------  ----------
  Income (loss) before income taxes,
   extraordinary item and change in
   accounting principle...................      44,935    (181,826)     48,641
Income tax expense (benefit)..............      27,960     (34,570)     38,449
                                            ----------  ----------  ----------
  Income (loss) before extraordinary item
   and change in accounting principle.....      16,975    (147,256)     10,192
Extraordinary loss related to early
 extinguishment of debt, net of tax of
 $2,222 and $7,668, respectively..........      (3,490)                (12,744)
Cumulative effect of change in accounting
 principle, net of tax of $4,300..........                              (6,896)
                                            ----------  ----------  ----------
  Net income (loss).......................  $   13,485  $ (147,256) $   (9,448)
                                            ==========  ==========  ==========
Earnings (loss) per common share--basic:
  Income (loss) before extraordinary item
   and change in accounting principle.....  $     0.21  $    (1.81) $     0.12
  Extraordinary loss, net of tax..........       (0.04)                  (0.16)
  Cumulative effect of change in
   accounting principle, net of tax.......                               (0.08)
                                            ----------  ----------  ----------
  Net income (loss).......................  $     0.17  $    (1.81) $    (0.12)
                                            ==========  ==========  ==========
Weighted average number of common shares
 outstanding..............................  81,581,000  81,152,000  80,143,000
                                            ==========  ==========  ==========
Earnings (loss) per common share--assuming
 dilution:
  Income (loss) before extraordinary item
   and change in accounting principle.....  $     0.20  $    (1.81) $     0.12
  Extraordinary loss, net of tax..........       (0.04)                  (0.16)
  Cumulative effect of change in
   accounting principle, net of tax.......                               (0.08)
                                            ----------  ----------  ----------
  Net income (loss).......................  $     0.16  $    (1.81) $    (0.12)
                                            ==========  ==========  ==========
Weighted average number of common shares
 and equivalents outstanding--assuming
 dilution.................................  83,157,000  81,152,000  81,701,000
                                            ==========  ==========  ==========
STATEMENTS OF COMPREHENSIVE INCOME
  Net income (loss).......................  $   13,485  $ (147,256) $   (9,448)
  Other comprehensive income:
    Foreign currency translation..........       4,718      (4,718)
                                            ----------  ----------  ----------
  Comprehensive income (loss).............  $   18,203  $ (151,974) $   (9,448)
                                            ==========  ==========  ==========



                See notes to consolidated financial statements.

                                      F-4


                                  DAVITA INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (dollars in thousands)



                                                Year ended December 31,
                                          -------------------------------------
                                             2000         1999         1998
                                          -----------  -----------  -----------
                                                           
Cash flows from operating activities:
  Net income (loss).....................  $    13,485  $  (147,256) $    (9,448)
  Non-cash items included in net income
   (loss):
   Depreciation and amortization........      111,605      112,481       90,353
   Impairment and valuation losses......        4,556      139,805
   Gain on divestitures.................       (2,875)
   Deferred income taxes................        8,906      (21,546)     (17,577)
   Non-cash debt expense................        3,008        2,563        1,376
   Stock option expense and tax
    benefits............................        2,908        2,280       33,912
   Equity investment losses (income)....          931          140         (157)
   Foreign currency exchange loss.......        4,718
   Minority interests in income of
    consolidated subsidiaries...........        5,942        5,152        7,163
   Extraordinary loss...................        3,490                    20,412
   Cumulative effect of change in
    accounting principle................                                 11,196
  Changes in operating assets and
   liabilities, net of effect of
   acquisitions and divestitures:
   Accounts receivable..................       59,564       28,486     (155,393)
   Inventories..........................        9,402       (8,742)      (7,152)
   Other current assets.................       15,150       14,171      (30,104)
   Other long-term assets...............        2,683        5,503        8,414
   Accounts payable.....................      (28,716)      72,694       10,131
   Accrued compensation and benefits....       26,365       11,541        8,933
   Other liabilities....................       19,445        5,200       36,580
   Income taxes.........................       45,473      (52,464)      11,004
   Other long-term liabilities..........        1,608        1,498       (7,725)
                                          -----------  -----------  -----------
     Net cash provided by operating
      activities........................      307,648      171,506       11,918
                                          -----------  -----------  -----------
Cash flows from investing activities:
  Additions of property and equipment,
   net..................................      (41,088)    (106,657)     (82,820)
  Acquisitions and divestitures, net....        1,120     (154,226)    (338,164)
  Divestitures of non-continental U.S.
   operations...........................      133,177
  Investments in affiliates, net........          488      (25,380)     (16,785)
  Intangible assets.....................         (342)      (5,184)     (14,555)
                                          -----------  -----------  -----------
     Net cash provided by (used in)
      investing activities..............       93,355     (291,447)    (452,324)
                                          -----------  -----------  -----------
Cash flows from financing activities:
  Borrowings............................    1,913,893    2,337,790    1,570,620
  Payments on long-term debt............   (2,390,929)  (2,136,273)  (1,443,325)
  Proceeds from convertible notes.......                                345,000
  Deferred financing costs..............       (3,092)      (8,546)     (17,631)
  Interest rate swap liquidation
   proceeds.............................        6,257
  Net proceeds from issuance of common
   stock................................        2,658        2,234       24,157
  Distributions to minority interests...       (6,564)      (4,052)      (3,628)
                                          -----------  -----------  -----------
     Net cash provided by (used in)
      financing activities..............     (477,777)     191,153      475,193
Foreign currency translation loss in
 comprehensive income...................                    (4,718)
                                          -----------  -----------  -----------
Net increase (decrease) in cash ........      (76,774)      66,494       34,787
Cash and cash equivalents at beginning
 of year ...............................      107,981       41,487        6,700
                                          -----------  -----------  -----------
Cash and cash equivalents at end of
 year...................................  $    31,207  $   107,981  $    41,487
                                          ===========  ===========  ===========


                See notes to consolidated financial statements.

                                      F-5


                                  DAVITA INC.

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                 (in thousands)



                                                      Notes      Accumulated
                          Common Stock  Additional  receivable      other     Retained
                          -------------  paid-in       from     comprehensive earnings
                          Shares Amount  capital   shareholders income (loss) (deficit)   Total
                          ------ ------ ---------- ------------ ------------- ---------  --------
                                                                    
Balance at December 31,
 1997...................  77,992  $78    $363,486    $(3,030)                 $ 61,912   $422,446
Shares issued in
 acquisitions...........      99            2,796                                           2,796
Shares issued to
 employees and others...      49            1,085                                           1,085
Options exercised.......   2,890    3      36,396                                          36,399
Repayment of notes
 receivable, net of
 interest accrued.......                               2,674                                2,674
Income tax benefit on
 stock options
 exercised..............                   14,199                                          14,199
Grant of stock options..                      128                                             128
Stock option expense....                    3,585                                           3,585
Net loss................                                                        (9,448)    (9,448)
                          ------  ---    --------    -------       -------    --------   --------
Balance at December 31,
 1998...................  81,030   81     421,675       (356)                   52,464    473,864
Shares issued to
 employees and others...      77            1,937                                           1,937
Options exercised.......      86              109                                             109
Repayment of notes
 receivable, net of
 interest accrued.......                                 164                                  164
Income tax benefit on
 stock options
 exercised..............                      375                                             375
Grant of stock options..                      813                                             813
Stock option expense....                    1,116                                           1,116
Foreign currency
 translation............                                           $(4,718)                (4,718)
Net loss................                                                      (147,256)  (147,256)
                          ------  ---    --------    -------       -------    --------   --------
Balance at December 31,
 1999...................  81,193   81     426,025       (192)       (4,718)    (94,792)   326,404
Shares issued to
 employees and others...     126              720                                             720
Options exercised.......     817    1       2,080                                           2,081
Repayment of notes
 receivable, net of
 interest accrued.......                                 109                                  109
Income tax benefit on
 stock options
 exercised..............                    1,977                                           1,977
Stock option expense
 (benefit) .............                     (126)                                           (126)
Foreign currency
 translation............                                             4,718                  4,718
Net income..............                                                        13,485     13,485
                          ------  ---    --------    -------       -------    --------   --------
Balance at December 31,
 2000...................  82,136  $82    $430,676    $   (83)      $     0    $(81,307)  $349,368
                          ======  ===    ========    =======       =======    ========   ========


                See notes to consolidated financial statements.

                                      F-6


                                  DAVITA INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            (dollars in thousands)


1. Organization and summary of significant accounting policies

 Organization

     DaVita Inc. (formerly Total Renal Care Holdings, Inc.) operates kidney
dialysis centers and provides related medical services in dialysis centers in
the United States. These operations represent a single business segment. See
Note 2 regarding the Company's divestiture of its operations outside the
continental United States during 2000.

 Basis of presentation

     These consolidated financial statements include the Company's wholly-
owned and majority-owned subsidiaries and partnerships, as well as other
entities in which the Company maintains a controlling financial interest. Non-
consolidated equity investments are recorded under the equity method of
accounting, unless DaVita's equity interest is less than 20% and it does not
exercise significant influence over the operations of the investee. For all
periods presented, the annual results of our operations outside the U.S. are
based on the twelve-month period ended November 30 to accommodate our
consolidated reporting time schedules.

 Net operating revenues

     Revenues are recognized as services are provided to patients. Operating
revenues consist primarily of reimbursement for dialysis and ancillary
services to patients. A usual and customary fee schedule is maintained for our
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 pre-determined net realizable rates per treatment that
are established by statute or regulation. Most non-governmental payors,
including contracted managed care payors, are billed at our usual and
customary rates, but a contractual allowance is recorded to reflect the
expected net realizable revenue for services provided. Contractual and bad
debt allowances are established based upon credit risk of specific third-party
payors, contractual terms and collection experience. Net revenue recognition
and allowances for uncollectible billings require the use of estimates, and
any changes in these estimates are reflected as they become known.

     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 operating revenues as
earned. Any costs incurred in performing these management services are
recognized in facility operating and general and administrative expenses.

 Other income

     Other income includes interest income on cash investments, earnings and
losses from non-consolidated equity investments and other non-operating gains
and losses.

 Cash and cash equivalents

     Cash equivalents are highly liquid investments with maturities at
purchase of three months or less.

 Inventories

     Inventories are stated at the lower of cost (first-in, first-out) or
market and consist principally of drugs and dialysis related supplies.

                                      F-7


                                  DAVITA INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                             (dollars in thousands)


 Property and equipment

     Property and equipment are stated at cost. Maintenance and repairs are
charged to expense as incurred. Depreciation and amortization expense are
computed using the straight-line method over the useful lives of the assets
estimated as follows: buildings, 20 to 40 years; leasehold improvements, over
the shorter of their estimated useful life or the lease term; and equipment, 3
to 15 years. Disposition gains and losses are included in current earnings.

 Capitalized interest

     Applicable interest charges incurred during significant facility expansion
and construction are capitalized as one of the elements of cost and are
amortized over the assets' estimated useful lives. Interest capitalized was
$1,125, $709 and $804 for 2000, 1999 and 1998, respectively.

 Intangible assets

     The excess of aggregate purchase price over the fair value of the net
assets of businesses acquired in purchase transactions is recorded as goodwill.
Goodwill is amortized over 15 to 40 years using the straight-line method. As of
December 31, 2000, the blended average life of goodwill is 35 years. Business
acquisition costs allocated to patient lists are amortized generally over five
to eight years using the straight-line method. Business acquisition costs
allocated to covenants not to compete are amortized over the terms of the
agreements, typically three to ten years, using the straight-line method.
Deferred debt issuance costs are amortized over the term of the related debt
using the effective interest method.

 Impairment of long-lived assets

     Long-lived assets including goodwill, other intangible assets, property
and equipment, and investment balances are reviewed for possible impairment
whenever significant events or changes in circumstances, including changes in
our business strategy and plans, indicate a potential impairment may have
occurred, and when the sum of the expected future undiscounted net cash flows
identifiable to that asset or group of assets is less than book value. For
potential impairment of goodwill balances, cash flows are reviewed for the
specific facility operations compared to the goodwill balance that resulted
from the acquisition of that specific group of centers. Impairment losses are
determined based on net realizable values or projections of net cash flows.
Interest is not accrued on impaired loans unless the estimated recovery amounts
justify such accruals. Cash flows of facility operations are routinely reviewed
for indications of potential impairment.

 Income taxes

     Federal, state and foreign income taxes are computed at current tax rates,
less tax credits. Taxes are adjusted both for items that do not have tax
consequences and for the cumulative effect of any changes in tax rates from
those previously used to determine deferred tax assets or liabilities. Tax
provisions include amounts that are currently payable, plus changes in deferred
tax assets and liabilities that arise because of temporary differences between
the timing of when items of income and expense are recognized for financial
reporting and income tax purposes.

 Minority interests

     Minority interests represent the proportionate equity interest of other
partners and shareholders in consolidated entities which are not wholly-owned.
As of December 31, 2000, these included 16 active partnerships and
corporations.

                                      F-8


                                  DAVITA INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                             (dollars in thousands)


 Stock-based compensation

     Stock-based compensation for employees is determined in accordance with
APB No. 25 as allowed under FAS 123. Stock option grants to employees do not
result in an expense if the exercise price is at least equal to the market
price at the date of grant. Stock option expense is also measured and recorded
for certain modifications to stock options as required under FIN 44.

     Stock options issued to non-employees are valued using the Black-Scholes
model and attributed to the respective vesting periods using the FIN 28 expense
attribution method, except that for options granted prior to the second quarter
of 1997 (effective date of EITF 96-18) such expense was a fixed amortization of
the grant date fair value.

 Earnings per share

     Basic earnings per share is calculated by dividing net income before
extraordinary items and the cumulative effect of changes in accounting
principle by the weighted average number of shares of common stock outstanding.
Earnings per common share assuming dilution includes the dilutive effects of
stock options and warrants, using the treasury stock method, in determining the
weighted average number of shares of common stock outstanding. The convertible
debt was antidilutive in all periods presented and therefore not included in
the diluted earnings per share calculation.

 Interest rate swap agreements

     The Company has from time to time entered into interest rate swap
agreements (see Note 10) as a means of managing interest rate exposure. These
agreements have not been for trading or speculative purposes, and had the
effect of converting a portion of our variable rate debt to a fixed rate. Net
amounts paid or received have been reflected as adjustments to interest
expense. The Company had no interest rate swap agreements as of December 31,
2000.

 Foreign currency translation

     Until sold in June 2000 the Company's principal operations outside of the
United States were in Argentina and were relatively self-contained and
integrated within Argentina. The currency in Argentina, which was considered
the functional currency, is tied to the U.S. dollar. Other operations outside
the U.S. were translated into U.S. dollars at period-end exchange rates and any
unrealized gains and losses were accounted for as a component of other
comprehensive income. Unrealized gains or losses on debt denominated in foreign
currency, which was considered a hedge of the net investment in foreign
operations, were accounted for as a component of other comprehensive income
until June 2000 when we divested our non-continental operations.

 Derivative instruments and hedging activities

     Statement of Financial Accounting Standards No. 133, Accounting for
Derivative Instruments and Hedging Activities. SFAS 133, as amended by SFAS 137
and 138, will be adopted effective January 1, 2001. SFAS 133 requires that all
derivative instruments be recorded on the balance sheet at their fair values.
Changes in the fair value of derivatives are recorded each period in current
earnings or other comprehensive income, depending on whether a derivative is
designated as part of a hedge transaction and, if it is, the type of hedge
transaction. As of December 31, 2000, the Company is not party to any
derivative instruments that will have a significant impact on the Company's
reported financial condition or results of operation upon adoption of this
statement.

                                      F-9


                                  DAVITA INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                             (dollars in thousands)


 Use of estimates

     The preparation of financial statements in conformity with generally
accepted accounting principles requires estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the dates of the financial statements and the
reported amounts of revenues and expenses during the reporting periods. Actual
results could differ from those estimates.

 Reclassifications

     Certain prior year amounts have been reclassified to conform to the
current year presentation. These reclassifications had no effect on reported
earnings.

2. Impairments and valuation losses

     Impairment and valuation losses for the year ended December 31, 2000 and
1999 consisted of the following:



                                                                 Year ended
                                                                December 31,
                                                               ----------------
                                                                2000     1999
                                                               ------  --------
                                                                 
    Non-continental U.S. operations........................... $ (616) $ 82,812
    Continental U.S. operations...............................  5,172    56,993
                                                               ------  --------
                                                               $4,556  $139,805
                                                               ======  ========


     During the fourth quarter of 1999, the Company announced its intention to
sell its dialysis operations outside the continental United States resulting in
an impairment charge of $82,812 representing the estimated losses on the sales
of these operations, including the costs of buying out minority interests and
the direct transaction costs of completing the sale. The divestitures were
substantially completed in the second quarter of 2000.

     The impairment and valuation losses of $56,993 recorded in 1999 associated
with dialysis centers within the continental U.S. similarly relate to actions
taken and decisions made during 1999. The Company established a plan to curtail
new facility acquisitions and developments and to close centers not supporting
the Company's new strategic direction. The losses principally related to
centers identified for closure or sale during the first half of 2000, new
facility plans terminated and projects abandoned, and impairments of loans to
and investments in third-party dialysis-related businesses. Additional charges
on continental U.S. operations were taken in 2000. The closure and abandonment
losses averaged less than $1,000 per facility, and were principally associated
with the impairment of leasehold improvements and intangible assets
specifically identified with these centers. The Company's new strategic
direction and curtailed new center acquisition had also affected the valuation
of several partnership investments in third-party dialysis-related businesses.
We do not expect recovery of the impairment losses even through potential
bankruptcy processes.

     Other than in connection with the impairment losses discussed above, we
determined that there were no goodwill impairments as of year-end 2000.

3. Accounts receivable

     The total provisions for uncollectible accounts were $39,649, $133,253 and
$44,858 for 2000, 1999 and 1998, respectively. The Company's rapid growth
through acquisitions through 1998 and the merger with RTC

                                      F-10


                                  DAVITA INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                             (dollars in thousands)

in 1998 had a significant impact on the Company's administrative functions,
including billing and cash collection processes, which at times operated below
optimal levels of efficiency and effectiveness. The backlog of aged accounts
receivable continued to increase during the first half of 1999 due to high
turnover of billing and collection personnel and process inefficiencies. The
subsequent collection rates for the older billings did not match our earlier
projections and estimates. Those earlier estimates had been based on prior
collection experience, but the build-up of the backlog of aged accounts
receivable not processed on a timely basis created collection difficulties at a
level not previously experienced or anticipated.

     During 2000, 1999 and 1998, the Company received approximately 58%, 59%
and 57%, respectively, of dialysis revenues in the continental U.S. from
Medicare and Medicaid programs. Accounts receivable from Medicare and Medicaid
were approximately $120,000 and $150,000, including the Florida lab receivables
as of December 31, 2000 and 1999, respectively. Medicare historically pays
approximately 80% of government established rates for services provided. The
remaining 20% typically is paid by state Medicaid programs, private insurance
companies or directly by the patients receiving the services. (See Note 15
regarding the Florida lab receivables.)

4. Other current assets

     Other current assets were comprised of the following:



                                                                 December 31,
                                                                ---------------
                                                                 2000    1999
                                                                ------- -------
                                                                  
    Supplier rebates and other non-trade receivables........... $ 4,289 $19,043
    Operating advances to managed centers......................   3,394   8,310
    Prepaid expenses...........................................   2,248   4,391
    Deposits...................................................     362     338
                                                                ------- -------
                                                                $10,293 $32,082
                                                                ======= =======


     Operating advances to managed centers are generally unsecured and interest
bearing under the terms of the applicable management agreements.

5. Property and equipment

     Property and equipment were comprised of the following:



                                                              December 31,
                                                           --------------------
                                                             2000       1999
                                                           ---------  ---------
                                                                
    Land.................................................. $   1,033  $   1,193
    Buildings.............................................     6,940      9,846
    Leasehold improvements................................   152,978    150,067
    Equipment.............................................   229,408    248,428
    Construction in progress..............................    15,142     17,575
                                                           ---------  ---------
                                                             405,501    427,109
    Less accumulated depreciation and amortization........  (168,842)  (141,660)
                                                           ---------  ---------
    Property and equipment, net........................... $ 236,659  $ 285,449
                                                           =========  =========


     Depreciation and amortization expense on property and equipment was
$56,330, $51,045 and $40,032 for 2000, 1999 and 1998, respectively.

                                      F-11


                                  DAVITA INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                             (dollars in thousands)


6. Intangible assets

     Intangible assets were comprised of the following:



                                                           December 31,
                                                       ----------------------
                                                          2000        1999
                                                       ----------  ----------
                                                             
    Goodwill.......................................... $  896,769  $  971,344
    Patient lists.....................................    121,208     137,469
    Noncompetition agreements.........................    103,532     112,378
    Deferred debt issuance costs, net of deferred
     gains on swap terminations.......................     14,182      24,524
                                                       ----------  ----------
                                                        1,135,691   1,245,715
    Less accumulated amortization.....................   (214,068)   (176,043)
                                                       ----------  ----------
                                                       $  921,623  $1,069,672
                                                       ==========  ==========


     Amortization expense applicable to intangible assets was $55,275, $61,436
and $50,321 for 2000, 1999 and 1998, respectively.

     In April 1998, Statement of Position No. 98-5, Reporting on the Costs of
Start-up Activities, or SOP 98-5, was issued. We adopted SOP 98-5 effective
January 1, 1998. SOP 98-5 requires that start-up and organization costs
incurred in conjunction with facility pre-opening activities, which had
previously been treated as deferred costs and amortized over five years, should
be expensed as incurred. As a result of the adoption of SOP 98-5, all remaining
unamortized pre-opening, development and organizational costs existing prior to
January 1, 1998 of $11,196 ($6,896 net of tax) were recognized as the
cumulative effect of a change in accounting principle in 1998.

7. Investments in third-party dialysis businesses

     During 1997 and 1998, the Company entered into various agreements to
provide funding for expansion to companies that provide dialysis-related
services.

     Investments in third-party dialysis businesses and related advances were
as follows:



                                                                 December 31,
                                                                ---------------
                                                                 2000    1999
                                                                ------- -------
                                                                  
    Investments in non-consolidated businesses................. $ 8,975 $ 3,782
    Acquisition advances and loans generally convertible to
     equity investments, less allowance of $16,326 in 2000 and
     $14,000 in 1999...........................................  25,219  31,770
                                                                ------- -------
                                                                $34,194 $35,552
                                                                ======= =======


     The loans to third-party dialysis businesses are in the form of notes
receivable that are secured by the assets and operations of these companies and
are convertible to equity investments. The notes receivable as of December 31,
2000 bear interest at the prime rate plus 1.5%. The valuation assessments
assume that the conversion options will be exercised in most instances.
Additional loan losses of $2,326 were recognized during 2000.

                                      F-12


                                  DAVITA INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                             (dollars in thousands)


8. Other liabilities

     Other accrued liabilities were comprised of the following:



                                                                  December 31,
                                                                ----------------
                                                                  2000    1999
                                                                -------- -------
                                                                   
    Payor deferrals............................................ $ 60,964 $40,505
    Accrued interest...........................................   10,703  14,664
    Disposition accruals.......................................    8,019
    Other......................................................   22,877  21,972
                                                                -------- -------
                                                                $102,563 $77,141
                                                                ======== =======


9. Income taxes

     Income tax expense (benefit) consisted of the following:



                                                      Year ended December 31,
                                                      -------------------------
                                                       2000     1999     1998
                                                      ------- --------  -------
                                                               
    Current
      Federal........................................ $12,307 $(11,497) $46,061
      State..........................................   4,288   (2,527)   8,913
      Foreign........................................   2,459    1,000    1,052
    Deferred
      Federal........................................   6,730  (18,199) (15,557)
      State..........................................   2,176   (3,347)  (2,020)
                                                      ------- --------  -------
                                                      $27,960 $(34,570) $38,449
                                                      ======= ========  =======


     Temporary differences which gave rise to deferred tax assets and
liabilities were as follows:



                                                             December 31,
                                                           ------------------
                                                             2000      1999
                                                           --------  --------
                                                               
    Asset impairment losses............................... $ 45,532  $ 46,291
    Receivables, primarily allowance for doubtful
     accounts.............................................   28,768    34,991
    Accrued expenses......................................   15,938    10,890
    Other.................................................   14,269     6,941
                                                           --------  --------
      Gross deferred tax assets...........................  104,507    99,113
                                                           --------  --------
    Property and equipment................................   (1,354)   (4,134)
    Intangible assets.....................................  (18,332)  (10,842)
    Other.................................................   (3,691)   (1,197)
                                                           --------  --------
      Gross deferred tax liabilities......................  (23,377)  (16,173)
                                                           --------  --------
      Valuation allowance.................................  (34,336)  (30,592)
                                                           --------  --------
      Net deferred tax assets............................. $ 46,794  $ 52,348
                                                           ========  ========


     At December 31, 2000, the Company had state net operating loss
carryforwards of approximately $15,000 that expire through 2015. At December
31, 2000, the Company also had federal capital loss carryforwards of
approximately $50,000 that expire in 2005, and foreign tax credit carryforwards
of

                                      F-13


                                  DAVITA INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                            (dollars in thousands)

approximately $200 that expire in 2002. The utilization of state net operating
loss carryforwards may be limited in future years based on the profitability
of certain subsidiary corporations. The utilization of capital loss
carryforwards and foreign tax credits may be limited in future years based on
the amount of capital gain and foreign source income generated in those years.
The Company has also recorded certain impairment losses that, when recognized
for tax purposes, will generate additional capital losses. The Company has
recorded a valuation allowance of $34,300, principally associated with these
deferred tax assets. The valuation allowance was increased by $3,700 in 2000.

     The reconciliation between our effective tax rate and the U.S. federal
income tax rate is as follows:



                                                               Year ended
                                                               December 31,
                                                           ------------------
                                                           2000  1999    1998
                                                           ----  -----   ----
                                                                
    Federal income tax rate............................... 35.0%  35.0 % 35.0%
    State taxes, net of federal benefit...................  5.9    3.7    3.1
    Foreign income taxes..................................  3.6   (0.7)
    Write off of deferred tax asset associated with
     cancellation of medical director stock options.......  6.3
    Nondeductible amortization of intangible assets.......  5.6   (2.1)   2.0
    Valuation allowance...................................  2.4  (15.6)
    Other.................................................  3.4   (1.3)
                                                           ----  -----   ----
    Effective tax rate before merger costs................ 62.2   19.0   40.1
    Merger charges........................................               38.9
                                                           ----  -----   ----
    Effective tax rate.................................... 62.2%  19.0 % 79.0%
                                                           ====  =====   ====


     The effective tax rate for 1999 represents the tax benefit associated
with the pre-tax loss for the year ended December 31, 1999. The 15.6%
reduction in the effective income tax rate for the valuation allowance in 1999
represents an increase to the valuation allowance.

10. Long-term debt

     As of December 31, 1999, the Company was not in compliance with several
formula-based covenants in its credit facilities. As a result of this non-
compliance, all debt outstanding under the credit facilities and the
convertible subordinated notes as of December 31, 1999 was potentially
callable and due within one year, and therefore had been reclassified from
long-term debt to a current classification. On July 14, 2000, a restructuring
of the credit facilities was completed, and the Company became in compliance
with all of the credit facilities covenants.

                                     F-14


                                  DAVITA INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                             (dollars in thousands)


     Long-term debt was comprised of the following:



                                                             December 31,
                                                         ---------------------
                                                           2000       1999
                                                         --------  -----------
                                                             
    Credit facilities..................................  $498,800  $   959,610
    Convertible subordinated notes, 7%, due 2009.......   345,000      345,000
    Convertible subordinated notes, 5 5/8%, due 2006...   125,000      125,000
    Acquisition obligations and other notes payable....       829       21,482
    Capital lease obligations (see Note 11)............     6,053        6,799
                                                         --------  -----------
                                                          975,682    1,457,891
    Less current portion and long-term debt potentially
     callable under covenant provisions in 1999........    (1,676)  (1,452,195)
                                                         --------  -----------
                                                         $974,006  $     5,696
                                                         ========  ===========


     Scheduled maturities of long-term debt were as follows:

                                                                  
    2001................................................................   1,676
    2002................................................................  15,097
    2003................................................................ 232,519
    2004................................................................  70,212
    2005................................................................  70,198
    Thereafter.......................................................... 585,980

    

     Included in debt expense was interest expense, net of capitalized
interest, of $112,180, $106,633 and $72,804 for 2000, 1999, and 1998,
respectively. Also included in debt expense were amortization and write-off of
deferred financing costs of $4,457, $4,164 and $1,376 for 2000, 1999, and 1998,
respectively, and interest rate swap early termination costs of $9,823 in 1998.

 Credit facilities

     In July 2000, the major terms of the credit facilities were restructured
which included the collateralization of the debt with substantially all of the
Company's assets, a reduction in the revolving credit availability to $150,000
together with conversion of $299,000 of the revolving facility into a term
loan, a new quarterly amortization schedule beginning September 30, 2000, and
the immediate permanent pay-down of $50,000. Total outstanding debt under the
credit facilities consisted of the following:



                                                                December 31,
                                                              -----------------
                                                                2000     1999
                                                              -------- --------
                                                                 
    Term loan................................................ $301,460 $392,000
    Revolving credit facility................................           567,610
    Revolving credit facility--term tranche..................  197,340
                                                              -------- --------
                                                              $498,800 $959,610
                                                              ======== ========


     In conjunction with the restructuring, the associated interest rates
returned to the lower LIBOR-based rate formulas in effect prior to the non-
compliance. The new financial covenants reflected the Company's financial
position and projected operating results and plans at the time of the
restructuring. As a result of the

                                      F-15


                                  DAVITA INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                             (dollars in thousands)

restructuring, related financing costs were written off. These write-offs were
recorded in 2000 as an extraordinary loss of $3,490, net of tax, and pre-tax
debt expenses of $1,192.

     In 1998, the then existing credit facilities were replaced with an
aggregate of $1,350,000 in two senior bank facilities. As a result of this
refinancing, remaining net deferred financing costs of $16,018 net of tax were
recognized as an extraordinary loss in 1998.

     Several of the Company's subsidiaries, including subsidiaries owning
substantially all of the Company's dialysis center assets, have guaranteed the
obligations under the credit facilities.

     At the time of the merger, RTC also had a credit agreement which provided
for a $350,000 revolving credit/term facility available to fund acquisitions
and general working capital requirements. The RTC credit agreement was
terminated and repaid with borrowings under the credit facilities on February
27, 1998 in connection with the completion of our merger with RTC. The
remaining net unamortized deferred financing costs in the amount of $4,393
related to the RTC credit agreement were recognized as an extraordinary loss in
1998.

 7% convertible subordinated notes

     In November 1998, $345,000 of 7% convertible subordinated notes due 2009
were issued in a private placement offering subject to subsequent registration
for resale. The notes are convertible, at the option of the holder, at any time
into common stock at a conversion price of $32.81 principal amount per share,
and the notes may be redeemed on or after November 15, 2001. The notes are
general, unsecured obligations junior to all existing and future senior debt
and effectively all existing and future liabilities of the Company and its
subsidiaries. Commencing May 18, 1999, the Company incurred monetary penalties
on a weekly basis until the registration of the notes under the Securities Act
of 1933 was declared effective. Penalties of $976 were included in debt expense
for the year ended December 31, 1999. The Company's registration statement
covering the resale of the notes was declared effective on February 1, 2000.

 5 5/8% convertible subordinated notes

     In June 1996, RTC (a wholly-owned subsidiary following the merger with the
Company in 1998) issued $125,000 of 5 5/8% convertible subordinated notes due
2006. These notes are convertible, at the option of the holder, at any time
after August 12, 1996 through maturity, unless previously redeemed or
repurchased, into our common stock at a conversion price of $25.62 principal
amount per share. After July 17, 1999, all or any part of these notes are
redeemable at the Company's option on at least 15 and not more than 60 days'
notice as a whole or, from time to time, in part at redemption prices ranging
from 103.94% to 100% of the principal amount thereof, depending on the year of
redemption, together with accrued interest to, but excluding, the date fixed
for redemption. These notes are guaranteed by DaVita Inc.

     Condensed consolidating financial statements for the Company, including
summarized financial information of RTC (a wholly-owned subsidiary) are
disclosed in Note 20.

 Interest rate swap agreements

     In April 1998, in conjunction with the refinancing of senior credit
facilities, the existing two interest rate swap agreements were cancelled. The
loss associated with the early cancellation of those swaps was $9,823 and was
included in debt expense for 1998.

     In May 1998, the Company entered into cancelable interest rate swap
agreements with a combined notional amount of $800,000. During 1999 two of the
swap agreement counterparties exercised their right to

                                      F-16


                                  DAVITA INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                             (dollars in thousands)

cancel agreements in the aggregate notional amount of $100,000. During 2000 two
more of the swap counterparties exercised their right to cancel agreements with
notional amounts totaling $100,000.

     During 2000, the Company liquidated or cancelled all of the remaining
interest rate swap agreements which had notional amounts of $600,000. The
Company received approximately $7,454 in the settlement of these swap
agreements and recorded an associated gain of $6,297, which is being amortized
over the remaining contractual life of the credit facilities.

11. Leases

     The majority of the Company's facilities are leased under noncancelable
operating leases expiring in various years through 2021. 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 or at rates subject to
periodic consumer price index increases. In the normal course of business,
operating leases are generally renewed or replaced by similar leases at
replacement centers. Some equipment is leased under capital lease agreements.

     Future minimum lease payments under noncancelable operating leases and
under capital leases are as follows:



                                                            Operating Capital
                                                             leases   leases
                                                            --------- -------
                                                                
    2001................................................... $ 45,109  $ 1,411
    2002...................................................   40,783    1,192
    2003...................................................   38,047    1,049
    2004...................................................   35,610      579
    2005...................................................   31,637      545
    Thereafter.............................................  100,304    4,676
                                                            --------  -------
                                                            $291,490    9,452
                                                            ========
    Less portion representing interest.....................            (3,399)
                                                                      -------
    Total capital lease obligation, including current
     portion...............................................           $ 6,053
                                                                      =======


     Rental expense under all operating leases for 2000, 1999 and 1998 was
$51,421, $52,504 and $38,975, respectively. The net book value of property and
equipment under capital lease was $6,192 and $7,719 at December 31, 2000 and
1999, respectively. Capital lease obligations are included in long-term debt
(see Note 10).

                                      F-17


                                  DAVITA INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                             (dollars in thousands)


12. Shareholders' equity

 Earnings per share

     The reconciliation of the numerators and denominators used to calculate
earnings per share, or EPS, is as follows:



                                                    Year ended December 31,
                                                   ---------------------------
                                                    2000      1999      1998
                                                   -------  ---------  -------
                                                   (in thousands, except per
                                                            share)
                                                              
Income (loss) before extraordinary item and
 cumulative effect of change in accounting
 principle--basic:
  As reported..................................... $16,975  $(147,256) $10,192
                                                   =======  =========  =======
Income (loss) before extraordinary item and
 cumulative effect of change in accounting
 principle--assuming dilution:
  As reported..................................... $16,975  $(147,256) $10,192
                                                   =======  =========  =======
Applicable common shares:
  Weighted average outstanding during the year....  81,593     81,168   80,156
  Reduction in shares in connection with notes
   receivable from Employees......................     (12)       (16)     (13)
                                                   -------  ---------  -------
Weighted average number of shares outstanding for
 use in computing basic earnings per share........  81,581     81,152   80,143
  Outstanding stock options (based on the treasury
   stock method)..................................   1,576               1,558
                                                   -------  ---------  -------
  Adjusted weighted average number of common and
   common share equivalent shares outstanding--
   assuming dilution..............................  83,157     81,152   81,701
                                                   =======  =========  =======
Earnings (loss) per common share--basic........... $  0.17  $   (1.81) $ (0.12)
Earnings (loss) per common share--assuming
 dilution......................................... $  0.16  $   (1.81) $ (0.12)


     Options to purchase 7,887,079 and 4,726,975 shares of common stock at
$6.70 to $33.50 per share and $28.43 to $36.13 per share, were outstanding
during 2000 and 1998, respectively, but were not included in the computation of
diluted EPS because the options' exercise price was greater than the average
market price of the common shares or the effect was anti-dilutive. All options
to purchase common stock were excluded from the 1999 EPS calculation because
they were anti-dilutive. The shares of common stock from the assumed conversion
of the 7% convertible subordinated notes and the 5 5/8% convertible
subordinated notes (see Note 10) were not included in the computation of
diluted EPS for any period because the effect was anti-dilutive.

 Stock-based compensation plans

     The Company's stock-based compensation plans are described below.

     1994 plan. The 1994 Equity Compensation Plan provides for grants of
nonqualified stock options to purchase common stock and other rights to
purchase shares of common stock to certain employees, directors, consultants
and facility medical directors. In December 1999, the plan was amended so that
no further grants may be made under this plan.

     There are 1,447,426 unexercised options outstanding under the 1994 plan.
Original options granted generally vest on the ninth anniversary of the date of
grant, subject to accelerated vesting in the event that

                                      F-18


                                  DAVITA INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                             (dollars in thousands)

certain performance criteria are met. In April 1996, the vesting schedule was
changed for new options granted so that options vest over four years from the
date of grant. The exercise price of each option equals the market price of our
stock on the date of grant, and an option's maximum term is ten years.

     Purchase rights to acquire 1,314,450 common shares for $0.90-$3.60 per
share were granted to certain employees under the 1994 plan. All of these
rights were exercised and the Company received notes for the uncollected
portion of the purchase proceeds. These notes bear interest at the lesser of
The Bank of New York's prime rate or 8%, are full recourse to the employees,
and are secured by the employees' stock. The notes are repayable four years
from the date of issuance, subject to certain prepayment requirements. At
December 31, 2000 and 1999 the outstanding notes plus accrued interest totaled
$83 and $192, respectively.

     1995 plan. The 1995 Equity Compensation Plan provides for grants of stock
options and the issuance of restricted stock to certain employees, directors
and other individuals providing services. In December 1999, the plan was
amended so that no further grants may be made under this plan. There are
712,640 unexercised options outstanding under the 1995 plan. Options granted
generally vest over four years from the date of grant and an option's maximum
term is ten years, subject to certain restrictions. Awards were generally
issued with the exercise prices equal to the market price of the stock on the
date of grant.

     1997 plan. The 1997 Equity Compensation Plan provides for grants of stock
options and the issuance of restricted stock to certain employees, directors
and other individuals providing services. In February 1998, the shares reserved
for issuance under the 1997 plan were increased to 7,166,667 common shares.
Options granted generally vest over four years from the date of grant and an
option's maximum term is ten years. Grants are generally issued with the
exercise prices equal to the market price of the stock on the date of grant.

     1999 plans. The 1999 Equity Compensation Plan provides for grants of stock
options to employees, directors and other individuals providing services. There
are 3,000,000 common shares reserved for issuance under this plan. Options
granted under this plan generally vest over four years from the date of grant
and an option's maximum term is seven years, subject to certain restrictions.
Grants under this plan are generally issued with the exercise prices equal to
the market price of the stock on the date of grant.

     The 1999 Non-Executive Officer and Non-Director Equity Compensation Plan
provides for grants of stock options to employees other than executive officers
and to other individuals providing services. There are 4,000,000 common shares
reserved for issuance under this plan. Options granted under this plan
generally vest over four years from the date of grant, subject to certain
restrictions. Grants under this plan are generally issued with the exercise
prices equal to the market price of the stock on the date of grant.

     Special Purpose Option Plan (RTC Plans). Upon consummation of the merger
with RTC, all outstanding options under RTC plans were converted to Total Renal
Care Holdings Inc. Special Purpose Option Plan options. This plan provides for
grants of incentive and nonqualified stock options in exchange for outstanding
RTC stock plan options. Options under this plan have the same provisions and
terms provided for in the RTC stock plans, including acceleration provisions
upon certain sales of assets, mergers and consolidations. On the merger date,
there was a conversion of 2,156,426 options. Further, options for
1,305,738 shares became fully vested due to change in control vesting
acceleration provisions that were contained in the original grants. Options for
1,780,193 shares were exercised subsequent to the merger date. In December
1999, the plan was amended so that no further grants may be made under this
plan.

     The fair value of each option grant was estimated on the date of grant
using the Black-Scholes option-pricing model with the following assumptions for
grants for 2000, 1999, and 1998, respectively: dividend yield of 0% for all
periods; weighted average expected volatility of 72.05%, 50.01%, and 33.98%;
risk-free interest rates of 6.13%, 5.63%, and 5.51% and weighted average
expected lives of 3.5, 6.0 and 6.0 years.

                                      F-19


                                  DAVITA INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                             (dollars in thousands)


     Stock options issued under these plans to non-employees and modifications
to previous grants to employees resulted in stock option expense of $126,
$1,116, and $3,585 for the years ended December 31, 2000, 1999, and 1998,
respectively.

     A combined summary of the status of the plans is presented below:



                                            Year ended December 31,
                          --------------------------------------------------------------
                                 2000                 1999                 1998
                          -------------------- -------------------- --------------------
                                      Weighted             Weighted             Weighted
                                      average              average              average
                                      exercise             exercise             exercise
                           Options     price    Options     price    Options     price
                          ----------  -------- ----------  -------- ----------  --------
                                                              
Outstanding at beginning
 of year................  10,421,845   $15.79  10,415,417   $23.85   8,325,030   $14.90
Granted.................   9,619,400     4.70   4,575,000     9.35   5,570,567    31.10
Exercised...............    (817,546)    2.55     (84,723)    1.23  (3,155,438)   12.61
Forfeited...............  (4,555,120)   16.74  (4,483,849)   28.22    (324,742)   27.61
                          ----------   ------  ----------   ------  ----------   ------
Outstanding at end of
 year...................  14,668,579   $ 8.96  10,421,845   $15.79  10,415,417   $23.85
                          ==========   ======  ==========   ======  ==========   ======
Options exercisable at
 year end...............   5,006,908            4,004,675            2,208,871
                          ==========           ==========           ==========
Weighted-average fair
 value of options
 granted during the
 year...................               $ 2.61               $12.74               $13.67
                                       ======               ======               ======


     Effective September 20, 1999, 1,750,000 options with exercise prices
greater than $30 per share were forfeited for the right to participate in a
retention bonus program. Retention compensation expense of $2.6 million was
recognized in 1999, and no replacement options were awarded within six months.
Effective December 31, 2000, 910,000 options with exercise prices over $15.00
were voluntarily relinquished and no replacement options have been issued.

     The following table summarizes information about fixed stock options
outstanding at December 31, 2000:



                                       Weighted
                            Options     average   Weighted             Weighted
                          outstanding  remaining  average  Exercisable average
                             as of    contractual exercise    as of    exercise
Range of Exercise Prices   12/31/00      life      price    12/31/00    price
- ------------------------  ----------- ----------- -------- ----------- --------
                                                        
$ 0.01-$ 5.00............  4,676,844      4.1      $ 2.66   1,181,539   $ 2.51
$ 5.01-$10.00............  6,433,119      6.2        7.24   1,291,244     7.42
$10.01-$15.00............    465,237      6.1       11.36      47,237    11.94
$15.01-$20.00............  2,146,347      4.8       18.52   1,912,213    18.52
$20.01-$25.00............    236,612      6.5       23.11     145,957    22.70
$25.01-$30.00............    167,113      7.3       26.67     100,096    26.81
$30.01-$35.00............    543,307      6.8       32.11     328,622    32.08
                          ----------      ---      ------   ---------   ------
                          14,668,579      5.4      $ 8.96   5,006,908   $12.99
                          ==========      ===      ======   =========   ======


     Stock purchase plan. The Employee Stock Purchase Plan entitles qualifying
employees to purchase up to $25 of common stock during each calendar year. The
amounts used to purchase stock are accumulated through payroll withholdings or
through an optional lump sum payment made in advance of the first day of the
plan. The plan allows employees to purchase stock for the lesser of 100% of the
fair market value on the first

                                      F-20


                                  DAVITA INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                             (dollars in thousands)

day of the purchase right period or 85% of the fair market value on the last
day of the purchase right period. Each purchase right period begins on January
1 or July 1, as elected by the employee and ends on December 31. Payroll
withholdings related to the plan, included in accrued employee compensation and
benefits, were $631 and $1,937 at December 31, 2000 and 1999, respectively.
Subsequent to December 31, 2000, and December 31, 1999, 99,648 and 77,106
shares, respectively, were issued to satisfy obligations under the plan.

     The fair value of the employees' purchase rights was estimated on the
beginning dates of the purchase right periods using the Black-Scholes model
with the following assumptions for grants on July 1, 2000, January 1, 2000,
July 1, 1999, January 1, 1999, July 1, 1998, and January 1, 1998, respectively:
dividend yield of 0% for all periods; expected volatility of 75% in 2000, 54%
in 1999 and 42% in 1998; risk-free interest rate of 6.0%, 6.4%, 5.5%, 4.6%,
5.5%, and 5.7%; and expected lives of 0.5 and 1.0 years. Using these
assumptions, the weighted-average fair value of purchase rights granted were
$1.33, $2.11, $2.50, $6.84, $6.24 and $7.84, respectively.

     Pro forma net income and earnings per share. The Company applies APB
Opinion No. 25 and related interpretations in accounting for all of our
employee stock compensation plans. Had compensation cost for our stock-based
compensation plans been determined under the provisions of SFAS 123, net income
and earnings per share would have been reduced to the pro forma amounts
indicated below:



                                                  Year ended December 31,
                                                 ----------------------------
                                                  2000      1999       1998
                                                 -------  ---------  --------
                                                 (in thousands, except per
                                                           share)
                                                            
Income (loss) before extraordinary item and
 cumulative effect of change in accounting
 principle...................................... $(3,492) $(162,472) $  4,004
  Extraordinary loss............................  (3,490)             (12,744)
  Cumulative effect of change in accounting
   principle....................................                       (6,896)
                                                 -------  ---------  --------
  Net income (loss)............................. $(6,982) $(162,472) $(15,636)
                                                 =======  =========  ========
Earnings (loss) per common share--basic:
  Income (loss) before extraordinary item....... $ (0.05) $   (2.00) $   0.04
  Extraordinary loss............................   (0.04)               (0.16)
  Cumulative effect of change in accounting
   principle....................................                        (0.08)
                                                 -------  ---------  --------
  Net income (loss)............................. $ (0.09) $   (2.00) $  (0.20)
                                                 =======  =========  ========
Weighted average number of common shares and
 equivalents outstanding........................  81,581     81,152    80,143
                                                 =======  =========  ========
Earnings (loss) per common share--assuming
 dilution:
  Income (loss) before extraordinary item....... $ (0.05) $   (2.00) $   0.05
  Extraordinary loss............................   (0.04)               (0.16)
  Cumulative effect of change in accounting
   principle....................................                        (0.08)
                                                 -------  ---------  --------
  Net income (loss)............................. $ (0.09) $   (2.00) $  (0.19)
                                                 =======  =========  ========
Weighted average number of common shares and
 equivalents outstanding--Assuming dilution.....  81,581     81,152    81,076
                                                 =======  =========  ========


                                      F-21


                                  DAVITA INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                             (dollars in thousands)


13. Transactions with related parties

     Richard K. Whitney, our Chief Financial Officer, received a loan from the
Company in the principal amount of $65,000 in July 1997. In February 2001 Mr.
Whitney prepaid this loan in full, with a $65,000 payment for the outstanding
principal. Under the terms of the loan, Mr. Whitney was required to pay
interest only on the note on a monthly basis from August 1997 at the rate of 7%
per year through July 2002, at which time the unpaid principal balance was due
in full. The loan was secured by all of Mr. Whitney's options to purchase our
common stock. Mr. Whitney used the proceeds of this loan in the purchase of his
principal residence.

     Joseph C. Mello, our Chief Operating Officer, received a loan from the
Company in the principal amount of $275,000 in December 2000. Mr. Mello is
required to pay quarterly interest only on the note from March 2001 through
September 2002 at a rate of 7% per year. Thereafter, Mr. Mello is required to
make quarterly interest and principal payments of approximately $15,800 through
September 2007, at which time the unpaid principal balance will be repaid in
full. The loan is secured by all of Mr. Mello's options to purchase our common
stock. Mr. Mello used the proceeds of this loan in the purchase of his
principal residence.

 Tenet

     Tenet Healthcare Corporation, or Tenet, owns less than 5% of our common
stock. The Company provides dialysis services to Tenet hospital patients under
agreements with terms of one to three years. The contract terms are comparable
to contracts with unrelated third parties. Included in accounts receivable are
amounts related to these services of $459 and $1,211 at December 31, 2000 and
1999, respectively. Net operating revenues received from Tenet for these
services were $4,903, $7,037, and $2,424, for 2000, 1999, and 1998,
respectively.

 CSFB

     A managing director of Credit Suisse First Boston Corporation, or CSFB,
has served on the Company's board of directors since August 1994 and, prior to
August 1997, an affiliate of CSFB held an ownership interest in the Company.
Effective with the August 1997 public offering of common stock, CSFB and its
affiliates no longer own an interest in the Company. During 1998, CSFB advised
the Company on the acquisition of RTC and assisted us in the issuance of the 7%
notes.

     Prior to November 2000 the Company maintained a business arrangement with
CSFB under which the Company managed third-party dialysis centers with options
to acquire the centers at future dates and guaranteed third-party debt of
approximately $11 million as of December 31, 1999. The Company purchased these
dialysis centers from CSFB and accordingly cancelled these guarantees in
November 2000.

14. Employee benefit plans

     The Company has a savings plan for substantially all employees, which has
been established pursuant to the provisions of Section 401(k) of the Internal
Revenue Code, or IRC. The plan provides for employees to contribute from 1% to
15% of their base annual salaries on a tax-deferred basis not to exceed IRC
limitations. The Company may make a contribution under the plan each fiscal
year as determined by our board of directors. Company matched contributions
were $91, $76, and $58 for the years ended December 31, 2000, 1999, and 1998,
respectively, in accordance with specific state requirements.

                                      F-22


                                  DAVITA INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                             (dollars in thousands)


     RTC had a defined contribution savings plan covering substantially all of
its employees. RTC's contributions under the plan were approximately $641 for
the year ended December 31, 1998. Effective July 1, 1998, the plan was
terminated and merged into the Company's savings plan.

     During 2000, the Company established the DaVita Inc. Profit Sharing Plan
and is in the process of applying to have it qualified under Section 401(a) of
the IRC. Contributions to this plan are made solely by the Company. All
contributions by the Company to the plan require the approval of the Board of
Directors and are deposited into an irrevocable trust. The profit sharing award
for each eligible participant is calculated as a percentage of base salary and
is based upon the achievement of certain employee specific and corporate
financial and operating goals. During 2000, the Company recognized expense of
$15,806 and made contributions of $7,088 to the trust.

15. Contingencies

     Health care providers' revenues may be subject to adjustment as a result
of (1) examination by government agencies or contractors, for which the
resolution of any matters raised may take extended periods of time to finalize;
(2) differing interpretations of government regulations by different fiscal
intermediaries; (3) differing opinions regarding a patient's medical diagnosis
or the medical necessity of services provided; and (4) retroactive implications
or interpretations of governmental requirements.

     The Company's Florida-based laboratory subsidiary is the subject of a
third-party carrier review of its Medicare reimbursement claims. The carrier
has issued formal overpayment determinations in the amount of $5.6 million for
the review period from January 1995 to April 1996, and $15 million for the
review period from May 1996 to March 1998. The carrier has suspended all
payments of Medicare claims from this laboratory since May 1998. The carrier
has also determined that $16.1 million of the suspended claims for the review
period from April 1998 to August 1999 were not properly supported by the
prescribing physicians' medical justification. The carrier has alleged that 99%
of the tests the laboratory performed during the review period from January
1995 to April 1996, 96% of the tests performed in the period from May 1996 to
March 1998, and 70% of the tests performed in the period from April 1998 to
August 1999 were not properly supported by the prescribing physicians' medical
justification. In August 2000, the carrier requested additional records with
respect to the time period August 1999 to May 2000.

     The Company is disputing the overpayment determinations and has provided
supporting documentation of its claims. The Company has initiated the process
of a formal review of each of the carrier's determinations. The first step in
this formal review process is a hearing before a hearing officer at the
carrier. The Company received minimal responses from the carrier to its
repeated requests for clarification and information regarding the continuing
payment suspension. The hearing regarding the initial review period from
January 1995 to April 1996 was held in July 1999. In January 2000 the hearing
officer issued a decision upholding the overpayment determination of $5.6
million. The hearing regarding the second review period from May 1996 to March
1998 was held in April 2000. In July 2000 the hearing officer issued a decision
upholding $14.2 million, or substantially all of the overpayment determination.
The Company has filed appeals of both decisions to a federal administrative law
judge, and has moved to consolidate the two appeals. At this time, we have not
received a scheduled date for a hearing with an administrative law judge,
although HHS has informed us that we can expect a hearing by the second quarter
of 2001.

     In February 1999, our Florida-based laboratory subsidiary filed a
complaint against the carrier and HHS seeking a court order to lift the payment
suspension. In July 1999, the court dismissed our complaint because we had not
exhausted all administrative remedies, that is, the carrier review and
administrative law judge processes described above.

                                      F-23


                                  DAVITA INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                             (dollars in thousands)


     In addition to the formal appeal process with a federal administrative law
judge, beginning in the third quarter of 1999 we sought a meeting with the
Department of Justice, or DOJ, to begin a process to resolve this matter. The
carrier had previously informed the local office of the DOJ and HHS of this
matter, and we had provided requested information to the DOJ. The Company met
with the DOJ in February 2001, at which time the DOJ requested additional
information which will be provided.

     Timing of the final resolution of this matter is highly uncertain, and
beyond the Company's control or influence. Beginning in the third quarter of
2000, the Company stopped accruing additional Medicare revenue from this
laboratory until the uncertainties regarding both the timing of resolution and
the ultimate revenue valuations are at least substantially eliminated. The
amount of potential Medicare revenue not accrued beginning in the third quarter
of 2000 was approximately $4 million per quarter. As of June 30, 2000, the
cumulative recognized gross revenue associated with the withheld billings was
approximately $38 million. We estimate that the potential cash exposure as of
December 31, 2000 was not more than $15 million based on the carrier's
overpayment findings noted above. In addition, the government could impose
additional fines and penalties, which could be substantial.

     In February 2001, the Civil Division of the United States Attorney's
Office for the Eastern District of Pennsylvania contacted us and requested that
the Company cooperate in a review of some of our historical practices,
including billing and other operating procedures and our financial
relationships with physicians.

     The Civil Division has requested that we provide a wide range of
information responding to the areas of review. The Civil Division has not
initiated any legal process or served any subpoena on the Company. The Civil
Division has indicated that it is not making any allegation of wrongdoing at
this time and that no criminal action against the Company or any individual is
contemplated. The Company is cooperating in this review.

     The inquiry appears to be at an early stage. As it proceeds, the Civil
Division could expand its areas of concern. If a court determines there has
been wrongdoing, the penalties under applicable statutes could be substantial.

     Following the announcement on February 18, 1999 of the Company's
preliminary results for the fourth quarter of 1998 and the full year then
ended, class action lawsuits were filed alleging violations of the federal
securities laws arising from allegedly false and misleading statements during a
class period of March 11, 1997 to July 18, 1999. During 2000 the consolidated
lawsuit was settled. Under a stipulation of settlement the Company contributed
$10.8 million and our insurance carriers contributed $14.2 million for a $25
million settlement fund. The Company agreed to implement corporate governance
principles and procedures to ensure the accountability of the Company's board
and management to its shareholders. The Company admitted to no wrongdoing or
liability in the stipulation of settlement.

     In addition, DaVita is subject to claims and suits in the ordinary course
of business for which the Company is believed to be covered by insurance.
Management believes that the ultimate resolution of these additional pending
proceedings, whether the underlying claims are covered by insurance or not,
will not have a material adverse effect on the Company's financial condition,
results of operations or cash flows.

16. Mergers, acquisitions and divestitures

 Merger

     On February 27, 1998 the Company merged with Renal Treatment Centers,
Inc., or RTC. In connection with the merger, the Company issued 34,565,729
shares of its common stock in exchange for all of the

                                      F-24


                                  DAVITA INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                            (dollars in thousands)

outstanding shares of RTC common stock. In addition, the Company guaranteed
$125,000 of RTC's 5 5/8% convertible subordinated notes. In conjunction with
this transaction, an additional 140,000 shares of common stock were authorized
by the shareholders.

     The RTC merger transaction was accounted for as a pooling of interests
and these consolidated financial statements have been restated to include the
results of operations and account balances of RTC for all periods presented.
There were no transactions between RTC and the Company prior to the
combination.

     As a result of the merger, RTC's revolving credit agreement was
terminated and the outstanding balance of approximately $297,228 was paid off
through additional borrowings under our credit facilities. The remaining net
unamortized deferred financing costs in the amount of $4,393, less tax of
$1,580, related to RTC's revolving credit agreement were recognized as an
extraordinary loss in 1998.

     Merger and related costs recorded during 1998 included transaction costs,
integration costs, employee severance and other directly associated
compensation expense.

     A summary of merger and related costs and accrual activity through
December 31, 2000 is as follows:



                                                Severance
                                      Direct       and      Costs to
                                    transaction employment integrate
                                       costs      costs    operations  Total
                                    ----------- ---------- ---------- --------
                                                          
    Initial expense................  $ 21,580    $ 41,960   $ 15,895  $ 79,435
    Amounts utilized during 1998...   (22,885)    (37,401)   (13,137)  (73,423)
    Adjustment of estimates........     1,305        (959)    (1,593)   (1,247)
                                     --------    --------   --------  --------
    Accrual, December 31, 1998.....                 3,600      1,165     4,765
    Amounts utilized during 1999...                  (600)      (377)     (977)
                                     --------    --------   --------  --------
    Accrual, December 31, 1999.....                 3,000        788     3,788
    Amounts utilized during 2000...                             (788)     (788)
                                     --------    --------   --------  --------
    Accrual, December 31, 2000.....  $    --     $  3,000   $    --   $  3,000
                                     ========    ========   ========  ========


     Direct transaction costs consisted primarily of investment banking fees,
legal and accounting costs and filing costs. Severance and other compensation
costs directly resulting from the merger included termination of employment
contracts; severance payments; the exercise of RTC stock options with tendered
shares (less than six months from exercise date); and special merger bonuses.
Integration costs of the combined operations were principally associated with
the elimination of the following RTC departments: human resources, managed
care, laboratory, and all finance functions with the exception of patient
accounting. In addition, RTC's laboratory, located in Las Vegas, Nevada, was
closed prior to its commencement of operation. Integration costs included
termination of a long-term laboratory management service agreement, write-off
of leasehold improvements and other capitalized costs, and incremental costs
of integrating operations.

     The remaining accrual balance is included in other liabilities.

                                     F-25


                                  DAVITA INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                             (dollars in thousands)


 Acquisitions

     The following is a summary of acquisitions that were accounted for as
purchases:



                                                      Year ended December 31,
                                                     -------------------------
                                                      2000     1999     1998
                                                     ------- -------- --------
                                                             
    Number of centers acquired .....................       8       45       76
    Number of common shares issued .................                    98,549
    Estimated fair value of common shares issued ...                  $  2,796
    Deferred purchase payments and acquisition
     obligations ...................................         $ 12,737   15,233
    Cash paid, net of cash acquired ................ $12,895  154,226  338,164
                                                     ------- -------- --------
    Aggregate purchase price ....................... $12,895 $166,963 $356,193
                                                     ======= ======== ========


     The assets and liabilities of the acquired entities in the preceding table
were recorded at their estimated fair market values at the dates of
acquisition. The results of operations of these centers have been included in
the financial statements from their effective acquisition dates. The nearest
month-end has been used as the effective date for recording acquisitions that
close during the month because there were no partial month accounting cutoffs
and partial month results associated with these acquisitions would not have a
material impact on consolidated operating results. The Company acquired all of
its foreign operations and several domestic operations through purchases of
capital stock. Any settlement with tax authorities relating to pre-acquisition
income tax liabilities may result in an adjustment to goodwill attributable to
that acquisition.

     The initial allocations of fair value are based upon available information
for the acquired businesses and are finalized when the contingent acquisition
amounts are determined. The final allocations did not differ materially from
the initial allocations. Allocations were as follows:



                                                     Year ended December 31,
                                                    ---------------------------
                                                     2000      1999      1998
                                                    -------  --------  --------
                                                              
    Identified intangible assets ..................          $ 18,061  $ 39,992
    Goodwill.......................................           140,111   315,655
    Tangible assets................................ $13,006    20,359    30,650
    Liabilities assumed............................    (111)  (11,568)  (30,104)
                                                    -------  --------  --------
      Total purchase price......................... $12,895  $166,963  $356,193
                                                    =======  ========  ========


                                      F-26


                                  DAVITA INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                             (dollars in thousands)


     The following summary, prepared on a pro forma basis, combines the results
of operations as if the acquisitions had been consummated as of the beginning
of each of the periods presented, after including the impact of certain
adjustments such as amortization of intangibles, interest expense on
acquisition financing and income tax effects.



                                                Year ended December 31,
                                           ----------------------------------
                                              2000        1999        1998
                                           (unaudited) (unaudited) (unaudited)
                                           ----------- ----------  ----------
                                                          
Net revenues ............................. $1,497,979  $1,476,727  $1,285,546
Net income (loss) before extraordinary
 item and cumulative effect of change in
 accounting principle .................... $   19,035  $ (145,246) $   15,587
Net income (loss).........................     15,545    (145,246)     (4,053)
Pro forma net income (loss) per share
 before extraordinary item and cumulative
 effect of change in accounting principle
 ......................................... $    0 .23  $    (1.79) $     0.19
Pro forma net income (loss) per share
 before extraordinary item and cumulative
 effect of change in accounting
 principle--assuming dilution ............ $     0.23  $    (1.79) $     0.19
Pro forma net income (loss) per share.....       0.19       (1.79)      (0.05)
Pro forma net income (loss) per share--
 assuming dilution .......................       0.19       (1.79)      (0.05)


     The unaudited pro forma results are not necessarily indicative of what
actually would have occurred if the acquisitions had been completed prior to
the beginning of the periods presented. In addition, they are not intended to
be a projection of future results and do not reflect the synergies, additional
revenue-generating services or direct facility operating expense reduction that
might be achieved from combined operations.

 Divestitures

     During the fourth quarter of 1999, the Company announced its intention to
sell its dialysis operations outside the continental U.S. and recorded an
impairment loss of $82,812 associated with the non-continental U.S. operations.
Assets and liabilities of the non-continental U.S. operations as of December
31, 1999 were $259,596 and $34,294 respectively.

     On June 19, 2000, the Company completed the sales of its operations
outside the continental U.S. with the exception of operations in Puerto Rico
and Guam. The definitive sale agreement for the Puerto Rico operations was
signed in the first quarter of 2000 and amended in the second quarter of 2000,
and the sale will be completed upon the receipt of required regulatory
approvals and third-party consents. The sales completed in June 2000
represented approximately 90% of the total value of the non-continental
operations being divested. An additional impairment loss of $3,000 was
recognized as of June 30, 2000 attributable to the completion of these sales.
The Company recognized a foreign currency translation loss of $4,700 associated
with non-continental U.S. operations divested during the second quarter. The
foreign currency translation loss had previously been recognized in other
comprehensive income.

     On November 1, 2000 the Company completed the sales of its interests in
operations on the island of Guam for a gain of approximately $1,600. Also in
the fourth quarter, the Company recognized accounts receivable recoveries on
the non-continental U.S. accounts receivable not sold of $1,100 and reversal of
$900 in transaction costs accrued for the sale of the non-continental U.S.
operations. Accruals for transaction costs and associated obligations amounted
to $7,843 as of December 31, 2000. Future charges or credits resulting from the
ultimate resolution of divestitures, indemnities and other estimated costs are
not expected to be material.

                                      F-27


                                  DAVITA INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                             (dollars in thousands)


     Net cash proceeds from the sales of non-continental U.S. operations in
2000 were $133,177. Of these proceeds, $125,000 was immediately applied to our
credit facilities debt in accordance with the conditions under which we
received consent from the lenders to consummate the sales.

     Operating results for the non-continental U.S. operations excluding
impairment charges were as follows (in thousands):



                                                      Year ended December 31,
                                                      -------------------------
                                                       2000     1999     1998
                                                      ------- --------  -------
                                                               
    Net operating revenue............................ $74,453 $124,410  $88,978
    Operating expenses
      Dialysis centers and labs......................  59,264  100,204   70,873
      General and administrative.....................   3,640    7,396    3,940
      Depreciation and amortization..................   8,181   12,629    7,531
      Provision for uncollectible accounts...........   1,728    5,717    2,734
                                                      ------- --------  -------
                                                       72,813  125,946   85,078
                                                      ------- --------  -------
    Operating income (loss).......................... $ 1,640 $ (1,536) $ 3,900
                                                      ======= ========  =======


17. Fair value of financial instruments

     Financial instruments consist primarily of cash, accounts receivable,
notes receivable, accounts payable, accrued compensation and benefits, and
other accrued liabilities. The balances of these financial instruments as
presented in the financial statements at December 31, 2000 approximate their
fair values. Borrowings under credit facilities, of which $498,800 was
outstanding as of December 31, 2000, reflect fair value as they are subject to
fees and adjustable rates competitively determined in the marketplace. The fair
value of the 7% convertible subordinated notes and the RTC 5 5/8% convertible
subordinated notes were approximately $293,000 and $110,000 at December 31,
2000 based on quoted market prices.

18. Supplemental cash flow information

     The table below provides supplemental cash flow information:



                                                     Year ended December 31,
                                                    --------------------------
                                                      2000      1999    1998
                                                    --------  -------- -------
                                                              
    Cash paid (received) for:
      Income taxes ................................ $(28,585) $ 32,324 $13,676
      Interest.....................................  117,856   102,125  66,409
    Non-cash investing and financing activities:
      Estimated value of stock and options issued
       in acquisitions                                                   2,796
      Fixed assets acquired under capital lease
       obligations ................................              3,405     583
      Contribution to consolidated partnerships ...       25     2,195   2,592
      Deferred financing cost write-off............    1,192     1,601


                                      F-28


                                  DAVITA INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                             (dollars in thousands)


19. Selected quarterly financial data (unaudited)

     Summary unaudited quarterly financial data for 2000 and 1999 is as
follows:



                                             2000                                        1999
                          ------------------------------------------- -------------------------------------------
                          December 31 September 30 June 30   March 31 December 31 September 30 June 30   March 31
                          ----------- ------------ --------  -------- ----------- ------------ --------  --------
                                                                                 
Net operating revenues
 .......................   $372,746     $362,535   $378,908  $372,113  $ 373,120    $367,168   $352,819  $352,244
Operating income (loss)
 .......................     51,649       49,906     32,843    40,317   (154,864)     35,107     (6,353)   62,128
Income (loss) before
 extraordinary item.....     15,333       13,150    (15,355)    3,847   (150,664)      2,259    (22,059)   23,207
Net income (loss) ......     15,333        9,660    (15,355)    3,847   (150,664)      2,259    (22,059)   23,207
Income (loss) per common
 share--basic:
 Income (loss) before
  extraordinary item....   $   0.19     $   0.16   $  (0.19) $   0.05  $   (1.86)   $   0.03   $  (0.27) $   0.29
 Extraordinary loss ....                   (0.04)
                           --------     --------   --------  --------  ---------    --------   --------  --------
 Net income (loss) per
  share ................   $   0.19     $   0.12   $  (0.19) $   0.05  $   (1.86)   $   0.03   $  (0.27) $   0.29
                           ========     ========   ========  ========  =========    ========   ========  ========
Income (loss) per common
 share--assuming
 dilution:
 Income (loss) before
  extraordinary item....   $   0.18     $   0.16   $  (0.19) $   0.05  $   (1.86)   $   0.03   $  (0.27) $   0.28
 Extraordinary loss.....                   (0.04)
                           --------     --------   --------  --------  ---------    --------   --------  --------
 Net income (loss) per
  share.................   $   0.18     $   0.12   $  (0.19) $   0.05  $   (1.86)   $   0.03   $  (0.27) $   0.28
                           ========     ========   ========  ========  =========    ========   ========  ========



20. Condensed consolidating financial statements

     The following information is presented as required under the Securities
and Exchange Commission Financial Reporting Release No. 55 in connection with
the Company's publicly traded debt. This information is not routinely prepared
for use by management. The operating and investing activities of the separate
legal entities included in the consolidated financial statements are fully
interdependent and integrated. Accordingly, the operating results of the
separate legal entities are not representative of what the operating results
would be on a stand-alone basis. Revenues and operating expenses of the
separate legal entities include intercompany charges for management and other
services.

                                      F-29


                                  DAVITA INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                             (dollars in thousands)


     The $125,000 5 5/8% Convertible Subordinated Notes Due 2006, issued by the
wholly-owned subsidiary Renal Treatments Center, Inc., or RTC, are guaranteed
by DaVita Inc. The $225,000 9 1/4% Senior Subordinated Notes issued in April
2001 by DaVita Inc., are guaranteed by all its wholly-owned domestic
subsidiaries. Non-wholly-owned subsidiaries, joint ventures and partnerships
are not guarantors of either obligation. The financial positions and results of
operations of the respective guarantors are based upon the guarantor
relationship as of the end of the year and respective interim periods.

                     Condensed consolidating balance sheets



                                        Wholly-owned
                                        subsidiaries
                                     -------------------
                            DaVita                        Non-participating Consolidating Consolidated
                             Inc.      RTC    All others    subsidiaries     adjustments     total
                          ---------- -------- ----------  ----------------- ------------- ------------
                                                                        
As of December 31, 2000
Cash and cash
 equivalents............  $   16,553 $  1,871 $   12,783                                   $   31,207
Accounts receivable,
 net....................               83,313    180,263      $ 26,836                        290,412
Other current assets....       2,014   15,967     55,947         2,328                         76,256
                          ---------- -------- ----------      --------       -----------   ----------
  Total current assets..      18,567  101,151    248,993        29,164                        397,875
Property and equipment,
 net....................       5,377   61,686    146,959        22,637                        236,659
Investments in
 subsidiaries...........     199,079                                         $  (199,079)
Receivables from
 subsidiaries...........     938,183                                            (938,183)
Intangible assets, net..       9,548  299,813    493,946       118,316                        921,623
Other assets............      37,692    2,146        593            44                         40,475
                          ---------- -------- ----------      --------       -----------   ----------
  Total assets..........  $1,208,446 $464,796 $  890,491      $170,161       $(1,137,262)  $1,596,632
                          ========== ======== ==========      ========       ===========   ==========
Current liabilities.....      15,278   23,996    206,275         3,978                        249,527
Payables to
 subsidiaries/parent....              146,877    746,892        44,414          (938,183)
Long-term liabilities...     843,800  125,000      5,311         4,750                        978,861
Minority interests......                                                          18,876       18,876
Shareholders' equity
 (deficit)..............     349,368  168,923    (67,987)      117,019          (217,955)     349,368
                          ---------- -------- ----------      --------       -----------   ----------
  Total liabilities and
   shareholders'
   equity...............  $1,208,446 $464,796 $  890,491      $170,161       $(1,137,262)  $1,596,632
                          ========== ======== ==========      ========       ===========   ==========
As of December 31, 1999
Cash and cash
 equivalents............  $   90,544 $  4,118 $   13,319                                   $  107,981
Accounts receivable,
 net....................              115,442    234,951      $ 39,936                        390,329
Other current assets....       9,599   11,946    129,393         5,500                        156,438
                          ---------- -------- ----------      --------       -----------   ----------
  Total current assets..     100,143  131,506    377,663        45,436                        654,748
Property and equipment,
 net....................       5,850   86,572    157,827        35,200                        285,449
Investments in
 subsidiaries...........     166,227                                         $  (166,227)
Receivables from
 subsidiaries...........   1,316,530                                          (1,316,530)
Intangible assets, net..      28,862  346,756    543,441       150,613                      1,069,672
Other assets............      40,038      167      5,444         1,200                         46,849
                          ---------- -------- ----------      --------       -----------   ----------
  Total assets..........  $1,657,650 $565,001 $1,084,375      $232,449       $(1,482,757)  $2,056,718
                          ========== ======== ==========      ========       ===========   ==========
Current liabilities.....  $1,328,180 $237,424 $  116,767      $ 16,173                     $1,698,544
Payables to
 subsidiaries/parent....              161,720  1,065,620        89,190        (1,316,530)
Long-term liabilities...       3,066    1,504      1,197         3,426                          9,193
Minority interests......                                                          22,577       22,577
Shareholders' equity
 (deficit)..............     326,404  164,353    (99,209)      123,660          (188,804)     326,404
                          ---------- -------- ----------      --------       -----------   ----------
  Total liabilities and
   shareholders'
   equity...............  $1,657,650 $565,001 $1,084,375      $232,449       $(1,482,757)  $2,056,718
                          ========== ======== ==========      ========       ===========   ==========


                                      F-30


                                  DAVITA INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                             (dollars in thousands)

                  Condensed consolidating statements of income



                                         Wholly-owned
                                         subsidiaries
                                      --------------------
                                                    All     Non-participating Consolidating Consolidated
                          DaVita Inc.    RTC      others      subsidiaries     Adjustments     Total
                          ----------- ---------  ---------  ----------------- ------------- ------------
                                                                          
For the year ended
 December 31, 2000
Net operating revenues..   $ 117,111  $ 442,940  $ 875,464      $159,974        $(109,187)   $1,486,302
Operating expenses......      27,457    426,069    839,595       127,653         (109,187)    1,311,587
                           ---------  ---------  ---------      --------        ---------    ----------
Operating income .......      89,654     16,871     35,869        32,321                        174,715
Other income (loss).....      (7,920)                 (578)        1,297                         (7,201)
Interest expense, net...     108,644      7,040     (6,082)        7,035                        116,637
Minority interests......                                                           (5,942)       (5,942)
Income taxes............     (11,033)     5,261     33,836          (104)                        27,960
Equity in earnings of
 consolidated
 subsidiaries...........      32,852                20,745                        (53,597)
Extraordinary loss......      (3,490)                                                            (3,490)
                           ---------  ---------  ---------      --------        ---------    ----------
 Net income ............   $  13,485  $   4,570  $  28,282      $ 26,687        $ (59,539)   $   13,485
                           =========  =========  =========      ========        =========    ==========
For the year ended
 December 31, 1999
Net operating revenues..   $ 100,344  $ 496,380  $ 743,147      $198,391        $ (92,911)   $1,445,351
Operating expenses......      51,668    499,560    880,969       170,047          (92,911)    1,509,333
                           ---------  ---------  ---------      --------        ---------    ----------
 Operating income
  (loss)................      48,676     (3,180)  (137,822)       28,344                        (63,982)
Other income (loss).....        (514)    (3,639)     2,464          (206)                        (1,895)
Interest expense, net...     100,798      7,988     (3,529)        5,540                        110,797
Minority interests......                                                           (5,152)       (5,152)
Income taxes............     (10,132)     9,296    (33,971)          237                        (34,570)
Equity in earnings
 (losses) of
 consolidated
 subsidiaries...........    (104,752)               17,209                         87,543
                           ---------  ---------  ---------      --------        ---------    ----------
 Net income (loss)......   $(147,256) $(24,103)  $ (80,649)     $ 22,361        $  82,391    $ (147,256)
                           =========  =========  =========      ========        =========    ==========
For the year ended
 December 31, 1998
Net operating revenues..   $  78,212  $ 472,355  $ 546,123      $161,039        $ (53,991)   $1,203,738
Operating expenses......      48,015    446,367    496,240       132,194          (53,991)    1,068,825
                           ---------  ---------  ---------      --------        ---------    ----------
 Operating income ......      30,197     25,988     49,883        28,845                        134,913
Other income............         595                 4,287            12                          4,894
Interest expense, net...      73,306      8,993     (4,104)        5,808                         84,003
Minority interests......                                                           (7,163)       (7,163)
Income taxes............       4,597     19,959     14,063          (170)                        38,449
Equity in earnings of
 consolidated
 subsidiaries...........      47,595                15,425                        (63,020)
Extraordinary loss......      (9,932)    (2,812)                                                (12,744)
Cumulative effect of
 accounting change......                 (3,993)    (2,272)         (631)                        (6,896)
                           ---------  ---------  ---------      --------        ---------    ----------
 Net income (loss)......   $  (9,448) $  (9,769) $  57,364      $ 22,588        $ (70,183)   $   (9,448)
                           =========  =========  =========      ========        =========    ==========


                                      F-31


                                  DAVITA INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                             (dollars in thousands)

                Condensed consolidated statements of cash flows



                                        Wholly-owned
                                        subsidiaries
                                     --------------------  Non-participating Consolidating Consolidated
                         DaVita Inc.   RTC     All Others    subsidiaries     adjustments     total
                         ----------- --------  ----------  ----------------- ------------- ------------
                                                                         
Year ended December 31,
 2000
Cash flows from
 operating activities:
Net income.............   $  13,485  $  4,570  $  28,282       $ 26,687        $(59,539)    $  13,485
Changes in operating
 and intercompany
 assets and liabilities
 and non cash items
 included in net income
 ......................     364,575   (99,917)   (10,644)       (19,390)         59,539       294,163
                          ---------  --------  ---------       --------        --------     ---------
   Net cash provided by
    (used in) operating
    activities.........     378,060   (95,347)    17,638          7,297             --        307,648
                          ---------  --------  ---------       --------        --------     ---------
Cash flows from
 investing activities:
Purchase of property
 and equipment, net....        (722)  (12,242)   (19,297)        (8,827)                      (41,088)
Acquisitions and
 divestitures, net.....               105,342     28,955                                      134,297
Other items............        (342)                 488                                          146
                          ---------  --------  ---------       --------        --------     ---------
   Net cash provided by
    (used in) investing
    activities.........      (1,064)   93,100     10,146         (8,827)                       93,355
                          ---------  --------  ---------       --------        --------     ---------
Cash flows from
 financing activities:
Long-term debt.........    (456,810)             (21,756)         1,530                      (477,036)
Other items............       5,823               (6,564)                                        (741)
                          ---------  --------  ---------       --------        --------     ---------
   Net cash provided by
    (used in) financing
    activities.........    (450,987)             (28,320)         1,530                      (477,777)
                          ---------  --------  ---------       --------        --------     ---------
Net decrease in cash...     (73,991)   (2,247)      (536)           --                        (76,774)
Cash at the beginning
 of the year...........      90,544     4,118     13,319                                      107,981
                          ---------  --------  ---------       --------        --------     ---------
Cash at the end of the
 year..................   $  16,553  $  1,871  $  12,783       $    --         $    --      $  31,207
                          =========  ========  =========       ========        ========     =========
Year ended December 31,
 1999
Cash flows from
 operating activities:
Net income (loss)......   $(147,256) $(24,103) $ (80,649)      $ 22,361        $ 82,391     $(147,256)
Changes in operating
 and intercompany
 assets and liabilities
 and non cash items
 included in net income
 (loss)................      40,079    50,684    321,287        (10,897)        (82,391)      318,762
                          ---------  --------  ---------       --------        --------     ---------
   Net cash provided by
    (used in) operating
    activities.........    (107,177)   26,581    240,638         11,464             --        171,506
                          ---------  --------  ---------       --------        --------     ---------
Cash flows from
 investing activities:
Purchases of property
 and equipment, net....      (5,133)  (27,660)   (62,770)       (11,094)                     (106,657)
Acquisitions and
 divestitures, net.....                         (154,226)                                    (154,226)
Other items............                          (30,564)                                     (30,564)
                          ---------  --------  ---------       --------        --------     ---------
   Net cash used in
    investing
    activities.........      (5,133)  (27,660)  (247,560)       (11,094)                     (291,447)
                          ---------  --------  ---------       --------        --------     ---------
Cash flows from
 financing activities:
Long-term debt.........     203,263      (199)    (1,177)          (370)                      201,517
Other items............      (6,312)              (4,052)                                     (10,364)
                          ---------  --------  ---------       --------        --------     ---------
   Net cash provided by
    (used in) financing
    activities.........     196,951      (199)    (5,229)          (370)                      191,153
Foreign currency
 translation loss......                           (4,718)                                      (4,718)
                          ---------  --------  ---------       --------        --------     ---------
Net increase (decrease)
 in cash...............      84,641    (1,278)   (16,869)           --                         66,494
Cash at the beginning
 of the year...........       5,903     5,396     30,188                                       41,487
                          ---------  --------  ---------       --------        --------     ---------
Cash at the end of the
 year..................   $  90,544  $  4,118  $  13,319       $    --         $    --      $ 107,981
                          =========  ========  =========       ========        ========     =========


                                      F-32


                                  DAVITA INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                             (dollars in thousands)

         Condensed consolidating statements of cash flows--(continued)



                                         Wholly-owned
                                         subsidiaries
                                     ---------------------  Non-participating Consolidating Consolidated
                         DaVita Inc.    RTC     All Others    subsidiaries     adjustments     total
                         ----------- ---------  ----------  ----------------- ------------- ------------

                                                                          
Year Ended December 31,
 1998
Cash flows from
 operating activities:
Net income (loss)......   $  (9,448) $  (9,769) $  57,364       $ 22,588        $(70,183)    $  (9,448)
Changes in operating
 and intercompany
 assets and liabilities
 and non cash items
 included in net income
 (loss)................    (722,378)   316,072    371,835        (14,346)         70,183        21,366
                          ---------  ---------  ---------       --------        --------     ---------
   Net cash provided by
    (used) in operating
    activities.........    (731,826)   306,303    429,199          8,242             --         11,918
                          ---------  ---------  ---------       --------        --------     ---------
Cash flows from
 investing activities:
Purchases of property
 and equipment, net....        (449)   (15,526)   (58,166)        (8,679)                      (82,820)
Acquisitions and
 divestitures, net.....                (17,871)  (320,293)                                    (338,164)
Other items............     (14,555)              (16,785)                                     (31,340)
                          ---------  ---------  ---------       --------        --------     ---------
   Net cash used in
    investing
    activities.........     (15,004)   (33,397)  (395,244)        (8,679)                     (452,324)
                          ---------  ---------  ---------       --------        --------     ---------
Cash flows from
 financing activities:
Long term debt.........     744,744   (268,253)    (4,633)           437                       472,295
Other items............       6,526                (3,628)                                       2,898
                          ---------  ---------  ---------       --------        --------     ---------
   Net cash provided by
    (used in) financing
    activities.........     751,270   (268,253)    (8,261)           437                       475,193
                          ---------  ---------  ---------       --------        --------     ---------
Net increase in cash...       4,440      4,653     25,694            --                         34,787
Cash at the beginning
 of the year...........       1,463        743      4,494                                        6,700
                          ---------  ---------  ---------       --------        --------     ---------
Cash at the end of the
 year..................   $   5,903  $   5,396  $  30,188       $    --         $    --      $  41,487
                          =========  =========  =========       ========        ========     =========


                                      F-33


                                  DAVITA INC.

                          CONSOLIDATED BALANCE SHEETS
                                  (unaudited)
                 (dollars in thousands, except per share data)



                                                       March 31,   December 31,
                                                          2001         2000
                                                       ----------  ------------
                                                             
                        ASSETS
Cash and cash equivalents............................. $   17,443   $   31,207
Accounts receivable, less allowance of $60,790 and
 $61,619..............................................    299,424      290,412
Inventories...........................................     45,566       20,641
Other current assets..................................     14,259       10,293
Income taxes receivable...............................                   2,830
Deferred income taxes.................................     42,265       42,492
                                                       ----------   ----------
    Total current assets..............................    418,957      397,875
Property and equipment, net...........................    242,797      236,659
Intangible assets, net................................    947,946      921,623
Investments in third-party dialysis businesses........     12,203       34,194
Other long-term assets................................      2,205        1,979
Deferred income taxes.................................      1,629        4,302
                                                       ----------   ----------
                                                       $1,625,737   $1,596,632
                                                       ==========   ==========
         LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable...................................... $   77,345   $   74,882
Other current liabilities.............................    106,781      102,563
Accrued compensation and benefits.....................     72,484       70,406
Current portion of long-term debt.....................      7,580        1,676
Income taxes payable..................................     15,503
                                                       ----------   ----------
    Total current liabilities.........................    279,693      249,527
Long-term debt........................................    932,025      974,006
Other long-term liabilities...........................      4,755        4,855
Minority interests....................................     21,045       18,876
Shareholders' equity:
  Preferred stock ($0.001 par value; 5,000,000 shares
   authorized; none issued or outstanding)............
  Common stock ($0.001 par value, 195,000,000 shares
   authorized; 82,943,817 and 82,135,634 shares issued
   and outstanding)...................................         83           82
  Additional paid-in capital..........................    438,509      430,676
  Notes receivable from shareholders..................                     (83)
  Accumulated deficit.................................    (50,373)     (81,307)
                                                       ----------   ----------
    Total shareholders' equity........................    388,219      349,368
                                                       ----------   ----------
                                                       $1,625,737   $1,596,632
                                                       ==========   ==========


           See notes to condensed consolidated financial statements.

                                      F-34


                                  DAVITA INC.

           CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                                  (unaudited)
                 (dollars in thousands, except per share data)



                                                               Three months
                                                              ended March 31
                                                             ------------------
                                                               2001      2000
                                                             --------  --------
                                                                 
Net operating revenues.....................................  $386,217  $372,113
Operating expenses:
  Dialysis centers and labs................................   260,974   259,298
  General and administrative...............................    31,813    31,921
  Depreciation and amortization............................    26,148    27,718
  Provision for uncollectible accounts.....................    (8,185)   12,859
                                                             --------  --------
    Total operating expenses...............................   310,750   331,796
                                                             --------  --------
Operating income...........................................    75,467    40,317
Other income, net..........................................     1,348     1,395
Debt expense...............................................    19,724    33,165
Minority interests in income of consolidated subsidiaries..    (2,457)     (998)
                                                             --------  --------
Income before income taxes.................................    54,634     7,549
Income tax expense.........................................    23,700     3,702
                                                             --------  --------
Net income.................................................  $ 30,934  $  3,847
                                                             ========  ========

Earnings per common share--basic...........................  $   0.37  $   0.05
                                                             ========  ========

Earnings per common share--assuming dilution...............  $   0.35  $   0.05
                                                             ========  ========

COMPREHENSIVE INCOME

Net income and comprehensive income........................  $ 30,934  $  3,847
                                                             ========  ========




           See notes to condensed consolidated financial statements.

                                      F-35


                                  DAVITA INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (unaudited)
                             (dollars in thousands)



                                                                                Three months ended
                                                                                     March 31
                                                                                -------------------
                                                                                  2001       2000
                                                                                ---------  --------
                                                                                     
Cash flows from operating activities:
  Net income................................................................... $  30,934  $  3,847
  Adjustments to reconcile net income to cash provided by operating activities:
    Depreciation and amortization..............................................    26,148    27,718
    Gain on divestures.........................................................              (2,107)
    Deferred income taxes......................................................     2,900       156
    Non-cash debt expense......................................................       500       852
    Stock option expense and tax benefits......................................     3,287        88
    Equity investment losses (income)..........................................      (694)      396
    Minority interests in income of consolidated subsidiaries..................     2,457       998
  Changes in operating assets and liabilities, net of acquisitions and
   divestitures:
    Accounts receivable........................................................    (2,846)   24,031
    Inventories................................................................   (24,418)    7,517
    Other current assets.......................................................    (3,540)   (4,541)
    Other long-term assets.....................................................        49     1,993
    Accounts payable...........................................................     2,160   (22,116)
    Accrued compensation and benefits..........................................    (1,539)     (261)
    Other current liabilities..................................................     4,200    (2,001)
    Income taxes...............................................................    18,333    25,978
    Other long-term liabilities................................................      (100)     (208)
                                                                                ---------  --------
      Net cash provided by operating activities................................    57,831    62,340
                                                                                ---------  --------
Cash flows from investing activities:
  Additions of property and equipment, net.....................................    (6,755)  (16,677)
  Acquisitions and divestitures, net...........................................   (50,667)   14,791
  Investments in affiliates, net...............................................    19,593    (2,194)
                                                                                ---------  --------
      Net cash used in investing activities....................................   (37,829)   (4,080)
                                                                                ---------  --------
Cash flows from financing activities:
  Borrowings...................................................................   814,813
  Payments on long-term debt...................................................  (851,667)  (15,223)
  Deferred financing costs.....................................................       (50)
  Net proceeds from issuance of common stock...................................     4,630       867
  Distributions to minority interests..........................................    (1,492)   (1,508)
                                                                                ---------  --------
      Net cash used in financing activities....................................   (33,766)  (15,864)
                                                                                ---------  --------
Net increase (decrease) in cash................................................   (13,764)   42,396
Cash and cash equivalents at beginning of period...............................    31,207   107,981
                                                                                ---------  --------
Cash and cash equivalents at end of period..................................... $  17,443  $150,377
                                                                                =========  ========


           See notes to condensed consolidated financial statements.

                                      F-36


                                  DAVITA INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)
                 (dollars in thousands, except per share data)

     Unless otherwise indicated in this prospectus "the Company", "we", "us",
"our" and similar terms refer to DaVita Inc. and its subsidiaries.

1. Condensed consolidated interim financial statements

     The condensed consolidated interim financial statements included in this
report have been prepared by the Company without audit. In the opinion of
management, all adjustments necessary for a fair presentation are reflected in
these interim financial statements. These adjustments are of a normal and
recurring nature. The results of operations for the period ended March 31, 2001
are not necessarily indicative of the operating results for the full year. The
interim financial statements should be read in conjunction with the audited
consolidated financial statements and notes thereto included in the Company's
2000 Form 10-K as amended by Form 10-K/A. Certain reclassifications have been
made to prior periods to conform with current reporting.

2. Earnings per share calculation

     The reconciliation of the numerators and denominators used to calculate
earnings per common share for the periods presented is as follows:



                                                                 Three months
                                                                ended March 31
                                                                --------------
                                                                 2001    2000
                                                                ------- ------
                                                                  
Basic:
  Net income................................................... $30,934 $3,847
                                                                ======= ======
  Weighted average number of shares outstanding during the
   period......................................................  82,537 81,352
  Reduction in shares in connection with notes receivable from
   employees...................................................            (37)
                                                                ------- ------
  Weighted average number of shares outstanding for earnings
   per share--basic............................................  82,537 81,315
                                                                ======= ======
  Earnings per share--basic.................................... $  0.37 $ 0.05
                                                                ======= ======
Assuming dilution:
  Net income................................................... $30,934 $3,847
  Interest, net of tax resulting from dilutive effect of
   convertible debt............................................   4,662
                                                                ------- ------
    Net income--assuming dilution.............................. $35,596 $3,847
                                                                ======= ======
  Weighted average number of shares outstanding for earnings
   per share--basic............................................  82,537 81,315
    Incremental shares from stock option plans.................   4,270    429
    Incremental shares from convertible debt...................  15,394
                                                                ------- ------
  Weighted average outstanding and incremental shares for
   earnings per share--assuming dilution....................... 102,201 81,744
                                                                ======= ======
  Earnings per share--assuming dilution........................ $  0.35 $ 0.05
                                                                ======= ======


     Stock options with exercise prices greater than the average market price
of shares outstanding during the period were not included in the calculation of
earnings per share assuming dilution because they would have been anti-
dilutive. The stock options not included in the calculation totaled 2,207,367
and 10,428,517 shares at exercise prices ranging from $16.77 to $33.50 per
share and $4.23 to $36.13 per share for the three months ended March 31, 2001
and 2000, respectively. The calculation of earnings per share assuming dilution
includes the dilutive effect of both the 5 5/8% and the 7% convertible
subordinated notes on an "if-converted"

                                      F-37


                                  DAVITA INC.

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                                  (unaudited)
                  (dollars in thousands except per share data)

basis for the three months ended March 31, 2001. Both the 5 5/8% and the 7%
convertible subordinated notes were anti-dilutive on an "if-converted" basis
for the three months ended March 31, 2000.

3. Subsequent events

     On April 6, 2001 the Company completed the sale of $225,000 9 1/4% Senior
Subordinated Notes in a private offering. The Notes mature on April 15, 2011
and will be callable by the Company on or after April 15, 2006. Net proceeds of
$219,375 from the offering were used to pay down amounts outstanding under the
Company's then existing senior credit facilities. On May 4, 2001 the Company
completed a refinancing of its existing senior credit facilities. The new
credit facilities consist of a Term A loan of $50,000, a Term B loan of
$200,000 and a $150,000 undrawn revolving credit facility. As a result of these
refinancings, the write-off of deferred financing costs and accelerated
recognition of deferred swap liquidation gains associated with the refinanced
debt will be reported as a net extraordinary gain for the quarter ending June
30, 2001.

4. Contingencies

     Health care providers' revenues may be subject to adjustment as a result
of (1) examination by government agencies or contractors, for which the
resolution of any matters raised may take extended periods of time to finalize;
(2) differing interpretations of government regulations by different fiscal
intermediaries; (3) differing opinions regarding a patient's medical diagnosis
or the medical necessity of services provided; and (4) retroactive applications
or interpretations of governmental requirements.

     The Company's Florida-based laboratory subsidiary is the subject of a
third-party carrier review of its Medicare reimbursement claims. The carrier
has issued formal overpayment determinations in the amount of $5.6 million for
the review period from January 1995 to April 1996, and $15 million for the
review period from May 1996 to March 1998. The carrier has suspended all
payments of Medicare claims from this laboratory since May 1998. The carrier
has also determined that $16.1 million of the suspended claims for the review
period from April 1998 to August 1999 and $11.6 million of the suspended claims
for the review period from August 1999 to May 2000 were not properly supported
by the prescribing physicians' medical justification. The carrier has alleged
that 99% of the tests the laboratory performed during the review period from
January 1995 to April 1996, 96% of the tests performed in the period from May
1996 to March 1998, 70% of the tests performed in the period from April 1998 to
August 1999, and 72% of the tests performed in the period from August 1999 to
May 2000 were not properly supported by the prescribing physicians' medical
justification.

     The Company is disputing the overpayment determinations and has provided
supporting documentation of its claims. The Company has initiated the process
of a formal review of each of the carrier's determinations. The first step in
this formal review process is a hearing before a hearing officer at the
carrier. The Company received minimal responses from the carrier to its
repeated requests for clarification and information regarding the continuing
payment suspension. The hearing regarding the initial review period from
January 1995 to April 1996 was held in July 1999. In January 2000 the hearing
officer issued a decision upholding the overpayment determination of $5.6
million. The hearing regarding the second review period from May 1996 to March
1998 was held in April 2000. In July 2000 the hearing officer issued a decision
upholding $14.2 million, or substantially all of the overpayment determination.
The Company has filed appeals of both decisions to a federal administrative law
judge, and has moved to consolidate the two appeals. At this time, the Company
has not received a scheduled date for a hearing with an administrative law
judge, although the Department of Health and Human Services, or HHS, has
informed the Company that it can expect a hearing in the second quarter of
2001.

                                      F-38


                                  DAVITA INC.

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                                  (unaudited)
                  (dollars in thousands except per share data)

     In February 1999, our Florida-based laboratory subsidiary filed a
complaint against the carrier and HHS seeking a court order to lift the payment
suspension. In July 1999, the court dismissed our complaint because we had not
exhausted all administrative remedies, that is, the carrier review and
administrative law judge processes described above.

     In addition to the formal appeal process with a federal administrative law
judge, beginning in the third quarter of 1999 we sought a meeting with the
Department of Justice, or DOJ, to begin a process to resolve this matter. The
carrier had previously informed the local office of the DOJ and HHS of this
matter, and we had provided requested information to the DOJ. The Company met
with the DOJ in February 2001 at which time the DOJ requested additional
information, which the Company is providing.

     Timing of the final resolution of this matter is highly uncertain, and
beyond the Company's control or influence. Beginning in the third quarter of
2000, the Company stopped recognizing Medicare revenue from this laboratory
until the uncertainties regarding both the timing of resolution and the
ultimate revenue valuations are at least substantially eliminated. The amount
of potential Medicare revenue not accrued beginning in the third quarter of
2000 was approximately $4 million per quarter. We estimate that the potential
cash exposure as of March 31, 2001 is not more than $15 million based on the
carrier's overpayment findings noted above. If this matter is resolved in a
manner adverse to the Company, the government could impose additional fines and
penalties, which could be substantial.

     In February 2001, the Civil Division of the United States Attorney's
Office for the Eastern District of Pennsylvania contacted us and requested that
the Company cooperate in a review of some of our historical practices,
including billing and other operating procedures and our financial
relationships with physicians. The Civil Division has requested that we provide
a wide range of information responding to the areas of review. The Civil
Division has not initiated any legal process or served any subpoena on the
Company. The Civil Division has indicated that it is not making any allegation
of wrongdoing at this time and that no criminal action against the Company or
any individual is contemplated. The Company is cooperating in this review. The
inquiry appears to be at an early stage. As it proceeds, the Civil Division
could expand its areas of concern. If a court determines there has been
wrongdoing, the penalties under applicable statutes could be substantial.

     In addition to the foregoing, DaVita is subject to claims and suits in the
ordinary course of business. Management believes that the ultimate resolution
of these additional matters, whether the underlying claims are covered by
insurance or not, will not have a material adverse effect on the Company's
financial condition, results of operations or cash flows.

5. Condensed consolidating financial statements

     The following information is presented as required under the Securities
and Exchange Commission Financial Reporting Release No. 55 in connection with
the Company's publicly traded debt. This information is not routinely prepared
for use by management. The operating and investing activities of the separate
legal entities included in the consolidated financial statements are fully
interdependent and integrated. Accordingly, the operating results of the
separate legal entities are not representative of what the operating results
would be on a stand-alone basis. Revenues and operating expenses of the
separate legal entities include intercompany charges for management and other
services.


                                      F-39


                                  DAVITA INC.

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                                  (unaudited)
                  (dollars in thousands except per share data)

     The $125,000 5 5/8% Convertible Subordinated Notes Due 2006, issued by the
wholly-owned subsidiary Renal Treatment Centers, Inc., or RTC, are guaranteed
by DaVita Inc. The $225,000 9 1/4% Senior Subordinated Notes issued in April
2001 by DaVita Inc., are guaranteed by all its wholly-owned domestic
subsidiaries. Non-wholly-owned subsidiaries, joint ventures and partnerships
are not guarantors of either obligations.

                     Condensed Consolidating Balance Sheets



                                        Wholly-owned
                                        subsidiaries
                            DaVita   ------------------- Non-participating Consolidating Consolidated
                             Inc.      RTC    All others   subsidiaries     adjustments     total
                          ---------- -------- ---------- ----------------- ------------- ------------
                                                                       
As of March 31, 2001
- --------------------
Cash and cash
 equivalents............  $    6,848 $      7  $ 10,588                                   $   17,443
Accounts receivable,
 net....................               84,446   185,524      $ 29,454                        299,424
Other current assets....       2,533   14,382    83,113         2,062                        102,090
                          ---------- --------  --------      --------       -----------   ----------
  Total current assets..       9,381   98,835   279,225        31,516                        418,957
Property and equipment,
 net....................       5,021   58,673   154,784        24,319                        242,797
Investments in
 subsidiaries...........     234,670                                           (234,670)
Receivables from
 subsidiaries...........     940,517                                           (940,517)
Intangible assets, net..       9,105  294,506   527,151       117,184                        947,946
Other assets............      12,541    5,325    (1,873)           44                         16,037
                          ---------- --------  --------      --------       -----------   ----------
  Total assets..........  $1,211,235 $457,339  $959,287      $173,063       $(1,175,187)  $1,625,737
                          ========== ========  ========      ========       ===========   ==========
Current liabilities.....      21,674   24,285   230,179         3,555                        279,693
Payables to
 subsidiaries/parent....              129,053   774,275        37,189          (940,517)
Long-term liabilities...     801,300  125,000     5,122         5,358                        936,780
Minority interests......                                                         21,045       21,045
Shareholders' equity....     388,261  179,001   (50,289)      126,961          (255,715)     388,219
                          ---------- --------  --------      --------       -----------   ----------
  Total liabilities and
   shareholders'
   equity...............  $1,211,235 $457,339  $959,287      $173,063       $(1,175,187)  $1,625,737
                          ========== ========  ========      ========       ===========   ==========

As of December 31, 2000
- -----------------------
Cash and cash
 equivalents............  $   16,553 $  1,871  $ 12,783                                   $   31,207
Accounts receivable,
 net....................               83,313   180,263      $ 26,836                        290,412
Other current assets....       2,014   15,967    55,947         2,328                         76,256
                          ---------- --------  --------      --------       -----------   ----------
  Total current assets..      18,567  101,151   248,993        29,164                        397,875
Property and equipment,
 net....................       5,377   61,686   146,959        22,637                        236,659
Investments in
 subsidiaries...........     199,079                                           (199,079)
Receivables from
 subsidiaries...........     938,183                                           (938,183)
Intangible assets, net..       9,548  299,813   493,946       118,316                        921,623
Other assets............      37,692    2,146       593            44                         40,475
                          ---------- --------  --------      --------       -----------   ----------
  Total assets..........  $1,208,446 $464,796  $890,491      $170,161       $(1,137,262)  $1,596,632
                          ========== ========  ========      ========       ===========   ==========
Current liabilities.....      15,278   23,996   206,275         3,978                        249,527
Payables to
 subsidiaries/parent....              146,877   746,892        44,414          (938,183)
Long-term liabilities...     843,800  125,000     5,311         4,750                        978,861
Minority interests......                                                         18,876       18,876
Shareholders' equity....     349,368  168,923   (67,987)      117,019          (217,955)     349,368
                          ---------- --------  --------      --------       -----------   ----------
  Total liabilities and
   shareholders'
   equity...............  $1,208,446 $464,796  $890,491      $170,161       $(1,137,262)  $1,596,632
                          ========== ========  ========      ========       ===========   ==========


                                      F-40


                                  DAVITA INC.

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                                  (unaudited)
                  (dollars in thousands except per share data)


                  Condensed Consolidating Statements of Income



                                        Wholly-owned
                                        subsidiaries
                                      -----------------
                                                 All     Non-participating Consolidating Consolidated
                          DaVita Inc.   RTC     others     subsidiaries     adjustments     total
                          ----------- -------- --------  ----------------- ------------- ------------
                                                                       
For the quarter ended
 March 31, 2001
- ---------------------
Net operating revenues..    $33,567   $117,789 $222,583       $44,147        $(31,869)     $386,217
Operating expenses......     10,123     98,563  201,059        32,874         (31,869)      310,750
                            -------   -------- --------       -------        --------      --------
Operating income........     23,444     19,226   21,524        11,273                        75,467
Other income............        228         58    1,062                                       1,348
Debt expense............     18,132      1,743   (1,482)        1,331                        19,724
Minority interests......                                                       (2,457)       (2,457)
Income taxes............      2,382      7,463   13,855                                      23,700
Equity earnings in
 consolidated
 subsidiaries...........     27,776               7,485                       (35,261)
                            -------   -------- --------       -------        --------      --------
  Net income............    $30,934   $ 10,078 $ 17,698       $ 9,942        $(37,718)     $ 30,934
                            =======   ======== ========       =======        ========      ========

For the quarter ended
 March 31, 2000
- ---------------------
Net operating revenues..    $21,201   $124,734 $206,125       $39,505        $(19,452)     $372,113
Operating expenses......      6,780    114,427  196,726        33,315         (19,452)      331,796
                            -------   -------- --------       -------        --------      --------
  Operating income......     14,421     10,307    9,399         6,190                        40,317
Other income............        385         48      950            12                         1,395
Debt expense............     31,647      1,728   (3,351)        3,141                        33,165
Minority interests......                                                         (998)         (998)
Income taxes............     (6,905)     3,424    7,223           (40)                        3,702
Equity earnings in
 consolidated
 subsidiaries...........     13,783               2,103                       (15,886)
                            -------   -------- --------       -------        --------      --------
  Net income............    $ 3,847   $  5,203 $  8,580       $ 3,101        $(16,884)     $  3,847
                            =======   ======== ========       =======        ========      ========


                                      F-41


                                  DAVITA INC.

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                                  (unaudited)
                  (dollars in thousands except per share data)


                Condensed Consolidating Statements of Cash Flows



                                        Wholly-owned
                                        subsidiaries
                                      ------------------
                                                  All     Non-participating Consolidating Consolidated
                          DaVita Inc.   RTC      others     subsidiaries     adjustments     total
                          ----------- --------  --------  ----------------- ------------- ------------
                                                                        
Quarter ended March 31,
 2001
Cash flows from
 operating activities:
Net income..............   $ 30,934   $ 10,078  $ 17,698       $ 9,942        $(37,718)     $ 30,934
Changes in operating and
 intercompany assets and
 liabilities and non
 cash items included in
 net income.............     (2,610)   (10,903)    8,953        (6,261)         37,718        26,897
                           --------   --------  --------       -------        --------      --------
 Net cash provided by
  (used in) operating
  activities:                28,324       (825)   26,651         3,681             --         57,831
                           --------   --------  --------       -------        --------      --------
Cash flows from
 investing activities:
Purchases of property
 and equipment, net.....       (109)    (1,039)   (2,779)       (2,828)                       (6,755)
Acquisitions and
 divestitures, net......                         (50,667)                                    (50,667)
Other items.............                          19,568            25                        19,593
                           --------   --------  --------       -------        --------      --------
 Net cash used in
  investing activities..       (109)    (1,039)  (33,878)       (2,803)                      (37,829)
                           --------   --------  --------       -------        --------      --------
Cash flows from
 financing activities:
Long-term debt..........    (42,500)               5,032           614                       (36,854)
Other items.............      4,580                             (1,492)                        3,088
                           --------   --------  --------       -------        --------      --------
 Net cash provided (used
  in) financing
  activities............    (37,920)               5,032          (878)                      (33,766)
                           --------   --------  --------       -------        --------      --------
Net decrease in cash....     (9,705)    (1,864)   (2,195)          --                        (13,764)
Cash at the beginning of
 the period.............     16,553      1,871    12,783                                      31,207
                           --------   --------  --------       -------        --------      --------
Cash at the end of the
 period.................   $  6,848   $      7  $ 10,588       $   --         $    --       $ 17,443
                           ========   ========  ========       =======        ========      ========
Quarter ended March 31,
 2000
Cash flows from
 operating activities:
Net income..............   $  3,847   $  5,203  $  8,580       $ 3,101        $(16,884)     $  3,847
Changes in operating and
 intercompany assets and
 liabilities and non
 cash items included in
 net loss...............    (56,284)      (362)   98,844          (589)         16,884        58,493
                           --------   --------  --------       -------        --------      --------
 Net cash provided by
  (used in) operating
  activities............    (52,437)     4,841   107,424         2,512             --         62,340
                           --------   --------  --------       -------        --------      --------
Cash flows from
 investing activities:
Purchases of property
 and equipment, net.....       (337)    (4,661)  (10,044)       (1,635)                      (16,677)
Acquisitions and
 divestitures, net......                          14,791                                      14,791
Other items.............                          (2,194)                                     (2,194)
                           --------   --------  --------       -------        --------      --------
 Net cash provided by
  (used in) investing
  activities............       (337)    (4,661)    2,553        (1,635)                       (4,080)
                           --------   --------  --------       -------        --------      --------
Cash flows from
 financing activities:
Long-term debt..........    (11,885)              (2,461)         (877)                      (15,223)
Other items.............        867               (1,508)                                       (641)
                           --------   --------  --------       -------        --------      --------
 Net cash used in
  financing activities..    (11,018)              (3,969)         (877)                      (15,864)
                           --------   --------  --------       -------        --------      --------
Net increase (decrease)
 in cash................    (63,792)       180   106,008                                      42,396
Cash at the beginning of
 the period.............     90,544      4,118    13,319                                     107,981
                           --------   --------  --------       -------        --------      --------
Cash at the end of the
 period.................   $ 26,752   $  4,298  $119,327       $   --         $    --       $150,377
                           ========   ========  ========       =======        ========      ========



                                      F-42


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

      , 2001


                                [LOGO OF DAVITA]

                                  DaVita Inc.
                         $225,000,000 Principal Amount
                   9 1/4% Senior Subordinated Notes due 2011




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

                                   PROSPECTUS

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




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

No dealer, salesperson or any other person has been authorized to give any
information or to make any representation not contained in this prospectus and,
if given or made, such information or representations must not be relied upon
as having been authorized by the company or by any of the initial purchasers.
This prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any security other than the securities offered hereby, nor does it
constitute an offer to sell or a solicitation of an offer to buy any securities
offered hereby to any person in any jurisdiction where such an offer or
solicitation would be unlawful. Neither the delivery of this prospectus nor any
sale made hereunder shall, under any circumstances, create any implication that
the information herein is correct as of any time subsequent to the date hereof.
- --------------------------------------------------------------------------------


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


                                    PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20. Indemnification of Directors and Officers

     The registrant's Certificate of Incorporation provides that, except to the
extent prohibited by the Delaware General Corporation Law, or DGCL, the
registrant's directors shall not be personally liable to the registrant, as the
case may be, or respective stockholders for monetary damages for any breach of
fiduciary duty as directors of the registrant, as the case may be. Under the
DGCL, the directors have a fiduciary duty to the registrant, as the case may
be, which is not eliminated by these provisions of the Certificate of
Incorporation and, in appropriate circumstances, equitable remedies such as
injunctive or other forms of nonmonetary relief will remain available. In
addition, each director will continue to be subject to liability under the DGCL
(1) for any breach of the director's duty of loyalty to the corporation or its
stockholders, (2) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (3) arising under Section
174 of the DGCL or (4) for any transaction from which the director derived an
improper personal benefit. This provision does not affect the directors'
responsibilities under any other laws, such as the federal securities laws or
state or federal environmental laws.

     Section 145 of the DGCL empowers a corporation to indemnify its directors
and officers and to purchase insurance with respect to liability arising out of
their capacity or status as directors and officers. The DGCL provides further
that the indemnification permitted thereunder shall not be deemed exclusive of
any other rights to which the directors and officers may be entitled under the
corporation's bylaws, any agreement, a vote of stockholders or otherwise. The
registrant's Certificate of Incorporation provides that the registrant shall
fully indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person is or was a director or officer of the registrant, or is or
was serving at the request of the registrant as a director or officer of
another corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise, against expenses, including attorney's fees, judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding. The registrant has
obtained liability insurance for its officers and directors.

     At present, there is no pending litigation or proceeding involving any
director, officer, employee or agent as to which indemnification will be
required or permitted under the Certificate of Incorporation. The registrant is
not aware of any threatened litigation or proceeding that may result in a claim
for such indemnification.

     The registrant has entered into indemnity agreements with each of its
respective directors.

     The foregoing discussion of the Certificate of Incorporation and the DGCL
is not intended to be exhaustive and is qualified in its entirety by the
Certificate of Incorporation and the relevant provisions of the DGCL.

Item 21. Exhibits and Financial Statement Schedules

     (a) Exhibits



 Exhibit
 Number                               Description
 -------                              -----------
      
   1.1   Purchase Agreement, dated April 6, 2001, among DaVita Inc. and Credit
          Suisse First Boston Corporation, Banc of America Securities, LLC,
          SunTrust Equitable Securities, BNY Capital Markets, Inc. and Scotia
          Capital, as representatives of the Initial Purchasers.X

   3.1   Amended and Restated Certificate of Incorporation of Total Renal Care
          Holdings, Inc., or TRCH, dated December 4, 1995.(1)


                                      II-1




 Exhibit
 Number                                Description
 -------                               -----------
      
   3.2   Certificate of Amendment of Certificate of Incorporation of TRCH,
          dated February 26, 1998.(2)

   3.3   Certificate of Amendment of Certificate of Incorporation of DaVita
          Inc. (formerly Total Renal Care Holdings, Inc.), dated October 5,
          2000.(12)

   3.4   Bylaws of TRCH, dated October 6, 1995.(3)

   4.1   Indenture, dated June 12, 1996 by Renal Treatment Centers, Inc., or
          RTC, to PNC Bank including form of RTC Note.(5)

   4.2   First Supplemental Indenture, dated as of February 27, 1998, among
          RTC, TRCH and PNC Bank under the 1996 Indenture.(2)

   4.3   Second Supplemental Indenture, dated as of March 31, 1998, among RTC,
          TRCH and PNC Bank under the 1996 Indenture.(2)

   4.4   Indenture, dated as of November 18, 1998, between TRCH and United
          States Trust Company of New York, as trustee, and form of Note.(6)

   4.5   Registration Rights Agreement, dated as of November 18, 1998, between
          TRCH and DLJ, BNY Capital Markets, Inc., Credit Suisse First Boston
          Corporation and Warburg Dillon Read LLC, as the initial
          purchasers.(6)

   4.6   Purchase Agreement, dated as of November 12, 1998, between TRCH and
          the initial purchasers.(6)

   4.7   Indenture, dated as of April 11, 2001, between DaVita Inc. and U.S.
          Trust Company of Texas, National Association, as trustee.X

   4.8   Form of certificate of 9 1/4% Rule 144A Senior Notes due 2011
          (included in Exhibit 4.7).X

   4.9   Form of certificate of 9 1/4% Regulation S Senior Notes due 2011
          (included in Exhibit 4.7).X

   4.10  Form of certificate of Exchange 9 1/4% Rule 144A Senior Notes due 2011
          (included in Exhibit 4.7).X

   4.11  Form of certificate of Exchange 9 1/4% Regulation S Senior Notes due
          2011 (included in Exhibit 4.7).X

   4.12  Registration Rights Agreement, dated as of April 11, 2001, among
          DaVita Inc. and Credit Suisse First Boston Corporation, Banc of
          America Securities LLC, SunTrust Equitable Securities, BNV Capital
          Markets, Inc. and Scotia Capital, as representatives of the Initial
          Purchasers.X

   5.1   Opinion of Riordan & McKinzie.X

  10.1   Employment Agreement, dated as of March 2, 1998, by and between TRCH
          and Barry C. Cosgrove.(7)*

  10.2   Employment Agreement, dated as of October 18, 1999, by and between
          TRCH and Kent J. Thiry.(8)*

  10.3   Amendment to Mr. Thiry's Employment Agreement, dated May 20,
          2000.(10)*

  10.4   Second Amendment to Mr. Thiry's Employment Agreement, dated November
          28, 2000.(12)*

  10.5   Employment Agreement, dated as of March 1, 1998, by and between TRCH
          and John J. McDonough.(11)*

  10.6   Employment Agreement, dated as of November 29, 1999, by and between
          TRCH and Gary W. Beil.(12)*

  10.7   Employment Agreement, dated as of July 19, 2000, by and between TRCH
          and Charles J. McAllister.(12)*

  10.8   Consulting Agreement, dated as of October 1, 1998, by and between
          Total Renal Care, Inc. and Shaul G. Massry, M.D.(8)*

  10.9   Second Amended and Restated 1994 Equity Compensation Plan.(11)*

  10.10  Form of Stock Subscription Agreement relating to the 1994 Equity
          Compensation Plan.(4)*


                                      II-2




 Exhibit
 Number                                Description
 -------                               -----------
      
  10.11  Form of Promissory Note and Pledge Agreement relating to the 1994
          Equity Compensation Plan.(4)*

  10.12  Form of Purchased Shares Award Agreement relating to the 1994 Equity
          Compensation Plan.(4)*

  10.13  Form of Nonqualified Stock Option relating to the 1994 Equity
          Compensation Plan.(4)*

  10.14  First Amended and Restated 1995 Equity Compensation Plan.(11)*

  10.15  Employee Stock Purchase Plan, 1999 Amendment and Restatement.(11)*

  10.16  First Amended and Restated 1997 Equity Compensation Plan.(11)*

  10.17  First Amended and Restated Special Purpose Option Plan.(11)*

  10.18  1999 Equity Compensation Plan.(9)

  10.19  Credit Agreement, dated as of May 3, 2001, by and among DaVita Inc.,
          the lenders party thereto, Bank of America, N.A., as the
          Administrative Agent, Banc of America Securities LLC as joint Book
          Manager and Credit Suisse First Boston Corporation as joint Book
          Manager and Syndication Agent (the "Credit Agreement").X

  10.20  Security Agreement, dated as of May 3, 2001, made by DaVita Inc. and
          the subsidiaries of DaVita Inc. party thereto, Bank of America, N.A.,
          as the Collateral Agent for the lenders party to the Credit
          Agreement.X

  10.21  Subsidiary Guarantee, dated as of May 3, 2001, made by the
          subsidiaries of DaVita Inc. party thereto in favor of the lenders
          party to the Credit Agreement.X

  10.23  Guaranty, entered into as of March 31, 1998, by TRCH in favor of and
          for the benefit of PNC Bank.(2)

  10.24  Amendment #2 dated June 22, 2000, to Agreement No. 19990110 between
          Amgen Inc. and Total Renal Care, Inc., and letter agreement dated
          January 17, 2001, modifying Amendment #2.(12)**

  10.25  Amendment #3 dated January 16, 2000, to Agreement No. 19990110 between
          Amgen Inc. and Total Renal Care, Inc.(12)**

  12.1   Statement re Computation of Ratios of Earnings to Fixed Charges.(12)

  21.1   List of our subsidiaries.(12)

  23.1   Consent of KPMG LLP, Independent Accountants.X

  23.2   Consent of PricewaterhouseCoopers LLP, Independent Accountants.X

  23.3   Consent of Riordan & McKinzie (included in Exhibit 5.1).X

  24.1   Power of Attorney (see Signature Pages).

  25.1   Statement of Eligibility on Form T-1 of Trustee.X

  99.1   Form of Letter of Transmittal.X

  99.2   Form of Notice of Guaranteed Delivery.X

  99.3   Form of Instructions to Registered Holder and/or Book-Entry Transfer
          Participant from Owner.X

  99.4   Form of Letter to Clients for Use by Brokers, Dealers, Commercial
          Banks, Trust Companies and Other Nominees.X

- --------
  X Included in this filing.

  * Management contract or executive compensation plan or arrangement.

 ** Portions of this exhibit are subject to a request for confidential
    treatment and have been redacted and filed separately with the SEC.

 (1) Filed on March 18, 1996 as an exhibit to our Transitional Report on Form
     10-K for the transition period from June 1, 1995 to December 31, 1995.

                                      II-3


 (2) Filed on March 31, 1998 as an exhibit to our Form 10-K for the year ended
     December 31, 1997.

 (3) Filed on October 24, 1995 as an exhibit to Amendment No. 2 to our
     Registration Statement on Form S-1 (Registration Statement No. 33-97618).

 (4) Filed on August 29, 1995 as an exhibit to our Form 10-K for the year ended
     May 31, 1995.

 (5) Filed as an exhibit to RTC's Form 10-Q for the quarter ended June 30,
     1996.

 (6) Filed on December 18, 1998 as an exhibit to our Registration Statement on
     Form S-3 (Registration Statement No. 333-69227).

 (7) Filed as an exhibit to our Form 10-Q for the quarter ended September 30,
     1998.

 (8) Filed on November 15, 1999 as an exhibit to our Form 10-Q for the quarter
     ended September 30, 1999.

 (9) Filed on February 18, 2000 as an exhibit to our Registration Statement on
     Form S-8 (Registration Statement No. 333-30736).

(10) Filed on August 14, 2000, as an exhibit to our Form 10-Q for the quarter
     ended June 30, 2000.

(11) Filed on March 29, 2000 as an exhibit to our Form 10-K for the year ended
     December 31, 1999.

(12) Filed on March 20, 2001 as an exhibit to our Form 10-K for the year ended
     December 31, 2000.

     (b) Financial Statement Schedules

     None.

Item 22. Undertakings

     1. The undersigned registrant hereby undertakes as follows:

        (a) 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; (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.

        (b) 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.

        (c) 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.

     2. 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 this Registration Statement when it became effective.

     3. The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and where interim financial information required to be presented by
Article 3 or Regulation S-X are not set forth in this prospectus, to deliver,
or cause to be delivered to each person to whom the prospectus is sent or
given, the latest quarterly report that is specifically incorporated by
reference inn the prospectus to provide such interim financial information.

                                      II-4


     4. 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 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.

     5. The undersigned registrant 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.

                                      II-5


                                   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 Torrance, State of
California, on the 6th day of June, 2001.

                                          DAVITA INC.

                                          TOTAL RENAL CARE, INC.

                                                    /s/ Kent J. Thiry
                                          By: _________________________________
                                                       Kent J. Thiry
                                                 Chairman of the Board and
                                                  Chief Executive Officer

                               POWER OF ATTORNEY

     KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kent J. Thiry, Richard K. Whitney, and
Steven J. Udicious, and each of them, his or her true and lawful attorneys-in-
fact and agents, with full power of substitution and resubstitution, for him or
her and in his or her name, place and stead, in any and all capacities, to sign
any and all amendments (including pre-effective and post-effective amendments)
to this registration statement on Form S-4, as well as any registration
statement (or amendment thereto) relating to the offering covered by this
registration statement on Form S-4 that is to be effective upon filing pursuant
to Rule 462(b) under the Securities Act, and to file the same, with all
exhibits thereto, and all documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his or her substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.

     Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.



               Signature                        Title(s)              Date
               ---------                        --------              ----

                                                            
         /s/ Kent J. Thiry              Chairman and Chief        June 6, 2001
 ______________________________________  Executive Officer
             Kent J. Thiry               (Principal Executive
                                         Officer)

       /s/ Richard K. Whitney           Chief Financial Officer   June 6, 2001
 ______________________________________  (Principal Financial
           Richard K. Whitney            Officer)

          /s/ Gary W. Beil              Vice President and        June 6, 2001
 ______________________________________  Controller (Principal
              Gary W. Beil               Accounting Officer)

       /s/ Nancy-Ann DeParle            Director                  June 6, 2001
 ______________________________________
           Nancy-Ann DeParle

      /s/ Richard B. Fontaine           Director                  June 6, 2001
 ______________________________________
          Richard B. Fontaine




                                      S-1




               Signature                Title(s)       Date
               ---------                --------       ----

                                             
        /s/ Peter T. Grauer             Director   June 6, 2001
 ______________________________________
            Peter T. Grauer

     /s/ C. Raymond Larkin, Jr.         Director   June 6, 2001
 ______________________________________
         C. Raymond Larkin, Jr.
         /s/ John M. Nehra              Director   June 6, 2001
 ______________________________________
             John M. Nehra

        /s/ William L. Roper            Director   June 6, 2001
 ______________________________________
            William L. Roper


                                      S-2


     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 Torrance, State of
California, on the 6th day of June, 2001.

                                        CARROLL COUNTY DIALYSIS FACILITY, INC.

                                        CONTINENTAL DIALYSIS CENTER, INC.

                                        CONTINENTAL DIALYSIS CENTER OF
                                         SPRINGFIELD-FAIRFAX, INC.

                                        DIALYSIS SPECIALISTS OF DALLAS, INC.

                                        EAST END DIALYSIS CENTER, INC.

                                        ELBERTON DIALYSIS FACILITY, INC.

                                        FLAMINGO PARK KIDNEY CENTER, INC.

                                        LINCOLN PARK DIALYSIS SERVICES, INC.

                                        MASON-DIXON DIALYSIS FACILITIES, INC.

                                        OPEN ACCESS SONOGRAPHY, INC.

                                        PENINSULA DIALYSIS CENTER, INC.

                                        RENAL TREATMENT CENTERS, INC.

                                        RENAL TREATMENT CENTERS-CALIFORNIA,
                                         INC.

                                        RENAL TREATMENT CENTERS-HAWAII, INC.

                                        RENAL TREATMENT CENTERS-ILLINOIS, INC.

                                        RENAL TREATMENT CENTERS-MID-ATLANTIC,
                                         INC.

                                        RENAL TREATMENT CENTERS-NORTHEAST, INC.

                                        RENAL TREATMENT CENTERS-SOUTHEAST, INC.

                                        RENAL TREATMENT CENTERS-WEST, INC.

                                        RTC-TEXAS ACQUISITION, INC.

                                        TOTAL ACUTE KIDNEY CARE, INC.

                                        TOTAL RENAL CARE, INC.

                                        TOTAL RENAL CARE OF COLORADO, INC.

                                        TOTAL RENAL LABORATORIES, INC.

                                        TOTAL RENAL RESEARCH, INC.

                                        TOTAL RENAL SUPPORT SERVICES, INC.

                                        TRC OF NEW YORK, INC.

                                        TRI-CITY DIALYSIS CENTER, INC.

                                                            *
                                        By: ____________________________________
                                                       Kent J. Thiry
                                                  Chief Executive Officer

                                      S-3



                                          BEVERLY HILLS DIALYSIS PARTNERSHIP

                                          By: TOTAL RENAL CARE, INC.
                                          Its: General Partner

                                                             *
                                          By: _________________________________
                                                       Kent J. Thiry
                                                  Chief Executive Officer

                                          HOUSTON KIDNEY CENTER/TOTAL RENAL
                                           CARE INTEGRATED SERVICE NETWORK
                                           LIMITED PARTNERSHIP

                                          By: TOTAL RENAL CARE, INC.
                                          Its: General Partner

                                                             *
                                          By: _________________________________
                                                       Kent J. Thiry
                                                  Chief Executive Officer

                                          SUNRISE DIALYSIS PARTNERSHIP

                                          By: TOTAL RENAL CARE, INC.
                                          Its: General Partner

                                                             *
                                          By: _________________________________
                                                       Kent J. Thiry
                                                  Chief Executive Officer

                                          TOTAL RENAL CARE/PERALTA RENAL
                                           CENTER PARTNERSHIP

                                          By: TOTAL RENAL CARE, INC.
                                          Its: General Partner

                                                             *
                                          By: _________________________________
                                                       Kent J. Thiry
                                                  Chief Executive Officer

                                          TOTAL RENAL CARE/PIEDMONT DIALYSIS
                                           PARTNERSHIP

                                          By: TOTAL RENAL CARE, INC.
                                          Its: General Partner

                                                             *
                                          By: _________________________________
                                                       Kent J. Thiry
                                                  Chief Executive Officer

                                      S-4



                                          TOTAL RENAL CARE TEXAS LIMITED
                                           PARTNERSHIP

                                          By: TOTAL RENAL CARE, INC.
                                          Its: General Partner

                                                             *
                                          By: _________________________________
                                                       Kent J. Thiry
                                                  Chief Executive Officer

                                          TRC--INDIANA L.L.C.

                                          By: RENAL TREATMENT CENTERS--
                                           ILLINOIS, INC.
                                          Its: Managing Member

                                                             *
                                          By: _________________________________
                                                       Kent J. Thiry
                                                  Chief Executive Officer

                                          TOTAL RENAL CARE OF UTAH, L.L.C.

                                          By: TOTAL RENAL CARE, INC.
                                          Its: Managing Member

                                                             *
                                          By: _________________________________
                                                       Kent J. Thiry
                                                  Chief Executive Officer

      /s/ Kent J. Thiry
*By: __________________________
         Kent J. Thiry
    Chief Executive Officer

                                      S-5


                               POWER OF ATTORNEY

     KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kent J. Thiry, Richard K. Whitney, and
Steven J. Udicious, and each of them, his or her true and lawful attorneys-in-
fact and agents, with full power of substitution and resubstitution, for him or
her and in his or her name, place and stead, in any and all capacities, to sign
any and all amendments (including pre-effective and post-effective amendments)
to this registration statement on Form S-4, as well as any registration
statement (or amendment thereto) relating to the offering covered by this
registration statement on Form S-4 that is to be effective upon filing pursuant
to Rule 462(b) under the Securities Act, and to file the same, with all
exhibits thereto, and all documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his or her substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.

     Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.



               Signature                        Title(s)              Date
               ---------                        --------              ----

                                                            
          /s/ Kent J. Thiry             Sole Director and Chief   June 6, 2001
 ______________________________________  Executive Officer
             Kent J. Thiry               (Principal Executive
                                         Officer)

       /s/ Richard K. Whitney           Chief Financial Officer   June 6, 2001
 ______________________________________  (Principal Financial
           Richard K. Whitney            Officer)

          /s/ Gary W. Beil              Vice President and        June 6, 2001
 ______________________________________  Controller (Principal
              Gary W. Beil               Accounting Officer)


                                      S-6


     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 Torrance, State of
California, on the 6th day of June, 2001.

                                          RTC HOLDINGS, INC.
                                          RTC TN, INC.

                                                  /s/ Steven J. Udicious
                                          By: _________________________________
                                                     Steven J. Udicious
                                                   President and Director

                               POWER OF ATTORNEY

     KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kent J. Thiry, Richard K. Whitney, and
Steven J. Udicious, and each of them, his or her true and lawful attorneys-in-
fact and agents, with full power of substitution and resubstitution, for him or
her and in his or her name, place and stead, in any and all capacities, to sign
any and all amendments (including pre-effective and post-effective amendments)
to this registration statement on Form S-4, as well as any registration
statement (or amendment thereto) relating to the offering covered by this
registration statement on Form S-4 that is to be effective upon filing pursuant
to Rule 462(b) under the Securities Act, and to file the same, with all
exhibits thereto, and all documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his or her substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.

     Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.



               Signature                       Title(s)              Date
               ---------                       --------              ----

                                                           
        /s/ Steven J. Udicious          President and Director   June 6, 2001
 ______________________________________  (Principal Executive
           Steven J. Udicious            Officer)

          /s/ Steve Grieger             Vice President and       June 6, 2001
 ______________________________________  Director (Principal
             Steve Grieger               Financial Officer)

         /s/ Peter Winnington           Treasurer and Director   June 6, 2001
 ______________________________________  (Principal Accounting
            Peter Winnington             Officer)


                                      S-7


     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 Torrance, State of
California, on the 6th day of June, 2001.

                                          TRC WEST, INC.

                                                    /s/ Jonathan Wolin
                                          By: _________________________________
                                                       Jonathan Wolin
                                              Director, President & Treasurer

                               POWER OF ATTORNEY

     KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kent J. Thiry, Richard K. Whitney, and
Steven J. Udicious, and each of them, his or her true and lawful attorneys-in-
fact and agents, with full power of substitution and resubstitution, for him or
her and in his or her name, place and stead, in any and all capacities, to sign
any and all amendments (including pre-effective and post-effective amendments)
to this registration statement on Form S-4, as well as any registration
statement (or amendment thereto) relating to the offering covered by this
registration statement on Form S-4 that is to be effective upon filing pursuant
to Rule 462(b) under the Securities Act, and to file the same, with all
exhibits thereto, and all documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his or her substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.

     Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.



               Signature                        Title(s)              Date
               ---------                        --------              ----

                                                            
          /s/ Jonathan Wolin            Director, President and   June 6, 2001
 ______________________________________  Treasurer (Principal
             Jonathan Wolin              Executive Officer and
                                         Principal Financial
                                         Officer)

           /s/ Monte Miller             Vice President and        June 6, 2001
    ___________________________________  Director (Principal
              Monte Miller               Accounting Officer)

          /s/ David Manheim             Director                  June 6, 2001
    ___________________________________
             David Manheim


                                      S-8

EX-1.1

                                                                     EXHIBIT 1.1

                                  DAVITA INC.


                          THE GUARANTORS NAMED HEREIN


                                  $225,000,000

               9 1/4% Series A Senior Subordinated Notes due 2011

                               Purchase Agreement

                                 April 6, 2001


                                  $225,000,000


               9 1/4% Series A Senior Subordinated Notes due 2011

                                 of DAVITA INC.

                               PURCHASE AGREEMENT


April 6, 2001


CREDIT SUISSE FIRST BOSTON CORPORATION
BANC OF AMERICA SECURITIES LLC
SUNTRUST EQUITABLE SECURITIES CORPORATION
BNY CAPITAL MARKETS, INC.
SCOTIA CAPITAL (USA) INC.

c/o Credit Suisse First Boston Corporation
11 Madison Avenue
New York, NY  10010

Dear Sirs:

          DAVITA INC., a Delaware corporation (the "Company"), proposes to issue
                                                    -------
and sell to the initial purchasers named on Schedule A hereto (each, an "Initial
                                                                         -------
Purchaser" and collectively, the "Initial Purchasers") an aggregate of
- ---------                         ------------------
$225,000,000 in principal amount of its 9 1/4% Series A Senior Subordinated
Notes due 2011 (the "Series A Notes"), subject to the terms and conditions set
                     --------------
forth herein.  The Series A Notes are to be issued pursuant to the provisions of
an indenture (the "Indenture"), to be dated as of the Closing Date (as defined
                   ---------
below), among the Company, the Guarantors (as defined below) and U.S. Trust
Company of Texas, National Association, as trustee (the "Trustee").  The Series
                                                         -------
A Notes and the Series B Notes (as defined below) issuable in exchange therefor
are collectively referred to herein as the "Notes."  The Notes will be
                                            -----
irrevocably and unconditionally guaranteed (the "Subsidiary Guarantees") as to
                                                 ---------------------
payment of principal, premium, if any, interest and Liquidated Damages (as
defined in the Indenture), if any, on a senior subordinated

                                       2


basis, jointly and severally, by each of the entities listed on Schedule B,
hereto (each, a "Guarantor" and collectively, the "Guarantors"). Capitalized
                 ---------                         ----------
terms used but not-defined herein shall have the meanings given to such terms in
the Indenture.

          1. Offering Circular. The Series A Notes will be offered and sold to
             -----------------
the Initial Purchasers pursuant to one or more exemptions from the registration
requirements under the Securities Act of 1933, as amended (the "Act"). The
                                                                ---
Company and the Guarantors have prepared a preliminary offering circular, dated
March 23, 2001 (the "Preliminary Offering Circular") and a final offering
                     -----------------------------
circular, dated April 6, 2001 (the "Offering Circular"), relating to the Series
                                    -----------------
A Notes and the Subsidiary Guarantees.

          Upon original issuance thereof, and until such time as the same is no
longer required pursuant to the Indenture, the Series A Notes (and all
securities issued in exchange therefor or in substitution thereof) shall bear
the following legend:

               "THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
          TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES
          SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT
          BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
          REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.  EACH PURCHASER OF
          THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE
          RELYING ON THE EXEMPTION FROM THE PROVISIONS  OF SECTION 5 OF THE
          SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

               THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE COMPANY
          THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE
          TRANSFERRED, ONLY (1) IN THE UNITED STATES TO A PERSON WHOM THE SELLER
          REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL  BUYER (AS DEFINED IN
          RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
          REQUIREMENTS OF RULE 144A, (2) OUTSIDE THE UNITED STATES IN AN
          OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES
          ACT, (3) PURSUANT

                                       3


          TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY
          RULE 144 THEREUNDER (IF AVAILABLE), (4) TO AN INSTITUTIONAL
          "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF
          REGULATION D UNDER THE SECURITIES ACT THAT, PRIOR TO SUCH TRANSFER,
          FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
          REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE
          AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT
          OF NOTES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE
          COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT OR
          (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
          SECURITIES ACT, IN EACH OF CASES (1) THROUGH (5) IN ACCORDANCE WITH
          ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND
          (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY
          ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED
          TO IN (A) ABOVE.

          2.   Agreements to Sell and Purchase.  On the basis of the
               -------------------------------
representations, warranties and covenants contained in this Agreement, and
subject to the terms and conditions contained herein, the Company agrees to
issue and sell to the Initial Purchasers, and each Initial Purchaser agrees,
severally and not jointly, to purchase from the Company, the principal amount of
Series A Notes set forth opposite the name of such Initial Purchaser on Schedule
A hereto at a purchase price equal to 97.5% of the principal amount thereof (the
"Purchase Price").
 --------------

          3.   Terms of Offering.  The Initial Purchasers have advised the
               -----------------
Company that the Initial Purchasers will make offers (the "Exempt Resales") of
                                                           --------------
the Series A Notes purchased hereunder on the terms set forth in the Offering
Circular, as amended or supplemented, solely to (i) persons whom the Initial
Purchasers reasonably believe to be "qualified institutional buyers" as defined
in Rule 144A under the Act ("QIBs"), and (ii) to persons permitted to purchase
                             ----
the Series A Notes in offshore transactions in reliance upon Regulation S under
the Act (each, a "Regulation S Purchaser") (such persons specified in clauses
                  ----------------------
(i) and (ii) being referred to herein as the "Eligible Purchasers").  The
                                              -------------------
Initial Purchasers will offer the Series A

                                       4


Notes to Eligible Purchasers initially at a price equal to 100% of the principal
amount thereof. Such price may be changed at any time without notice.

          Holders (including subsequent transferees) of the Series A Notes will
have the registration rights set forth in the registration rights agreement (the
"Registration Rights Agreement"), to be dated the Closing Date (as defined
 -----------------------------
below), in substantially the form of Exhibit A hereto, for so long as such
Series A Notes constitute "Transfer Restricted Securities" (as defined in the
                           ------------------------------
Registration Rights Agreement).  Pursuant to the Registration Rights Agreement,
the Company and the Guarantors will agree to file with the Securities and
Exchange Commission (the "Commission") under the circumstances set forth
                          ----------
therein, (i) a registration statement under the Act (the "Exchange Offer
                                                          --------------
Registration Statement") relating to the Company's 9 1/4% Series B Senior
- ----------------------
Subordinated Notes due 2011 (the "Series B Notes"), to be offered in exchange
                                  --------------
for the Series A Notes (such offer to exchange being referred to as the
"Exchange Offer") and the Subsidiary Guarantees thereof and (ii) a shelf
- ---------------
registration statement pursuant to Rule 415 under the Act (the "Shelf
                                                                -----
Registration Statement" and, together with the Exchange Offer Registration
- ----------------------
Statement, the "Registration Statements") relating to the resale by certain
                -----------------------
holders of the Series A Notes and to use its best efforts to cause such
Registration Statements to be declared and remain effective and usable for the
periods specified in the Registration Rights Agreement and to consummate the
Exchange Offer.  This Agreement, the Indenture, the Notes, the Subsidiary
Guarantees and the Registration Rights Agreement are hereinafter sometimes
referred to collectively as the "Operative Documents."
                                 -------------------

          4.   Delivery and Payment.
               --------------------

          (a)  Delivery of, and payment of the Purchase Price for, the Series A
Notes shall be made at the offices of Skadden, Arps, Slate, Meagher & Flom LLP,
4 Times Square, New York, New York 10036, or such other location as may be
mutually acceptable. Such delivery and payment shall be made at 9:00 a.m. New
York City time, on April 11, 2001 or at such other time on the same date or such
other date as shall be agreed upon by the Initial Purchasers and the Company in
writing. The time and date of such delivery and the payment for the Series A
Notes are herein called the "Closing Date."
                             ------------

               (b) One or more of the Series A Notes in definitive global form,
registered in the name of Cede & Co., as nominee of the Depository Trust Company
("DTC"), having an aggregate principal amount corresponding to the
  ---

                                       5


aggregate principal amount of the Series A Notes (collectively, the "Global
                                                                     ------
Note"), shall be delivered by the Company to the Initial Purchasers (or as the
- ----
Initial Purchasers direct) in each case with any transfer taxes thereon duly
paid by the Company against payment by the Initial Purchasers of the Purchase
Price thereof by wire transfer in same day funds to the order of the Company.
The Global Note shall be made available to the Initial Purchasers for inspection
not later than 9:30 a.m., New York City time, on the business day immediately
preceding the Closing Date.

          5.   Agreements of the Company and the Guarantors.  Each of the
               ---------------------------------------------
Company and the Guarantors hereby agrees with each Initial Purchaser as follows:

          (a)  To advise the Initial Purchasers promptly and, if requested by
the Initial Purchasers, confirm such advice in writing, (i) of the issuance by
any state securities commission of any stop order suspending the qualification
or exemption from qualification of any Series A Notes for offering or sale in
any jurisdiction designated by the Initial Purchasers pursuant to Section 5(e)
hereof, or the initiation of any proceeding by any state securities commission
or any other federal or state regulatory authority for such purpose and (ii) of
the happening of any event during the period referred to in Section 5(c) below
that makes any statement of a material fact made in the Preliminary Offering
Circular or the Offering Circular untrue or that requires any additions to or
changes in the Preliminary Offering Circular or the Offering Circular in order
to make the statements therein not misleading. The Company and the Guarantors
shall use their best efforts to prevent the issuance of any stop order or order
suspending the qualification or exemption of any Series A Notes under any state
securities or Blue Sky laws and, if at any time any state securities commission
or other federal or state regulatory authority shall issue an order suspending
the qualification or exemption of any Series A Notes under any state securities
or Blue Sky laws, the Company and the Guarantors shall use their best efforts to
obtain the withdrawal or lifting of such order at the earliest possible time.

          (b)  To furnish the Initial Purchasers and those persons identified by
the Initial Purchasers to the Company as many copies of the Preliminary Offering
Circular and the Offering Circular, and any amendments or supplements thereto,
as the Initial Purchasers may reasonably request for the time period specified
in Section 5(c). Subject to the Initial Purchasers' compliance with its
representations and warranties and agreements set forth in Section 7 hereof, the
Company consents to the use of the Preliminary Offering Circular and the
Offering Circular, and any amendments

                                       6


and supplements thereto required pursuant hereto, by the Initial Purchasers in
connection with Exempt Resales.

          (c)  During such period as in the opinion of counsel for the Initial
Purchasers an Offering Circular is required by law to be delivered in connection
with Exempt Resales by the Initial Purchasers or in connection with market-
making activities of the Initial Purchasers (which period with respect to
market-making activities shall not exceed 180 days after the date hereof), (i)
not to make any amendment or supplement to the Offering Circular of which the
Initial Purchasers shall not previously have been advised or to which the
Initial Purchasers shall reasonably object after being so advised and (ii) to
prepare promptly upon any Initial Purchaser's reasonable request, any amendment
or supplement to the Offering Circular which may be necessary or advisable in
connection with such Exempt Resales or such market-making activities.

          (d)  If, during the period referred to in Section 5(c) above, any
event shall occur or condition shall exist as a result of which, in the opinion
of counsel to the Initial Purchasers, it becomes necessary to amend or
supplement the Offering Circular in order to make the statements therein, in the
light of the circumstances when such Offering Circular is delivered to an
Eligible Purchaser, not misleading, or if, in the opinion of counsel to the
Initial Purchasers, it is necessary to amend or supplement the Offering Circular
to comply with any applicable law, forthwith to prepare an appropriate amendment
or supplement to such Offering Circular so that the statements therein, as so
amended or supplemented, will not, in the light of the circumstances when it is
so delivered, be misleading, or so that such Offering Circular will comply with
applicable law, and to furnish to the Initial Purchasers and such other persons
as the Initial Purchasers may designate such number of copies thereof as the
Initial Purchasers may reasonably request.

          (e)  Prior to the sale of all Series A Notes pursuant to Exempt
Resales as contemplated hereby, to cooperate with the Initial Purchasers and
counsel to the Initial Purchasers in connection with the registration or
qualification of the Series A Notes for offer and sale to the Initial Purchasers
and pursuant to Exempt Resales under the securities or Blue Sky laws of such
jurisdictions as the Initial Purchasers may request and to continue such
registration or qualification in effect so long as required for Exempt Resales
and to file such consents to service of process or other documents as may be
necessary in order to effect such registration or qualification; provided,
however, that neither the Company nor any Guarantor shall be required in
connection therewith to qualify as a foreign corporation in any jurisdiction

                                       7


in which it is not now so qualified or to take any action that would subject it
to general consent to service of process or taxation other than as to matters
and transactions relating to the Preliminary Offering Circular, the Offering
Circular or Exempt Resales, in any jurisdiction in which it is not now
so subject.


          (f)  So long as the Notes are outstanding, (i) to mail and make
generally available as soon as practicable after the end of each fiscal year to
the record holders of the Notes a financial report of the Company and its
subsidiaries on a consolidated basis (and a similar financial report of all
unconsolidated subsidiaries, if any), all such financial reports to include a
consolidated balance sheet, a consolidated statement of operations, a
consolidated statement of cash flows and a consolidated statement of
shareholders' equity as of the end of and for such fiscal year, together with
comparable information as of the end of and for the preceding year, certified by
the Company's independent public accountants and (ii) to mail and make generally
available as soon as practicable after the end of each quarterly period (except
for the last quarterly period of each fiscal year) to such holders, a
consolidated balance sheet, a consolidated statement of operations and a
consolidated statement of cash flows (and similar financial reports of all
unconsolidated subsidiaries, if any) as of the end of and for such period, and
for the period from the beginning of such year to the close of such quarterly
period, together with comparable information for the corresponding periods of
the preceding year.

          (g)  For a period of five years from the date hereof, and thereafter
upon request for so long as the Notes are outstanding, to furnish to the Initial
Purchasers as soon as available copies of all reports or other communications
furnished by the Company or any of the Guarantors to its security holders or
furnished to or filed with the Commission or any national securities exchange on
which any class of securities of the Company or any of the Guarantors is listed
and such other publicly available information concerning the Company and/or its
subsidiaries as the Initial Purchasers may reasonably request.

          (h)  So long as any of the Series A Notes remain outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the Act,
during any period in which the Company and the Guarantors are not subject to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), to make available to any holder of Series A Notes in connection
 ------------
with any sale thereof and any prospective purchaser of such Series A Notes from
such holder, the information ("Rule 144A Information") required by Rule
                               ---------------------
144A(d)(4) under the Act.

                                       8


          (i)  Whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of the obligations of the Company and the
Guarantors under this Agreement, including: (i) the fees, disbursements and
expenses of counsel to the Company and the Guarantors and accountants of the
Company and the Guarantors in connection with the sale and delivery of the
Series A Notes to the Initial Purchasers and pursuant to Exempt Resales, and all
other fees and expenses in connection with the preparation, printing, filing and
distribution of the Preliminary Offering Circular, the Offering Circular and all
amendments and supplements to any of the foregoing (including financial
statements), including the mailing and delivering of copies thereof to the
Initial Purchasers and persons designated by it in the quantities specified
herein, (ii) all costs and expenses related to the transfer and delivery of the
Series A Notes to the Initial Purchasers and pursuant to Exempt Resales,
including any transfer or other taxes payable thereon, (iii) all costs of
printing or producing this Agreement, the other Operative Documents and any
other agreements or documents in connection with the offering, purchase, sale or
delivery of the Series A Notes, (iv) all expenses in connection with the
registration or qualification of the Series A Notes and the Subsidiary
Guarantees for offer and sale under the securities or Blue Sky laws of the
several states and all costs of printing or producing any preliminary and
supplemental Blue Sky memoranda in connection therewith (including the filing
fees and reasonable fees and disbursements of counsel for the Initial Purchasers
in connection with such registration or qualification and memoranda relating
thereto), (v) the cost of printing certificates representing the Series A Notes
and the Subsidiary Guarantees, (vi) all expenses and listing fees in connection
with the application for quotation of the Series A Notes in the National
Association of Securities Dealers, Inc. ("NASD") Automated Quotation System -
                                          ----
PORTAL ("PORTAL"), (vii) the fees and expenses of the Trustee and the Trustee's
         ------
counsel in connection with the Indenture, the Notes and the Subsidiary
Guarantees, (viii) the costs and charges of any transfer agent, registrar and/or
depositary (including DTC), (ix) any fees charged by rating agencies for the
rating of the Notes, (x) all costs and expenses of the Exchange Offer and any
Registration Statement, as set forth in the Registration Rights Agreement, and
(xi) and all other costs and expenses incident to the performance of the
obligations of the Company and the Guarantors hereunder for which provision is
not otherwise made in this Section.

          (j)  To use its best efforts to effect the inclusion of the Series A
Notes in PORTAL and to maintain the listing of the Series A Notes on PORTAL for
so long as the Series A Notes are outstanding.

                                       9


          (k)  To obtain the approval of DTC for "book-entry" transfer of the
Notes, and to comply with all of its agreements set forth in the representation
letters of the Company and the Guarantors to DTC relating to the approval of the
Notes by DTC for "book-entry" transfer.

          (l)  During the period beginning on the date hereof and continuing to
and including the Closing Date, not to offer, sell, contract to sell or
otherwise transfer or dispose of any debt securities of the Company or any
Guarantor or any warrants, rights or options to purchase or otherwise acquire
debt securities of the Company or any Guarantor substantially similar to the
Notes and the Subsidiary Guarantees (other than (i) the Notes and the Subsidiary
Guarantees and (ii) commercial paper issued in the ordinary course of business),
without the prior written consent of the Initial Purchasers.

          (m)  Not to sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Act) that would be
integrated with the sale of the Series A Notes to the Initial Purchasers or
pursuant to Exempt Resales in a manner that would require the registration of
any such sale of the Series A Notes under the Act.

          (n)  Not to voluntarily claim, and to actively resist any attempts to
claim, the benefit of any usury laws against the holders of any Notes and the
related Subsidiary Guarantees.

          (o)  To cause the Exchange Offer to be made in the appropriate form to
permit Series B Notes and Subsidiary Guarantees thereof by the Guarantors
registered pursuant to the Act to be offered in exchange for the Series A Notes
and the Subsidiary Guarantees thereof and to comply with all applicable federal
and state securities laws in connection with the Exchange Offer.

          (p)  To comply with all of its agreements set forth in the
Registration Rights Agreement.

          (q)  To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by it prior to the
Closing Date and to satisfy all conditions precedent to the delivery of the
Series A Notes and the Subsidiary Guarantees.

                                       10


          6    Representation, Warranties and Agreements of the Company and the
               ----------------------------------------------------------------
Guarantors.  As of the date hereof, each of the Company and the Guarantors
- -----------
represents and warrants to, and agrees with, each Initial Purchaser that:

          (a)  The Preliminary Offering Circular as of its date did not, and the
Offering Circular as of its date does not, and any supplement or amendment to
them will not, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that the representations and warranties contained
in this Section 6(a) shall not apply to pricing terms and other financial terms
intentionally left blank in the Preliminary Offering Circular or statements in
or omissions from the Preliminary Offering Circular or the Offering Circular (or
any supplement or amendment thereto) based upon information relating to the
Initial Purchasers furnished to the Company in writing by the Initial Purchasers
expressly for use therein.  The parties hereto acknowledge that for purposes of
this Agreement, including this Section 6(a) and Section 8 hereof, the only
information furnished to the Company in writing by the Initial Purchasers
expressly for use in the Preliminary Offering Circular or the Offering Circular
is the information set forth: (i) on the cover page of the Offering Circular
with respect to the price of the Series A Notes; (ii) the second paragraph of
text on page i of the Preliminary Offering Circular; (iii) the second paragraph
of text on page i of the Offering Circular; (iv) the tenth paragraph of text
under the caption "Plan of Distribution" in the Preliminary Offering Circular
and (v) the tenth paragraph of text under the caption "Plan of Distribution" in
the Offering Circular.  No stop order preventing the use of the Preliminary
Offering Circular or the Offering Circular, or any amendment or supplement
thereto, or any order asserting that any of the transactions contemplated by
this Agreement are subject to the registration requirements of the Act, has been
issued.

          (b)  Each of the Company and its subsidiaries has been duly organized,
is validly existing and is in good standing under the laws of its jurisdiction
of organization and has the power and authority, corporate or other, to carry on
its business as described in the Preliminary Offering Circular and the Offering
Circular and to own, lease and operate its properties, and each is duly
qualified and is in good standing as a foreign organization authorized to do
business in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification, except where the
failure to be so qualified would not (i) have a material adverse effect on the
business, prospects, financial condition or results of operations of the Company
and its subsidiaries, taken as a whole or (ii)

                                       11


materially adversely affect the ability of the Company or the Guarantors to
issue and perform under the Notes or the Subsidiary Guarantees (any of the
events set forth in clauses (i) or (ii), a "Material Adverse Effect").
                                            -----------------------

          (c)  All outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid, non-assessable and not
subject to any preemptive or similar rights.

          (d)  The entities listed on Schedule C hereto are the only
subsidiaries, direct or indirect, of the Company. All of the outstanding shares
of capital stock, or other ownership interests, of each of the Company's
subsidiaries have been duly authorized and validly issued and, in the case of
shares of capital stock, are fully paid and non-assessable, and, except as set
forth on Schedule C hereto, are owned by the Company, directly or indirectly
through one or more subsidiaries, free and clear of any security interest,
claim, lien, encumbrance or adverse interest of any nature (each, a "Lien"),
                                                                     ----
other than the pledge of certain of such shares, or other ownership interests,
as applicable, to secure the obligations under the Second Amended and Restated
Revolving Credit Agreement, dated as of July 14, 2000, and the Second Amended
and Restated Term Loan Agreement, dated as of July 14, 2000 (collectively, the
"Credit Facilities").
 -----------------

          (e)  This Agreement has been duly authorized, executed and delivered
by the Company and each of the Guarantors.

          (f)  The Indenture has been duly authorized by the Company and each of
the Guarantors and, on the Closing Date, will have been validly executed and
delivered by the Company and each of the Guarantors. When the Indenture has been
duly executed and delivered by the Company and each of the Guarantors, the
Indenture will be a valid and binding agreement of the Company and each
Guarantor, enforceable against the Company and each Guarantor in accordance with
its terms except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or similar laws
affecting creditors' rights generally and (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability as applied by the court before which any proceeding
therefor may be brought (regardless of whether such enforcement is considered in
a proceeding at law or in equity). On the Closing Date, the Indenture will
conform in all material respects to the requirements of the Trust Indenture Act
of 1939, as amended (the "TIA" or "Trust
                          ---      -----

                                       12


Indenture Act"), and the rules and regulations of the Commission applicable to
- -------------
an indenture which is qualified thereunder.

          (g)  The Series A Notes have been duly authorized and, on the Closing
Date, will have been validly executed and delivered by the Company. When the
Series A Notes have been issued, executed and authenticated in accordance with
the provisions of the Indenture and delivered to and paid for by the Initial
Purchasers in accordance with the terms of this Agreement, the Series A Notes
will be entitled to the benefits of the Indenture and will be valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
similar laws affecting creditors' rights generally and (ii) rights of
acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability as applied by the court before
which any proceeding therefor may be brought (regardless of whether such
enforcement is considered in a proceeding at law or in equity). On the Closing
Date, the Series A Notes will conform in all material respects to the
description thereof contained in the Offering Circular.

          (h)  On the Closing Date, the Series B Notes will have been duly
authorized by the Company. When the Series B Notes are issued, executed and
authenticated in accordance with the terms of the Exchange Offer and the
Indenture, the Series B Notes will be entitled to the benefits of the Indenture
and will be the valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or similar laws affecting creditors' rights
generally and (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability as
applied by the court before which any proceeding therefor may be brought
(regardless of whether such enforcement is considered in a proceeding at law or
in equity).

          (i)  The Subsidiary Guarantee to be endorsed on the Series A Notes by
each Guarantor has been duly authorized by such Guarantor and, on the Closing
Date, will have been duly executed and delivered by each such Guarantor. When
the Series A Notes have been issued, executed and authenticated in accordance
with the Indenture and delivered to and paid for by the Initial Purchasers in
accordance with the terms of this Agreement, the Subsidiary Guarantee of each
Guarantor endorsed thereon will be entitled to the benefits of the Indenture and
will be the valid

                                       13


and binding obligation of such Guarantor, enforceable against such Guarantor in
accordance with its terms, except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or similar laws affecting creditors' rights generally and (ii) rights
of acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability as applied by the court before
which any proceeding therefor may be brought (regardless of whether such
enforcement is considered in a proceeding at law or in equity). On the Closing
Date, the Subsidiary Guarantees to be endorsed on the Series A Notes will
conform in all material respects to the description thereof contained in the
Offering Circular.

          (j)  The Subsidiary Guarantee to be endorsed on the Series B Notes by
each Guarantor has been duly authorized by such Guarantor and, when issued, will
have been duly executed and delivered by each such Guarantor. When the Series B
Notes have been issued, executed and authenticated in accordance with the terms
of the Exchange Offer and the Indenture, the Subsidiary Guarantee of each
Guarantor endorsed thereon will be entitled to the benefits of the Indenture and
will be the valid and binding obligation of such Guarantor, enforceable against
such Guarantor in accordance with its terms, except as (i) the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or similar laws affecting creditors' rights generally and
(ii) rights of acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability as applied by the court
before which any proceeding therefor may be brought (regardless of whether such
enforcement is considered in a proceeding at law or in equity). When the Series
B Notes are issued, authenticated and delivered, the Subsidiary Guarantees to be
endorsed on the Series B Notes will conform as to legal matters to the
description thereof in the Offering Circular.

          (k)  The Registration Rights Agreement has been duly authorized by the
Company and each of the Guarantors and, on the Closing Date, will have been duly
executed and delivered by the Company and each of the Guarantors. When the
Registration Rights Agreement has been duly executed and delivered, the
Registration Rights Agreement will be a valid and binding agreement of the
Company and each of the Guarantors, enforceable against the Company and each
Guarantor in accordance with its terms except as (i) the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or similar laws affecting creditors' rights generally, (ii) public
policy or laws limiting rights of indemnity or contribution and (iii) rights of
acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability

                                       14


as applied by the court before which any proceeding therefor may be brought
(regardless of whether such enforcement is considered in a proceeding at law or
in equity). On the Closing Date, the Registration Rights Agreement will conform
in all material respects to the description thereof in the Offering Circular.

          (l)  Neither the Company nor any of its subsidiaries is in (i)
violation of its respective charter or by-laws or other organizational documents
or (ii) default in the performance of any obligation, agreement, covenant or
condition contained in any indenture, loan agreement, mortgage, lease or other
agreement or instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries or their respective
property is bound, except to the extent such default, if any, would not have a
Material Adverse Effect.

          (m)  The execution, delivery and performance of this Agreement and the
other Operative Documents by the Company and each of the Guarantors, compliance
by the Company and each of the Guarantors with all provisions hereof and thereof
and the consummation of the transactions contemplated hereby and thereby will
not, assuming the Notes are sold in the manner contemplated by this Agreement,
(i) require any consent, approval, authorization or other order of, or
qualification with, any court or governmental body or agency (except such as
have been obtained or as may be required under the securities or Blue Sky laws
of the various states and, with respect to performance of the Registration
Rights Agreement, the Securities Act and the Trust Indenture Act), (ii) conflict
with or constitute a breach of any of the terms or provisions of, or a default
under, (A) the charter or by-laws or other organizational documents of the
Company or any of its subsidiaries or (B) any indenture, loan agreement,
mortgage, lease or other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which the Company or any of its subsidiaries
or their respective property is bound, after receipt of any required consents,
which consents have been obtained, (iii) violate or conflict with any applicable
law or any rule, regulation, judgment, order or decree of any court or any
governmental body or agency having jurisdiction over the Company, any of its
subsidiaries or their respective property, (iv) result in the imposition or
creation of (or the obligation to create or impose) a Lien under, any agreement
or instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or their respective property is
bound, or (v) result in the termination, suspension or revocation of any
Authorization (as defined below) of the Company or any of its subsidiaries or
result in any other impairment of the rights of the holder of any such
Authorization, except, with respect to clauses (ii)(B), (iv) and (v) above, for
any violation, conflict, breach, default, Lien, termination, suspension,

                                       15


revocation or impairment which would not, singly or in the aggregate, have a
Material Adverse Effect.

          (n)  Except as disclosed in the Offering Circular, there are no legal
or governmental proceedings (i) pending to which the Company or any of its
subsidiaries is a party or to which any of their respective property is subject,
or (ii) to the Company's knowledge, threatened to which the Company or any of
its subsidiaries could be a party or to which any of their respective property
could be subject, in either case, which if determined adversely to the Company
or such subsidiary, as applicable, would, singly or in the aggregate, have a
Material Adverse Effect.

          (o)  Neither the Company nor any of its subsidiaries has violated any
foreign, federal, state or local law or regulation relating to the protection of
human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"), any provisions of the
                                     ------------------
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or any
                                                              -----
provisions of the Foreign Corrupt Practices Act or the rules and regulations
promulgated thereunder, except for such violations which, singly or in the
aggregate, would not have a Material Adverse Effect.

          (p)  There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with Environmental
Laws or any Authorization, any related constraints on operating activities and
any potential liabilities to third parties) which would, singly or in the
aggregate, have a Material Adverse Effect.

          (q)  There is no claim, cause of action, investigation or notice by
any person or entity alleging potential liability (including, without
limitation, alleged or potential liability or investigatory costs, cleanup
costs, governmental response costs, natural resource damages, property damages,
personal injuries or penalties) of the Company or any of its subsidiaries
arising out of, based on or resulting from (A) the presence or release into the
environment of any Hazardous Material (as defined) at any location, whether or
not owned by the Company or any of its subsidiaries, as the case may be, or (B)
any violation or alleged violation of any Environmental Law, which would, singly
or in the aggregate, have a Material Adverse Effect. The term "Hazardous
Material" means (i) any "hazardous substance" as defined by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, (ii)
any "hazardous waste" as defined by the Resource Conservation and

                                       16


Recovery Act, as amended, (iii) any petroleum or petroleum product, (iv) any
polychlorinated biphenyl, and (v) any pollutant or contaminant or hazardous
dangerous or toxic chemical, material, waste or substance regulated under or
within the meaning of any other law relating to protection of human health or
the environment or imposing liability or standards of conduct concerning any
such chemical material, waste or substance.

          (r)  Each of the Company and its subsidiaries has such permits,
licenses, consents, exemptions, franchises, authorizations and other approvals
(each, an "Authorization") of, and has made all filings with and notices to, all
           -------------
governmental or regulatory authorities and self-regulatory organizations and all
courts and other tribunals, including without limitation, under any applicable
Environmental Laws, as are necessary to own, lease, license and operate its
respective properties and to conduct its business, except where the failure to
have any such Authorization or to make any such filing or notice would not,
singly or in the aggregate, have a Material Adverse Effect. Each such
Authorization is valid and in full force and effect and each of the Company and
its subsidiaries is in compliance with all the terms and conditions thereof and
with the rules and regulations of the authorities and governing bodies having
jurisdiction with respect thereto; and, except with respect to the matters
discussed in the "Business--United States Attorney's inquiry" and "Business--
Laboratory payment reviews" sections of the Offering Circular, no event has
occurred (including, without limitation, the receipt of any notice from any
authority or governing body) which allows or, after notice or lapse of time or
both, would allow, revocation, suspension or termination of any such
Authorization or results or, after notice or lapse of time or both, would result
in any other impairment of the rights of the holder of any such Authorization;
and such Authorizations contain no restrictions that are burdensome to the
Company or any of its subsidiaries; except where such failure to be valid and in
full force and effect or to be in compliance, the occurrence of any such event
or the presence of any such restriction would not, singly or in the aggregate,
have a Material Adverse Effect.

          (s)  To the best of the Company's knowledge after due inquiry, the
accountants, KPMG LLP and PricewaterhouseCoopers LLP, that have certified the
financial statements and supporting schedules included in the Preliminary
Offering Circular and the Offering Circular, are or were independent public
accountants with respect to the Company and the Guarantors, as required by the
Act and the Exchange Act.  The historical financial statements, together with
related schedules and notes, set forth in the Preliminary Offering Circular and
the Offering Circular comply as to form in all material respects with the
requirements applicable to registration statements

                                       17


on Form S-1 under the Act, except for the exclusion of the condensed
consolidating financial information with respect to the Company's subsidiaries
that would be required by Rule 3-10 of Regulation S-X.

          (t)  The historical financial statements, together with related
schedules and notes forming part of the Offering Circular (and any amendment or
supplement thereto), present fairly the consolidated financial position, results
of operations and changes in financial position of the Company and its
subsidiaries on the basis stated in the Offering Circular at the respective
dates or for the respective periods to which they apply; such statements and
related schedules and notes have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved, except as disclosed therein; and the other financial and statistical
information and data set forth in the Offering Circular (and any amendment or
supplement thereto) are, in all material respects, accurately presented and
prepared on a basis consistent with such financial statements and the books and
records of the Company.

          (u)  The pro forma financial and statistical information and data
included in the Offering Circular are, in all material respects, accurately
presented and prepared on a basis consistent with the pro forma financial
statements that were prepared in connection with the transactions contemplated
hereby by the Company, and reviewed by its independent public accountants, on a
basis consistent with the historical consolidated financial statements of the
Company and such pro forma financial statements give effect to assumptions used
in the preparation thereof on a reasonable basis and in good faith and present
fairly the historical and proposed transactions contemplated by the Offering
Circular.

          (v)  The industry, statistical and market-related data included in the
Offering Circular, to the best knowledge of the Company and each of the
Guarantors, is true and accurate in all material respects and is based on or
derived from sources which the Company and the Guarantors believe to be reliable
and accurate.

          (w)  Neither the Company nor any Guarantor is, and, after giving
effect to the offering and sale of the Series A Notes and the application of the
net proceeds thereof as described in the Offering Circular, neither the Company
nor any Guarantor will be, an "investment company," as such term is defined in
the Investment Company Act of 1940, as amended.

                                       18


          (x)  No person has the right, under any contract, agreement or
understanding between any such person and the Company or any Guarantor, in
connection with, or as a result of, the transactions contemplated hereby or by
the Registration Rights Agreement, to require the Company or such Guarantor to
file a registration statement under the Act with respect to any debt securities
of the Company or such Guarantor or to require the Company or such Guarantor to
include any securities of the Company or any Guarantor with the Notes and
Subsidiary Guarantees registered pursuant to any Registration Statement, other
than the Registration Rights Agreement.

          (y)  Neither the Company nor any of its subsidiaries nor any agent
thereof acting on the behalf of them has taken, and none of them will take prior
to completion of the distribution of the Notes, any action that would cause this
Agreement or the issuance or sale of the Series A Notes to violate Regulation T
(12 C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or Regulation X (12
C.F.R. Part 224) of the Board of Governors of the Federal Reserve System.

          (z)  No "nationally recognized statistical rating organization" as
such term is defined for purposes of Rule 436(g)(2) under the Act (i) has
imposed (or has informed the Company or any Guarantor that it is considering
imposing) any condition (financial or otherwise) on the Company's or any
Guarantor's retaining any rating assigned to the Company or any Guarantor, any
securities of the Company or any Guarantor or (ii) has indicated to the Company
or any Guarantor that it is considering (a) the downgrading, suspension, or
withdrawal of, or any review for a possible change that does not indicate the
direction of the possible change in, any rating so assigned or (b) any change in
the outlook for any rating of the Company, any Guarantor or any securities of
the Company or any Guarantor.

          (aa) Since the respective dates as of which information is given in
the Offering Circular other than as set forth in the Offering Circular
(exclusive of any amendments or supplements thereto subsequent to the date of
this Agreement), (i) there has not occurred any material adverse change or any
development involving a prospective material adverse change in the condition,
financial or otherwise, or the earnings, business, management or operations of
the Company and its subsidiaries, taken as a whole, (ii) there has not been any
material adverse change or any development involving a prospective material
adverse change in the capital stock or in the long-term debt of the Company or
any of its subsidiaries and (iii) neither the Company nor any of its
subsidiaries has incurred any material liability or obligation, direct or
contingent.

                                       19


          (bb)    Each of the Preliminary Offering Circular and the Offering
Circular, as of its date, contains all the information specified in, and meeting
the requirements of, Rule 144A(d)(4) under the Act.

          (cc)    Each of the Company and its subsidiaries has good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by it which is material to the business of
the Company and its subsidiaries, taken as a whole, in each case free and clear
of all Liens and defects, except such as are described in the Offering Circular
or such as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property
by the Company and its subsidiaries; and any real property and buildings held
under lease by the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are described in the
Offering Circular or such as do not materially affect the value of such property
and do not interfere with the use made and proposed to be made of such property
by the Company and its subsidiaries.

          (dd)    When the Series A Notes and the Subsidiary Guarantees are
issued and delivered pursuant to this Agreement, neither the Series A Notes nor
the Subsidiary Guarantees will be of the same class (within the meaning of Rule
144A under the Act) as any security of the Company or the Guarantors that is
listed on a national securities exchange registered under Section 6 of the
Exchange Act or that is quoted in a United States automated inter-dealer
quotation system.

          (ee)    No form of general solicitation or general advertising (as
defined in Regulation D under the Act) was used by the Company, the Guarantors
or any of their respective affiliates or representatives (other than the Initial
Purchasers and any of their respective affiliates or representatives who are not
affiliates or representatives of the Company or any Guarantor, as to whom the
Company and the Guarantors make no representation) in connection with the offer
and sale of the Series A Notes contemplated hereby, including, but not limited
to, articles, notices or other communications published in any newspaper,
magazine, or similar medium or broadcast over television or radio, or any
seminar or meeting whose attendees have been invited by any general solicitation
or general advertising. No securities of the same class as the Series A Notes
have been issued and sold by the Company within the six-month period immediately
prior to the date hereof.

                                       20


          (ff)      Prior to the effectiveness of any Registration Statement,
the Indenture is not required to be qualified under the TIA, assuming the Notes
are sold in the manner contemplated by this Agreement.

          (gg)      None of the Company, the Guarantors nor any of their
respective affiliates or any person acting on its or their behalf (other than
the Initial Purchasers and any of their respective affiliates or persons acting
on their behalf who are not affiliates of the Company or any Guarantor or acting
on their behalf, as to whom the Company and the Guarantors make no
representation) has engaged or will engage in any directed selling efforts
within the meaning of Regulation S under the Act ("Regulation S") with respect
                                                   ------------
to the Series A Notes or the Subsidiary Guarantees.

          (hh)      The sale of the Series A Notes pursuant to Regulation S is
not part of a plan or scheme to evade the registration provisions of the Act.

          (ii)      The Company, the Guarantors and their respective affiliates
and all persons acting on their behalf (other than the Initial Purchasers and
any of their respective affiliates or persons acting on their behalf who are not
affiliates of the Company or any Guarantor or acting on their behalf, as to whom
the Company and the Guarantors make no representation) have complied with and
will comply with the offering restrictions requirements of Regulation S in
connection with the offering of the Series A Notes outside the United States
and, in connection therewith, the Offering Circular will contain the disclosure
required by Rule 902(h).

          (jj)      The Series A Notes sold in reliance on Regulation S will be
represented upon issuance by a temporary global security that may not be
exchanged for definitive securities until the expiration of the 40-day
restricted period referred to in Rule 903(b)(3) of the Act and only upon
certification of beneficial ownership of such Series A Notes by non-U.S. persons
or U.S. persons who purchased such Series A Notes in transactions that were
exempt from the registration requirements of the Act.

          (kk)      No registration under the Act of the Series A Notes or the
Subsidiary Guarantees is required for the sale of the Series A Notes and the
Subsidiary Guarantees to the Initial Purchasers as contemplated hereby or for
the Exempt Resales assuming the accuracy of the Initial Purchasers'
representations and warranties and agreements set forth in Section 7 hereof.

                                       21


          (ll)      The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are, in the opinion of management, reasonable and
customary in the businesses in which they are engaged; and neither the Company
nor any of its subsidiaries (i) has received notice from any insurer or agent of
such insurer that substantial capital improvements or other material
expenditures will have to be made in order to continue such insurance or (ii)
has any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers at a cost that would not have a Material Adverse
Effect.

          (mm)      Except as disclosed in the Offering Circular, no
relationship, direct or indirect, exists between or among the Company or any of
its subsidiaries on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company or any of its subsidiaries on the other
hand, which would be required by the Act to be described in the Offering
Circular if the Offering Circular were a prospectus included in a registration
statement on Form S-1 filed with the Commission.

          (nn)      To the best knowledge of the Company, no significant
collective bargaining organizing activities are taking place with respect to the
Company or any of its subsidiaries.

          (oo)      The Company and each of its subsidiaries maintains a system
of internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.

          (pp)      All material tax returns required to be filed by the Company
and each of its subsidiaries in any jurisdiction, or any extensions related
thereto, have been filed, other than those filings being contested in good
faith, and all such returns are true, accurate and complete in all material
respects, and all material taxes, including withholding taxes, penalties and
interest, assessments, fees and other charges due pursuant to such returns or
pursuant to any assessment received by the

                                       22


Company or any of its subsidiaries have been paid, other than those being
contested in good faith and for which adequate reserves have been provided.

          (qq)      All indebtedness of the Company and the Guarantors that will
be repaid with the proceeds of the issuance and sale of the Series A Notes was
incurred, and the indebtedness represented by the Series A Notes is being
incurred, for proper purposes and in good faith and each of the Company and the
Guarantors was, at the time of the incurrence of such indebtedness that will be
repaid with the proceeds of the issuance and sale of the Series A Notes, and
will be on the Closing Date (after giving effect to the application of the
proceeds from the issuance of the Series A Notes) solvent, and had at the time
of the incurrence of such indebtedness that will be repaid with the proceeds of
the issuance and sale of the Series A Notes and will have on the Closing Date
(after giving effect to the application of the proceeds from the issuance of the
Series A Notes) sufficient capital for carrying on their respective business and
were, at the time of the incurrence of such indebtedness that will be repaid
with the proceeds of the issuance and sale of the Series A Notes, and will be on
the Closing Date (after giving effect to the application of the proceeds from
the issuance of the Series A Notes) able to pay their respective debts as they
mature.


          (rr)      No action has been taken and no law, statute, rule or
regulation or order has been enacted, adopted or issued by any governmental
agency or body which prevents the execution, delivery and performance of any of
the Operative Documents, the issuance of the Series A Notes or the Subsidiary
Guarantees, or suspends the sale of the Series A Notes or the Subsidiary
Guarantees in any jurisdiction referred to in Section 5(e); and no injunction,
restraining order or other order or relief of any nature by a federal or state
court or other tribunal of competent jurisdiction has been issued with respect
to the Company or any of its subsidiaries which would prevent or suspend the
issuance or sale of the Series A Notes or the Subsidiary Guarantees in any
jurisdiction referred to in Section 5(e).

          (ss)      Each certificate signed by any officer of the Company or any
Guarantor and delivered to the Initial Purchasers or counsel for the Initial
Purchasers shall be deemed to be a representation and warranty by the Company or
such Guarantor to the Initial Purchasers as to the matters covered thereby.

          The Company acknowledges that the Initial Purchasers and, for purposes
of the opinions to be delivered to the Initial Purchasers pursuant to Section 9
hereof, counsel to the Company and the Guarantors and counsel to the Initial

                                       23


Purchasers will rely upon the accuracy and truth of the foregoing
representations and hereby consents to such reliance.


          7.   Initial Purchasers' Representations and Warranties.  Each of the
               --------------------------------------------------
Initial Purchasers, severally and not jointly, represents and warrants to the
Company and the Guarantors, and agrees that:

          (a)  Such Initial Purchaser is a QIB with such knowledge and
experience in financial and business matters as is necessary in order to
evaluate the merits and risks of an investment in the Series A Notes.

          (b)  Such Initial Purchaser (A) is not acquiring the Series A Notes
with a view to any distribution thereof or with any present intention of
offering or selling any of the Series A Notes in a transaction that would
violate the Act or the securities laws of any state of the United States or any
other applicable jurisdiction and (B) will be reoffering and reselling the
Series A Notes only to persons whom such Initial Purchaser reasonably believes
to be (x) QIBs, in reliance on the exemption from the registration requirements
of the Act provided by Rule 144A and (y) Regulation S Purchasers, in offshore
transactions in reliance upon R egulation S under the Act.

          (c)  Such Initial Purchaser agrees that no form of general
solicitation or general advertising (within the meaning of Regulation D under
the Act) has been or will be used by such Initial Purchaser or any of its
representatives in connection with the offer and sale of the Series A Notes
pursuant hereto, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising.

          (d)  Such Initial Purchaser agrees that, in connection with Exempt
Resales, such Initial Purchaser will solicit offers to buy the Series A Notes
only from, and will offer to sell the Series A Notes only to, persons whom such
Initial Purchaser reasonably believes to be Eligible Purchasers. Each Initial
Purchaser further agrees that it will offer to sell the Series A Notes only to,
and will solicit offers to buy the Series A Notes only from (A) Eligible
Purchasers that the Initial Purchaser reasonably believes to be QIBs and (B)
Regulation S Purchasers, in each case, that agree that (x) the Series A Notes
purchased by them may be resold, pledged or otherwise transferred within the
time period referred to under Rule 144(k)

                                       24


(taking into account the provisions of Rule 144(d) under the Act, if applicable)
under the Act, as in effect on the date of the transfer of such Series A Notes,
only (I) to the Company or any of its subsidiaries, (II) to a person whom the
seller reasonably believes is a QIB purchasing for its own account or for the
account of a QIB in a transaction meeting the requirements of Rule 144A under
the Act, (III) in an offshore transaction (as defined in Rule 902 under the Act)
meeting the requirements of Rule 904 of the Act, (IV) in a transaction meeting
the requirements of Rule 144 under the Act, (V) to an institutional "accredited
investor" as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under
the Securities Act (an "Accredited Institution") that, prior to such transfer,
furnishes the Trustee a signed letter containing certain representations and
agreements relating to the registration of transfer of such Series A Note and,
if such transfer is in respect of an aggregate principal amount of Series A
Notes less than $250,000, an opinion of counsel acceptable to the Company that
such transfer is in compliance with the Act, (VI) in accordance with another
exemption from the registration requirements of the Act (and based upon an
opinion of counsel acceptable to the Company) or (VII) pursuant to an effective
registration statement and, in each case, in accordance with the applicable
securities laws of any state of the United States or any other applicable
jurisdiction and (y) they will deliver to each person to whom such Series A
Notes or an interest therein is transferred a notice substantially to the effect
of the foregoing.

          (e)  Such Initial Purchaser and its affiliates or any person acting on
its or their behalf have not engaged and will not engage in any directed selling
efforts within the meaning of Regulation S with respect to the Series A Notes or
the Subsidiary Guarantees.

          (f)  The Series A Notes offered and sold by such Initial Purchaser
pursuant hereto in reliance on Regulation S have been and will be offered and
sold only in offshore transactions.

          (g)  The sale of the Series A Notes offered and sold by such Initial
Purchaser pursuant hereto in reliance on Regulation S is not part of a plan or
scheme to evade the registration provisions of the Act.

          (h)  Such Initial Purchaser agrees that it has not offered or sold and
will not offer or sell the Series A Notes in the United States or to, or for the
benefit or account of, a U.S. Person (other than a distributor), in each case,
as defined in Rule 902 under the Act (i) as part of its distribution at any time
and (ii) otherwise until 40 days after the later of the commencement of the
offering of the Series A

                                       25


Notes pursuant hereto and the Closing Date, other than in accordance with
Regulation S of the Act or another exemption from the registration requirements
of the Act. Such Initial Purchaser agrees that, during such 40-day restricted
period, it will not cause any advertisement with respect to the Series A Notes
(including any "tombstone" advertisement) to be published in any newspaper or
periodical or posted in any public place and will not issue any circular
relating to the Series A Notes, except such advertisements as permitted by and
include the statements required by Regulation S.

               (i)  Such Initial Purchaser agrees that, at or prior to
confirmation of a sale of Series A Notes by it to any distributor, dealer or
person receiving a selling concession, fee or other remuneration during the 40-
day restricted period referred to in Rule 903(b)(3) under the Act, it will send
to such distributor, dealer or person receiving a selling concession, fee or
other remuneration a confirmation or notice to substantially the following
effect:

                    "The Series A Notes covered hereby have not been registered
               under the U.S. Securities Act of 1933, as amended (the
               "Securities Act"), and may not be offered and sold within the
                --------------
               United States or to, or for the account or benefit of, U.S.
               persons (i) as part of your distribution at any time or (ii)
               otherwise until 40 days after the later of the commencement of
               the Offering and the Closing Date, except in either case in
               accordance with Regulation S under the Securities Act (or Rule
               144A or to Accredited Institutions in transactions that are
               exempt from the registration requirements of the Securities Act),
               and in connection with any subsequent sale by you of the Series A
               Notes covered hereby in reliance on Regulation S during the
               period referred to above to any distributor, dealer or person
               receiving a selling concession, fee or other remuneration, you
               must deliver a notice to substantially the foregoing effect.
               Terms used above have the meanings assigned to them in Regulation
               S."

               (j)  Such Initial Purchaser agrees that the Series A Notes
offered and sold in reliance on Regulation S will be represented upon issuance
by a global security that may not be exchanged for definitive securities until
the expiration of the 40-day restricted period referred to in Rule 903(b)(3) of
the Act and only upon certification of beneficial ownership of such Series A
Notes by non-U.S. persons or U.S. persons who purchased such Series A Notes in
transactions that were exempt from the registration requirements of the Act.

                                       26


          Such Initial Purchaser acknowledges that the Company and the
Guarantors and, for purposes of the opinions to be delivered to each Initial
Purchaser pursuant to Section 9 hereof, counsel to the Company and the
Guarantors and counsel to the Initial Purchaser will rely upon the accuracy and
truth of the foregoing representations and Such Initial Purchaser hereby
consents to such reliance.

          8.   Indemnification.
               ---------------

          (a)  The Company and each Guarantor agree, jointly and severally, to
indemnify and hold harmless each Initial Purchaser, its directors, its officers
and each person, if any, who controls such Initial Purchaser within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act, from and against any
and all losses, claims, damages, liabilities and judgments (including, without
limitation, any legal or other expenses incurred in connection with
investigating or defending any matter, including any action, that could give
rise to any such losses, claims, damages, liabilities or judgments) caused by
any untrue statement or alleged untrue statement of a material fact contained in
the Offering Circular (or any amendment or supplement thereto), the Preliminary
Offering Circular or any Rule 144A Information provided by the Company or any
Guarantor to any holder or prospective purchaser of Series A Notes pursuant to
Section 5(h) or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages,
liabilities or judgments are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to such
Initial Purchaser furnished in writing to the Company by such Initial Purchaser,
which, for purposes of this Section 8, the parties agree is limited to the
information as set forth in Section 6(a) of this Agreement; provided, however,
that the foregoing indemnity agreement with respect to any Preliminary Offering
Circular shall not inure to the benefit of any Initial Purchaser who failed to
deliver a Final Offering Circular (as then amended or supplemented, provided by
the Company to the several Initial Purchasers in the requisite quantity and on a
timely basis to permit proper delivery on or prior to the Closing Date) to the
person asserting any losses, claims, damages and liabilities and judgements
caused by any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Offering Circular, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, if such material
misstatement or omission or alleged material misstatement or omission was cured
in the Final Offering Circular.

                                       27


          (b)  Each Initial Purchaser agrees, severally and not jointly with all
other Initial Purchasers, to indemnify and hold harmless the Company and the
Guarantors, and their respective directors and officers and each person, if any,
who controls (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) the Company or the Guarantors, to the same extent as the foregoing
indemnity from the Company and the Guarantors to the Initial Purchasers but only
with reference to information relating to such Initial Purchaser furnished in
writing to the Company by such Initial Purchaser expressly for use in the
Preliminary Offering Circular or the Offering Circular, which, for purposes of
this Section 8, the parties agree is limited to the information as set forth in
Section 6(a) of this Agreement.

          (c)  In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
indemnified party"), the indemnified party shall promptly notify the person
- ------------ -----
against whom such indemnity may be sought (the "indemnifying party") in writing
                                                ------------ -----
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that
in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 8(a) and 8(b), no Initial Purchaser shall be required to assume
the defense of such action pursuant to this Section 8(c), but may employ
separate counsel and participate in the defense thereof, but the fees and
expenses of such counsel, except as provided below, shall be at the expense of
such Initial Purchaser).  Any indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the indemnified
party unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party).
In any such case, the indemnifying party shall not, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of

                                       28


attorneys (in addition to any local counsel) for all indemnified parties and all
such fees and expenses shall be reimbursed as they are incurred. Such firm shall
be designated in writing by Credit Suisse First Boston Corporation, in the case
of the parties indemnified pursuant to Section 8(a), and by the Company, in the
case of parties indemnified pursuant to Section 8(b). The indemnifying party
shall indemnify and hold harmless the indemnified party from and against any and
all losses, claims, damages, liabilities and judgments by reason of any
settlement of any action (i) effected with its written consent or (ii) effected
without its written consent if the settlement is entered into more than twenty
business days after the indemnifying party shall have received a request from
the indemnified party for reimbursement for the fees and expenses of counsel (in
any case where such fees and expenses are at the expense of the indemnifying
party) and, prior to the date of such settlement, the indemnifying party shall
have failed to comply with such reimbursement request. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement or compromise of, or consent to the entry of judgment with respect
to, any pending or threatened action in respect of which the indemnified party
is or could have been a party and indemnity or contribution may be or could have
been sought hereunder by the indemnified party, unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability on claims that are or could have been the subject
matter of such action and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of the
indemnified party.

          (d)  To the extent the indemnification provided for in this Section 8
is unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Guarantors, on the one hand, and such Initial Purchaser on the
other hand from the offering of the Series A Notes or (ii) if the allocation
provided by clause 8(d)(i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause 8(d)(i) above but also the relative fault of the Company and the
Guarantors, on the one hand, and such Initial Purchaser, on the other hand, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Guarantors, on the one hand and such Initial Purchaser, on the other hand, shall
be deemed to be in the

                                       29


same proportion as the total net proceeds from the offering of the Series A
Notes (after underwriting discounts and commissions, but before deducting
expenses) received by the Company, and the total discounts and commissions
received by such Initial Purchaser bear to the total price to investors of the
Series A Notes. The relative fault of the Company and the Guarantors, on the one
hand, and such Initial Purchaser, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Guarantors, on the one
hand, or such Initial Purchaser, on the other hand, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.

          The Company and the Guarantors, and the Initial Purchasers agree that
it would not be just and equitable if contribution pursuant to this Section 8(d)
were determined by pro rata allocation (even if the Initial Purchasers were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to in the
immediately preceding paragraph.  The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or judgments
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses incurred
by such indemnified party in connection with investigating or defending any
matter, including any action, that could have given rise to such losses, claims,
damages, liabilities or judgments.  Notwithstanding the provisions of this
Section 8, no Initial Purchaser shall be required to contribute any amount in
excess of the amount by which the total discounts and commissions received by
such Initial Purchaser exceeds the amount of any damages which such Initial
Purchaser has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission.   No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.  The Initial Purchasers' obligations to contribute
pursuant to this Section 8(d) are several in proportion to the respective
principal amount of Series A Notes purchased by each of the Initial Purchasers
hereunder and not joint.

          (e)  The remedies provided for in this Section 8 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.

                                       30


          9.   Conditions of Initial Purchasers' Obligations.  The obligations
               ---------------------------------------------
of the Initial Purchasers to purchase the Series A Notes under this Agreement
are subject to the satisfaction of each of the following conditions:

          (a)  All the representations and warranties of the Company and the
Guarantors contained in this Agreement that are qualified as to materiality
shall be true and correct on the Closing Date and such representations and
warranties that are not so qualified shall be true and correct in all material
respects on the Closing Date, in each case with the same force and effect as if
made on and as of the Closing Date.

          (b)  On or after the date hereof, (i) there shall not have occurred
any downgrading, suspension or withdrawal of, nor shall any notice have been
given of any potential or intended downgrading, suspension or withdrawal of, or
of any review (or of any potential or intended review) for a possible change
that does not indicate the direction of the possible change in, any rating of
the Company or any Guarantor or any securities of the Company or any Guarantor
(including, without limitation, the placing of any of the foregoing ratings on
credit watch with negative or developing implications or under review with an
uncertain direction) by any "nationally recognized statistical rating
organization" as such term is defined for purposes of Rule 436(g)(2) under the
Act, (ii) there shall not have occurred any change, nor shall any notice have
been given of any potential or intended change, in the outlook for any rating of
the Company or any Guarantor or any securities of the Company or any Guarantor
by any such rating organization and (iii) no such rating organization shall have
given notice that it has assigned (or is considering assigning) a lower rating
to the Notes than that on which the Notes were marketed.

          (c)  Since the respective dates as of which information is given in
the Offering Circular other than as set forth in the Offering Circular
(exclusive of any amendments or supplements thereto subsequent to the date of
this Agreement), (i) there shall not have occurred any change or any development
involving a prospective change in the condition, financial or otherwise, or the
earnings, business, management or operations of the Company and its
subsidiaries, taken as a whole, (ii) there shall not have been any change or any
development involving a prospective change in the capital stock or in the long-
term debt of the Company or any of its subsidiaries and (iii) neither the
Company nor any of its subsidiaries shall have incurred any liability or
obligation, direct or contingent, the effect of which, in any such case
described in clause 9(c)(i), 9(c)(ii) or 9(c)(iii), in your judgment, is
material and adverse and, in your judgment, makes it impracticable to market the
Series A Notes on the terms and in the manner contemplated in the Offering
Circular.

                                       31


          (d)  You shall have received on the Closing Date (i) a certificate
dated the Closing Date, signed by the Chief Executive Officer and the Chief
Financial Officer of the Company and each of the Guarantors, confirming the
matters set forth in Sections 6(aa), 9(a) and 9(b) and stating that each of the
Company and the Guarantors has complied with all the agreements and satisfied
all of the conditions herein contained and required to be complied with or
satisfied on or prior to the Closing Date and (ii) a certificate dated the
Closing Date, signed by the Chief Financial Officer of the Company, stating that
the industry, statistical and market-related data included in the Offering
Circular has been reviewed by such person and, to the best of his knowledge,
subject to the risks and limitations described in the Preliminary Offering
Circular and the Offering Circular, is true and accurate in all material
respects and is based on or derived from sources which the Company believes to
be reliable and accurate, which certificate shall be in form and substance
satisfactory to counsel for the Initial Purchasers.

          (e)  You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Initial Purchasers), dated the Closing
Date, of Riordan & McKinzie, a Professional Law Corporation, counsel for the
Company and the Guarantors, to the effect that:

                    (i)  the Company has been duly organized, is validly
               existing and is in good standing under the laws of its
               jurisdiction of organization and has the corporate power and
               authority to carry on its business as described in the Offering
               Circular and to own, lease and operate its properties;

                    (ii) the Series A Notes have been duly authorized and, when
               executed and authenticated in accordance with the provisions of
               the Indenture and delivered to and paid for by the Initial
               Purchasers in accordance with the terms of this Agreement, will
               be entitled to the benefits of the Indenture and will be valid
               and binding obligations of the Company, enforceable in accordance
               with their terms except as (x) the enforceability thereof may be
               limited by bankruptcy, insolvency, reorganization, fraudulent
               conveyance, moratorium or similar laws affecting creditors'
               rights generally and (y) rights of acceleration and the
               availability of equitable remedies may be limited by equitable
               principles of

                                       32


               general applicability as applied by the court before which any
               proceeding therefor may be brought (regardless of whether such
               enforcement is considered in a proceeding at law or in equity);

                    (iii)     the Subsidiary Guarantees have been duly
               authorized and, when the Series A Notes are executed and
               authenticated in accordance with the provisions of the Indenture
               and delivered to and paid for by the Initial Purchasers in
               accordance with the terms of this Agreement, the Subsidiary
               Guarantees endorsed thereon will be valid and binding obligations
               of the Guarantors, enforceable in accordance with their terms
               except as (x) the enforceability thereof may be limited by
               bankruptcy, insolvency, reorganization, fraudulent conveyance,
               moratorium or similar laws affecting creditors' rights generally
               and (y) rights of acceleration and the availability of equitable
               remedies may be limited by equitable principles of general
               applicability as applied by the court before which any proceeding
               therefor may be brought (regardless of whether such enforcement
               is considered in a proceeding at law or in equity);

                    (iv)      the Indenture has been duly authorized, executed
               and delivered by the Company and each Guarantor and is a valid
               and binding agreement of the Company and each Guarantor,
               enforceable against the Company and each Guarantor in accordance
               with its terms except as (x) the enforceability thereof may be
               limited by bankruptcy, insolvency, reorganization, fraudulent
               conveyance, moratorium or similar laws affecting creditors'
               rights generally and (y) rights of acceleration and the
               availability of equitable remedies may be limited by equitable
               principles of general applicability as applied by the court
               before which any proceeding therefor may be brought (regardless
               of whether such enforcement is considered in a proceeding at law
               or in equity);

                    (v)       this Agreement has been duly authorized, executed
               and delivered by the Company and the Guarantors;

                                       33


                    (vi)      the Registration Rights Agreement has been duly
               authorized, executed and delivered by the Company and the
               Guarantors and is a valid and binding agreement of the Company
               and each Guarantor, enforceable against the Company and each
               Guarantor in accordance with its terms, except as (x) the
               enforceability thereof may be limited by bankruptcy, insolvency,
               reorganization, fraudulent conveyance, moratorium or similar laws
               affecting creditors' rights generally and (y) rights of
               acceleration and the availability of equitable remedies may be
               limited by equitable principles of general applicability as
               applied by the court before which any proceeding therefor may be
               brought (regardless of whether such enforcement is considered in
               a proceeding at law or in equity);

                    (vii)     the Series B Senior Notes have been duly
               authorized and, when executed and authenticated in accordance
               with the provisions of the Indenture and delivered in exchange
               for Series A Notes in accordance with the provisions of the
               Indenture and the Exchange Offer, will be entitled to the
               benefits of the Indenture and will be valid and binding
               obligations of the Company, enforceable in accordance with their
               terms except as (x) the enforceability thereof may be limited by
               bankruptcy, insolvency, reorganization, fraudulent conveyance,
               moratorium or similar laws affecting creditors' rights generally
               and (y) rights of acceleration and the availability of equitable
               remedies may be limited by equitable principles of general
               applicability as applied by the court before which any proceeding
               therefor may be brought (regardless of whether such enforcement
               is considered in a proceeding at law or in equity);

                    (vii)     when the Series B Notes are executed and
               authenticated in accordance with the provisions of the Indenture
               and delivered in exchange for Series A Notes in accordance with
               the Indenture and the Exchange Offer, the Guarantees endorsed
               thereon will be valid and binding obligations of the Guarantors,
               enforceable in accordance with

                                       34


               their terms except as (x) the enforceability thereof may be
               limited by bankruptcy, insolvency, reorganization, fraudulent
               conveyance, moratorium or similar laws affecting creditors'
               rights generally and (y) rights of acceleration and the
               availability of equitable remedies may be limited by equitable
               principles of general applicability as applied by the court
               before which any proceeding therefor may be brought (regardless
               of whether such enforcement is considered in a proceeding at law
               or in equity);

                    (ix)      the statements under the captions "Certain
               Relationships and Related Transactions," "Description of Debt,"
               "Description of Notes" and "Federal Income Tax Consequences to
               Non-U.S. Holders" in the Offering Circular, insofar as such
               statements constitute a summary of the legal matters, documents
               or proceedings referred to therein, fairly present in all
               material respects such legal matters, documents and proceedings;

                    (x)       the execution, delivery and performance of this
               Agreement and the other Operative Documents by the Company and
               each of the Guarantors, compliance by the Company and each of the
               Guarantors with all provisions hereof and thereof and the
               consummation of the transactions contemplated hereby and thereby
               will not (i) require any consent, approval, authorization or
               other order of, or qualification with, any court or governmental
               body or agency (except such as have been obtained or as may be
               required under the securities or Blue Sky laws of the various
               states and, with respect to the Registration Rights Agreement,
               the Securities Act and the Trust Indenture Act), (ii) conflict
               with or constitute a breach of any of the terms or provisions of,
               or a default under, (A) the charter or by-laws or other
               organizational documents of the Company or any of its
               subsidiaries or (B) the Credit Facilities, after receipt of any
               required consents, which consents have been obtained; the
               Indenture, dated June 12, 1996, between Renal Treatment Centers,
               Inc. and PNC Bank, National Association, including the first and
               second supplemental indentures thereto; the

                                       35


               Guaranty, dated March 31, 1998, made by the Company in favor of
               PNC Bank, National Association; or the Indenture, dated as of
               November 18, 1998, between the Company and United States Trust
               Company of New York except, with respect to this clause (ii)(B),
               for any breach or default which would not, singly or in the
               aggregate, have a Material Adverse Effect; or (iii) violate or
               conflict with those laws, rules and regulations which, in such
               counsel's experience, are normally applicable to transactions of
               the type contemplated by the Operative Documents;

                    (xi)      the Company is not and, upon the offering and sale
               of the Series A Notes and the application of the net proceeds
               thereof as described in the Offering Circular, will not be, an
               "investment company" as such term is defined in the Investment
               Company Act of 1940, as amended;

                    (xii)     the Indenture complies as to form in all material
               respects with the requirements of the TIA, and the rules and
               regulations of the Commission applicable to an indenture which is
               qualified thereunder. It is not necessary in connection with the
               offer, sale and delivery of the Series A Notes to the Initial
               Purchasers in the manner contemplated by this Agreement or in
               connection with the Exempt Resales to qualify the Indenture under
               the TIA;

                    (xiii)    no registration under the Act of the Series A
               Notes is required for the sale of the Series A Notes to the
               Initial Purchasers as contemplated by this Agreement or for the
               Exempt Resales assuming that (i) each Initial Purchaser is a QIB,
               or a Regulation S Purchaser, (ii) the accuracy of, and compliance
               with, the Initial Purchasers' representations and agreements
               contained in Section 7 of this Agreement, (iii) the accuracy of
               the representations of the Company and the Guarantors set forth
               in Sections 5(h) and 6(dd), (ee), (ff), (gg), (hh), (ii) and (jj)
               of this Agreement; and

                    (xiv)     no facts have come to such counsel's attention
               that have caused such counsel to believe that the Offering


                                       36


               Circular (including the documents incorporated by reference, as
               amended) as of its date and as of the Closing Date contained or
               contains an untrue statement of a material fact or omitted or
               omits to state a material fact necessary in order to make the
               statements therein, in light of the circumstances under which
               they were made, not misleading (it being understood such counsel
               expresses no opinion on the financial statements or other
               financial and statistical (other than industry) data included or
               incorporated by reference in the Offering Circular).

          The opinion of Riordan & McKinzie described in Section 9(e) above
shall be rendered to you at the request of the Company and the Guarantors and
shall so state therein.  In giving such opinion with respect to the matters
covered by Section 9(e)(xiv), counsel for the Company may state in their opinion
that, in its capacity as special counsel to the Company, such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the independent public accountants for the Company
and representatives of the Initial Purchasers at which the contents of the
Offering Circular and related matters were discussed and that such counsel does
not pass upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Offering Circular
(except as indicated in clause (ix) above) and has made no independent check or
verification thereof.

          In giving the enforceability opinions specified in clauses (ii)
through (iv) and (vi) through (viii) above, Riordan & McKinzie may assume that
the laws governing the subject documents are the same as California law with
respect to the contemplated transactions; provided, that such counsel must state
in its opinion that, without independent check or verification, it is not aware
of any exceptions to enforceability of the subject documents under the laws
governing the same that would be required to be stated in such counsel's opinion
if such counsel were opining as to the laws governing such documents but are not
so stated in such opinion due to the fact that such opinion is with respect to
California law.

          (f)  You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Initial Purchasers), dated the Closing
Date, of McDermott, Will & Emery, regulatory counsel for the Company and the
Guarantors, to the effect that:

                                       37


                    (i)    the statements under the captions "Business --
               Physician relationships," "--Sources of revenue" "--United States
               Attorney's inquiry," "--Laboratory payment reviews" and "--
               Government regulation," in the Offering Circular, insofar as such
               statements constitute a summary of the legal matters, documents
               or proceedings referred to therein, fairly present in all
               material respects such legal matters, documents and proceedings;

                  (ii)    after due inquiry, such counsel does not know of any
               legal or governmental proceedings pending to which the Company or
               any of its subsidiaries is a party or to which any of their
               respective property is subject which would be required to be
               described in the Offering Circular if the Offering Circular were
               a registration statement on Form S-1 under the Act that is not so
               described in the Offering Circular;

                  (iii)   such counsel has no reason to believe that, as of the
               date of the Offering Circular or as of the Closing Date, the
               "Business--Physician relationships," "--Sources of revenue," "--
               United States Attorney's inquiry," "--Laboratory payment reviews"
               and "--Government regulation" sections of the Offering Circular,
               as amended or supplemented, if applicable contain any untrue
               statement of a material fact or omit to state a material fact
               necessary in order to make the statements therein, in the light
               of the circumstances under which they were made, not misleading.

          The opinion of McDermott, Will & Emery described in Section 9(f) above
shall be rendered to you at the request of the Company and the Guarantors and
shall so state therein.  In giving such opinion with respect to the matters
covered by Section 9(f)(iii), regulatory counsel for the Company may state that
their opinion and belief are based upon their participation in the preparation
of the Offering Circular and any amendments or supplements thereto and review
and discussion of the contents thereof, but are without independent check or
verification except as specified.  Such counsel need express no opinion or
belief with respect to the financial statements or other financial data or
statistical data (other than industry data) included or incorporated by
reference in the Offering Circular.

                                       38


          (g)  You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Initial Purchasers), dated the Closing
Date, of Steven J. Udicious, General Counsel of the Company, to the effect that:

                    (i)    each of the Company's subsidiaries has been duly
               organized, is validly existing and is in good standing under the
               laws of its jurisdiction of organization and has the power and
               authority, corporate or other, to carry on its business as
               described in the Offering Circular and to own, lease and operate
               its properties;

                    (ii)   each of the Company and its subsidiaries is duly
               qualified and is in good standing as a foreign organization
               authorized to do business in each jurisdiction in which the
               nature of its business or its ownership or leasing of property
               requires such qualification, except where the failure to be so
               qualified could not reasonably be expected to have a Material
               Adverse Effect;

                    (iii)  all of the outstanding shares of capital stock of the
               Company have been duly authorized and validly issued and are
               fully paid, non-assessable and not subject to any preemptive or
               similar rights;

                    (iv)   the entities listed on Schedule C hereto are the only
               subsidiaries, direct or indirect, of the Company.  All of the
               outstanding shares of capital stock, or other ownership
               interests, of each of the Company's subsidiaries have been duly
               authorized and validly issued and are fully paid and non-
               assessable, and, except as set forth on Schedule C hereto, are
               owned by the Company, directly or indirectly through one or more
               subsidiaries, free and clear of any Lien, other than the pledge
               of certain of such shares, or other ownership interests, as
               applicable, to secure the obligations under the Credit
               Facilities;

                    (v)    the Series A Notes have been duly authorized and,
               when executed and authenticated in accordance with the provisions
               of the Indenture and delivered to and paid for by

                                       39


               the Initial Purchasers in accordance with the terms of this
               Agreement, will be entitled to the benefits of the Indenture and
               will be valid and binding obligations of the Company, enforceable
               in accordance with their terms except as (x) the enforceability
               thereof may be limited by bankruptcy, insolvency, reorganization,
               fraudulent conveyance, moratorium or similar laws affecting
               creditors' rights generally and (y) rights of acceleration and
               the availability of equitable remedies may be limited by
               equitable principles of general applicability as applied by the
               court before which any proceeding therefor may be brought
               (regardless of whether such enforcement is considered in a
               proceeding at law or in equity);

                    (vi)   the Subsidiary Guarantees have been duly authorized
               and, when the Series A Notes are executed and authenticated in
               accordance with the provisions of the Indenture and delivered to
               and paid for by the Initial Purchasers in accordance with the
               terms of this Agreement, the Subsidiary Guarantees endorsed
               thereon will be valid and binding obligations of the Guarantors,
               enforceable in accordance with their terms except as (x) the
               enforceability thereof may be limited by bankruptcy, insolvency,
               reorganization, fraudulent conveyance, moratorium or similar laws
               affecting creditors' rights generally and (y) rights of
               acceleration and the availability of equitable remedies may be
               limited by equitable principles of general applicability as
               applied by the court before which any proceeding therefor may be
               brought (regardless of whether such enforcement is considered in
               a proceeding at law or in equity);

                    (vii)  the Indenture has been duly authorized, executed and
               delivered by the Company and each Guarantor and is a valid and
               binding agreement of the Company and each Guarantor, enforceable
               against the Company and each Guarantor in accordance with its
               terms except as (x) the enforceability thereof may be limited by
               bankruptcy, insolvency, reorganization, fraudulent conveyance,
               moratorium or similar laws affecting creditors' rights generally

                                       40


               and (y) rights of acceleration and the availability of equitable
               remedies may be limited by equitable principles of general
               applicability as applied by the court before which any proceeding
               therefor may be brought (regardless of whether such enforcement
               is considered in a proceeding at law or in equity);

                    (viii) the Registration Rights Agreement has been duly
               authorized, executed and delivered by the Company and the
               Guarantors and is a valid and binding agreement of the Company
               and each Guarantor, enforceable against the Company and each
               Guarantor in accordance with its terms, except as (x) the
               enforceability thereof may be limited by bankruptcy, insolvency,
               reorganization, fraudulent conveyance, moratorium or similar laws
               affecting creditors' rights generally and (y) rights of
               acceleration and the availability of equitable remedies may be
               limited by equitable principles of general applicability as
               applied by the court before which any proceeding therefor may be
               brought (regardless of whether such enforcement is considered in
               a proceeding at law or in equity);

                    (ix)   the Series B Senior Notes have been duly authorized
               and, when executed and authenticated in accordance with the
               provisions of the Indenture and delivered in exchange for Series
               A Notes in accordance with the provisions of the Indenture and
               the Exchange Offer, will be entitled to the benefits of the
               Indenture and will be valid and binding obligations of the
               Company, enforceable in accordance with their terms except as (x)
               the enforceability thereof may be limited by bankruptcy,
               insolvency, reorganization, fraudulent conveyance, moratorium or
               similar laws affecting creditors' rights generally and (y) rights
               of acceleration and the availability of equitable remedies may be
               limited by equitable principles of general applicability as
               applied by the court before which any proceeding therefor may be
               brought (regardless of whether such enforcement is considered in
               a proceeding at law or in equity);

                                       41


                    (x)    when the Series B Notes are executed and
               authenticated in accordance with the provisions of the Indenture
               and delivered in exchange for Series A Notes in accordance with
               the Indenture and the Exchange Offer, the Guarantees endorsed
               thereon will be valid and binding obligations of the Guarantors,
               enforceable in accordance with their terms except as (x) the
               enforceability thereof may be limited by bankruptcy, insolvency,
               reorganization, fraudulent conveyance, moratorium or similar laws
               affecting creditors' rights generally and (y) rights of
               acceleration and the availability of equitable remedies may be
               limited by equitable principles of general applicability as
               applied by the court before which any proceeding therefor may be
               brought (regardless of whether such enforcement is considered in
               a proceeding at law or in equity);

                    (xi)   the statements under the captions "Business --
               Physician relationships," "--Sources of revenue," "--United
               States Attorney's inquiry," "--Laboratory payment reviews," "--
               Government regulation" and "--Legal proceedings" in the Offering
               Circular, insofar as such statements constitute a summary of the
               legal matters, documents or proceedings referred to therein,
               fairly present in all material respects such legal matters,
               documents and proceedings;

                    (xii)  neither the Company nor any of its subsidiaries is in
               violation of its respective charter or by-laws and, to the best
               of such counsel's knowledge after due inquiry, neither the
               Company nor any of its subsidiaries is in default in the
               performance of any obligation, agreement, covenant or condition
               contained in any indenture, loan agreement, mortgage, lease or
               other agreement or instrument to which the Company or any of its
               subsidiaries is a party or by which the Company or any of its
               subsidiaries or their respective property is bound, except to the
               extent such default, if any, could not reasonably be expected to
               have a Material Adverse Effect;

                    (xiii) the execution, delivery and performance of this
               Agreement and the other Operative Documents by the

                                       42


               Company and each of the Guarantors, compliance by the Company and
               each of the Guarantors with all provisions hereof and thereof and
               the consummation of the transactions contemplated hereby and
               thereby will not (i) conflict with or constitute a breach of any
               of the terms or provisions of, or a default under, any indenture,
               loan agreement, mortgage, lease or other agreement or instrument
               to which the Company or any of its subsidiaries is a party or by
               which the Company or any of its subsidiaries or their respective
               property is bound, after receipt of any required consents, which
               consents have been obtained, (ii) violate or conflict with any
               applicable law or any rule, regulation, judgment, order or decree
               of any court or any governmental body or agency having
               jurisdiction over the Company, any of its subsidiaries or their
               respective property, (iii) result in the imposition or creation
               of (or the obligation to create or impose) a Lien under, any
               agreement or instrument to which the Company or any of its
               subsidiaries is a party or by which the Company or any of its
               subsidiaries or their respective property is bound, or (iv)
               result in the termination, suspension or revocation of any
               Authorization (as defined below) of the Company or any of its
               subsidiaries or result in any other impairment of the rights of
               the holder of any such Authorization, except for any violation,
               conflict, breach, default, Lien, termination, suspension,
               revocation or impairment which would not, singly or in the
               aggregate, have a Material Adverse Effect;

                    (xiv)  after due inquiry, such counsel does not know of any
               legal or governmental proceedings pending to which the Company or
               any of its subsidiaries is a party or to which any of their
               respective property is subject which would be required to be
               described in the Offering Circular if the Offering Circular were
               a registration statement on Form  S-1 under the Act that is not
               so described in the Offering Circular;

                    (xv)   neither the Company nor any of its subsidiaries has
               violated any Environmental Law or any provisions of ERISA, any
               provisions of the Foreign Corrupt Practices Act or the rules and
               regulations promulgated thereunder, except for

                                       43


               such violations which, singly or in the aggregate, would not have
               a Material Adverse Effect;

                    (xvi)     to the best of such counsel's knowledge, each of
               the Company and its subsidiaries has such Authorizations of, and
               has made all filings with and notices to, all governmental or
               regulatory authorities and self-regulatory organizations and all
               courts and other tribunals, including without limitation, under
               any applicable Environmental Laws, as are necessary to own,
               lease, license and operate its respective properties and to
               conduct its business, except where the failure to have any such
               Authorization or to make any such filing or notice would not,
               singly or in the aggregate, have a Material Adverse Effect. Each
               such Authorization is valid and in full force and effect and each
               of the Company and its subsidiaries is in compliance with all the
               terms and conditions thereof and with the rules and regulations
               of the authorities and governing bodies having jurisdiction with
               respect thereto; and, except as set forth in the Offering
               Circular, no event has occurred (including, without limitation,
               the receipt of any notice from any authority or governing body)
               which allows or, after notice or lapse of time or both, would
               allow, revocation, suspension or termination of any such
               Authorization or results or, after notice or lapse of time or
               both, would result in any other impairment of the rights of the
               holder of any such Authorization; and such Authorizations contain
               no restrictions that are burdensome to the Company or any of its
               subsidiaries; except where such failure to be valid and in full
               force and effect or to be in compliance, the occurrence of any
               such event or the presence of any such restriction would not,
               singly or in the aggregate, have a Material Adverse Effect;

                    (xvii)    to the best of such counsel's knowledge after due
               inquiry, no person has the right, under any contract, agreement
               or understanding between any such person and the Company or any
               Guarantor, in connection with, or as a result of, the
               transactions contemplated hereby or by the Registration Rights
               Agreement, to require the Company or such Guarantor to file a
               registration statement under the Act with respect to

                                       44


               any debt securities of the Company or such Guarantor or to
               require the Company or such Guarantor to include any securities
               of the Company or any Guarantor with the Notes and Subsidiary
               Guarantees registered pursuant to any Registration Statement,
               other than the Registration Rights Agreement; and

                    (xviii)   no facts have come to such counsel's attention
               that have caused such counsel to believe that the Offering
               Circular (including the documents incorporated by reference, as
               amended) as of its date and as of the Closing Date contained or
               contains an untrue statement of a material fact or omitted or
               omits to state a material fact necessary in order to make the
               statements therein, in light of the circumstances under which
               they were made, not misleading (it being understood such counsel
               expresses no opinion on the financial statements or other
               financial and statistical (other than industry) data included or
               incorporated by reference in the Offering Circular).

          The opinion of the General Counsel described in Section 9(g) above
shall be rendered to you at the request of the Company and the Guarantors and
shall so state therein.  In giving such opinion with respect to the matters
covered by Section 9(g)(xviii), the General Counsel may state in his opinion
that, in his capacity as General Counsel, he has participated in conferences
with officers and other representatives of the Company, representatives of the
independent public accountants for the Company and representatives of the
Initial Purchasers at which the contents of the Offering Circular and related
matters were discussed and that such counsel does not pass upon and does not
assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Offering Circular (except as indicated in clause
(xi) above) and has made no independent check or verification thereof.

          In giving the enforceability opinions specified in clauses (v) through
(x) above, the General Counsel may assume that the laws governing the subject
documents are the same as Pennsylvania law with respect to the contemplated
transactions; provided, that such counsel must state in his opinion that,
without independent check or verification, he is not aware of any exceptions to
enforceability of the subject documents under the laws governing the same that
would be required

                                       45


to be stated in such counsel's opinion if such counsel were opining as to the
laws governing such documents but are not so stated in such opinion due to the
fact that such opinion is with respect to Pennsylvania law.

          (h)  The Initial Purchasers shall have received on the Closing Date an
opinion, dated the Closing Date, of Skadden, Arps, Slate, Meagher & Flom LLP,
counsel for the Initial Purchasers, in form and substance reasonably
satisfactory to the Initial Purchasers.

          (i)  The Initial Purchasers shall have received, at the time this
Agreement is executed and at the Closing Date, letters dated the date hereof or
the Closing Date, as the case may be, in form and substance reasonably
satisfactory to the Initial Purchasers from each of KPMG LLP and
PricewaterhouseCoopers LLP, independent public accountants, containing the
information and statements of the type ordinarily included in accountants'
"comfort letters" to the Initial Purchasers with respect to the financial
statements and certain financial information contained in the Offering Circular.

          (j)  The Series A Notes shall have been approved by the NASD for
trading and duly listed in PORTAL.

          (k)  The Initial Purchasers shall have received a counterpart,
conformed as executed, of the Indenture which shall have been entered into by
the Company, the Guarantors and the Trustee.

          (l)  The Company and the Guarantors shall have executed the
Registration Rights Agreement and the Initial Purchasers shall have received an
original copy thereof, duly executed by the Company and the Guarantors.

          (m)  Neither the Company nor the Guarantors shall have failed at or
prior to the Closing Date to perform or comply with any of the agreements herein
contained and required to be performed or complied with by the Company or the
Guarantors, as the case may be, at or prior to the Closing Date.

          10.  Effectiveness of Agreement and Termination.  This Agreement shall
               ------------------------------------------
become effective upon the execution and delivery of this Agreement by the
parties hereto.

                                       46


          This Agreement may be terminated at any time on or prior to the
Closing Date by the Initial Purchasers by written notice to the Company if any
of the following has occurred:  (i) any outbreak or escalation of hostilities or
other national or international calamity or crisis or change in economic
conditions or in the financial markets of the United States or elsewhere that,
in the Initial Purchasers' judgment, is material and adverse and, in the Initial
Purchasers' judgment, makes it impracticable to market the Series A Notes on the
terms and in the manner contemplated in the Offering Circular, (ii) the
suspension or material limitation of trading in securities or other instruments
on the New York Stock Exchange, the American Stock Exchange, the Chicago Board
of Options Exchange, the Chicago Mercantile Exchange, the Chicago Board of Trade
or the Nasdaq National Market or limitation on prices for securities or other
instruments on any such exchange or the Nasdaq National Market, (iii) the
suspension of trading of any securities of the Company or any Guarantor on any
exchange or in the over-the-counter market, (iv) the enactment, publication,
decree or other promulgation of any federal or state statute, regulation, rule
or order of any court or other governmental authority which in your opinion
materially and adversely affects, or will materially and adversely affect, the
business, prospects, financial condition or results of operations of the Company
and its subsidiaries, taken as a whole, (v) the declaration of a banking
moratorium by either federal or New York State authorities or (vi) the taking of
any action by any federal, state or local government or agency in respect of its
monetary or fiscal affairs which in your opinion has a material adverse effect
on the financial markets in the United States.

          If on the Closing Date any one or more of the Initial Purchasers shall
fail or refuse to purchase the Series A Notes which it or they have agreed to
purchase hereunder on such date and the aggregate principal amount of the Series
A Notes which such defaulting Initial Purchaser or Initial Purchasers, as the
case may be, agreed but failed or refused to purchase is not more than one-tenth
of the aggregate principal amount of the Series A Notes to be purchased on such
date by all Initial Purchasers, each non-defaulting Initial Purchaser shall be
obligated severally, in the proportion which the principal amount of the Series
A Notes set forth opposite its name in Schedule A bears to the aggregate
principal amount of the Series A Notes which all the non-defaulting Initial
Purchasers, as the case may be, have agreed to purchase, or in such other
proportion as you may specify, to purchase the Series A Notes which such
defaulting Initial Purchaser or Initial Purchasers, as the case may be, agreed
but failed or refused to purchase on such date; provided that in no event shall
the aggregate principal amount of the Series A Notes which any Initial Purchaser
has agreed to purchase pursuant to Section 2 hereof be increased pursuant

                                       47


to this Section 10 by an amount in excess of one-ninth of such principal amount
of the Series A Notes without the written consent of such Initial Purchaser. If
on the Closing Date any Initial Purchaser or Initial Purchasers shall fail or
refuse to purchase the Series A Notes and the aggregate principal amount of the
Series A Notes with respect to which such default occurs is more than one-tenth
of the aggregate principal amount of the Series A Notes to be purchased by all
Initial Purchasers and arrangements satisfactory to the Initial Purchasers and
the Company for purchase of such the Series A Notes are not made within 48 hours
after such default, this Agreement will terminate without liability on the part
of any non-defaulting Initial Purchaser and the Company. In any such case which
does not result in termination of this Agreement, either you or the Company
shall have the right to postpone the Closing Date, but in no event for longer
than seven days, in order that the required changes, if any, in the Offering
Circular or any other documents or arrangements may be effected. Any action
taken under this paragraph shall not relieve any defaulting Initial Purchaser
from liability in respect of any default of any such Initial Purchaser under
this Agreement.

          11.  Miscellaneous.  Notices given pursuant to any provision of this
               -------------
Agreement shall be addressed as follows:  (i) if to the Company or any
Guarantor, to 21250 Hawthorne Boulevard, Suite 800, Torrance, CA  90503, (310)
792-2600 and (ii) if to the Initial Purchasers, c/o Credit Suisse First Boston
Corporation, 11 Madison Avenue, New York, New York 11010, Attention:  Syndicate
Department, or in any case to such other address as the person to be notified
may have requested in writing.

          The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company, the Guarantors and the Initial
Purchasers set forth in or made pursuant to this Agreement shall remain
operative and in full force and effect, and will survive delivery of and payment
for the Series A Notes, regardless of (i) any investigation, or statement as to
the results thereof, made by or on behalf of the Initial Purchasers, the
officers or directors of the Initial Purchasers, any person controlling the
Initial Purchasers, the Company, any Guarantor, the officers or directors of the
Company or any Guarantor, or any person controlling the Company or any
Guarantor, (ii) acceptance of the Series A Notes and payment for them hereunder
and (iii) termination of this Agreement.

          If for any reason the Series A Notes are not delivered by or on behalf
of the Company as provided herein (other than as a result of any termination of
this Agreement pursuant to Section 10), the Company and each Guarantor, jointly
and

                                       48


severally, agree to reimburse the Initial Purchasers for all out-of-pocket
expenses (including the fees and disbursements of counsel) incurred by them.
Notwithstanding any termination of this Agreement, the Company shall be liable
for all expenses which it has agreed to pay pursuant to Section 5(i) hereof.
The Company and each Guarantor also agree, jointly and severally, to reimburse
the Initial Purchasers and its officers, directors and each person, if any, who
controls such Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act for any and all reasonable fees and expenses
(including without limitation the reasonable fees and expenses of counsel)
incurred by them in connection with enforcing their rights under this Agreement
(including without limitation its rights under Section 8).

          Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the Guarantors,
the Initial Purchasers, the Initial Purchasers' directors and officers, any
controlling persons referred to herein, the directors of the Company and the
Guarantors and their respective successors and assigns, all as and to the extent
provided in this Agreement, and no other person shall acquire or have any right
under or by virtue of this Agreement.  The term "successors and assigns" shall
not include a purchaser of any of the Series A Notes from the Initial Purchasers
merely because of such purchase.  Notwithstanding anything herein to the
contrary, other than with respect to assignments to affiliates of the Initial
Purchasers, no Initial Purchaser may assign its rights hereunder prior to
completion of the distribution of the Notes without the prior written consent of
the Company, which consent shall not be unreasonably withheld.

                                       49


          This Agreement shall be governed and construed in accordance with the
laws of the State of New York, including, without limitation, Section 5-1401 of
the New York General Obligations Law.

          This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.

          Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Guarantors and the Initial Purchasers.


                          Very truly yours,

                          DAVITA INC.


                          By: ---------------------------
                                   Steven Udicious
                                   Vice President, General Counsel and Secretary


                                      S-1


                    GUARANTORS
                    ----------

                    CARROLL COUNTY DIALYSIS FACILITY, INC.

                    CONTINENTAL DIALYSIS CENTER, INC.

                    CONTINENTAL DIALYSIS CENTER OF SPRINGFIELD-FAIRFAX, INC.

                    DIALYSIS SPECIALISTS OF DALLAS, INC.

                    EAST END DIALYSIS CENTER, INC.

                    ELBERTON DIALYSIS FACILITY, INC.

                    FLAMINGO PARK KIDNEY CENTER, INC.

                    LINCOLN PARK DIALYSIS SERVICES, INC.

                    MASON-DIXON DIALYSIS FACILITIES, INC.

                    OPEN ACCESS SONOGRAPHY, INC.

                    PENINSULA DIALYSIS CENTER, INC.

                    RENAL TREATMENT CENTERS, INC.

                    RENAL TREATMENT CENTERS-CALIFORNIA, INC.

                    RENAL TREATMENT CENTERS-HAWAII, INC.

                    RENAL TREATMENT CENTERS-ILLINOIS, INC.

                    RENAL TREATMENT CENTERS-MID-ATLANTIC, INC.

                    RENAL TREATMENT CENTERS-NORTHEAST, INC.

                                      S-2


                    RENAL TREATMENT CENTERS-SOUTHEAST, INC.

                    RENAL TREATMENT CENTERS-WEST, INC.

                    RTC-TEXAS ACQUISITION, INC.

                    RTC TN, INC.

                    TOTAL ACUTE KIDNEY CARE, INC.

                    TOTAL RENAL CARE, INC.

                    TOTAL RENAL CARE OF COLORADO, INC.

                    TOTAL RENAL LABORATORIES, INC.

                    TOTAL RENAL RESEARCH, INC.

                    TOTAL RENAL SUPPORT SERVICES, INC.

                    TRC OF NEW YORK, INC.

                    TRI-CITY DIALYSIS CENTER, INC.

                    By:___________________________________________
                         Steven Udicious
                         Vice President, General Counsel and Secretary of each
                         of the above


                    TRC WEST, INC.

                    By:________________________________________
                         David Manheim
                         Vice President and Secretary

                                      S-3


                    RTC HOLDINGS, INC.

                    By:__________________________________
                         Steven J. Udicious
                         President


                    BEVERLY HILLS DIALYSIS PARTNERSHIP

                         By: TOTAL RENAL CARE, INC.
                         Its: General Partner


                              By:___________________________________
                                    Steven Udicious
                                    Vice President, General Counsel and
                                    Secretary


                    CRESCENT CITY DIALYSIS PARTNERSHIP

                         By: TOTAL RENAL CARE, INC.
                         Its: General Partner


                              By:___________________________________
                                    Steven Udicious
                                    Vice President, General Counsel and
                                    Secretary

                                      S-4


                    HOUSTON KIDNEY CENTER/TOTAL RENAL CARE INTEGRATED SERVICE
                    NETWORK LIMITED PARTNERSHIP

                         By: TOTAL RENAL CARE, INC.
                         Its: General Partner


                              By:___________________________________
                                    Steven Udicious
                                    Vice President, General Counsel and
                                    Secretary


                    KENNER REGIONAL DIALYSIS PARTNERSHIP

                         By: TOTAL RENAL CARE, INC.
                         Its: General Partner


                              By:___________________________________
                                    Steven Udicious
                                    Vice President, General Counsel and
                                    Secretary


                    SUNRISE DIALYSIS PARTNERSHIP


                         By: TOTAL RENAL CARE, INC.
                         Its: General Partner


                              By:___________________________________
                                    Steven Udicious
                                    Vice President, General Counsel and
                                    Secretary

                                      S-5


                    TOTAL RENAL CARE/PERALTA RENAL CENTER PARTNERSHIP

                         By: TOTAL RENAL CARE, INC.
                         Its: General Partner


                              By:___________________________________
                                    Steven Udicious
                                    Vice President, General Counsel and
                                    Secretary


                    TOTAL RENAL CARE/PIEDMONT DIALYSIS PARTNERSHIP

                         By: TOTAL RENAL CARE, INC.
                         Its: General Partner


                              By:___________________________________
                                    Steven Udicious
                                    Vice President, General Counsel and
                                    Secretary


                    TOTAL RENAL CARE TEXAS LIMITED PARTNERSHIP

                         By: TOTAL RENAL CARE, INC.
                         Its: General Partner


                              By:___________________________________
                                    Steven Udicious
                                    Vice President, General Counsel and
                                    Secretary

                                      S-6


                    TRC-INDIANA, LLC

                         By: TOTAL RENAL CARE, INC.
                         Its: Manager


                              By:___________________________________
                                    Steven Udicious
                                    Vice President, General Counsel and
                                    Secretary


                    TOTAL RENAL CARE OF UTAH, L.L.C.

                         By: TOTAL RENAL CARE, INC.


                              By:___________________________________
                                    Steven Udicious
                                    Vice President, General Counsel and
                                    Secretary

                                      S-7


INITIAL PURCHASERS
- ------------------

CREDIT SUISSE FIRST BOSTON CORPORATION


By:_______________________________
Name:
Title:


BANC OF AMERICA SECURITIES LLC


By:_______________________________
Name:
Title:


SUNTRUST EQUITABLE SECURITIES CORPORATION


By:_______________________________
Name:
Title:


BNY CAPITAL MARKETS, INC.


By:_______________________________
Name:
Title:


SCOTIA CAPITAL (USA) INC.


By:_______________________________
Name:
Title:

                                      S-8


                                  SCHEDULE A

                              Initial Purchasers




                                                              Principal
Initial Purchasers:                                        Amount of Notes
- -------------------                                        ---------------

Credit Suisse First Boston Corporation                    $      90,000,000

Banc of America Securities LLC                            $      90,000,000

SunTrust Equitable Securities Corporation                 $      22,500,000

BNY Capital Markets, Inc.                                 $      11,250,000

Scotia Capital (USA) Inc.                                 $      11,250,000

                                                          -----------------
     Total                                                $     225,000,000

                                     A-1


                                  SCHEDULE B

                                  Guarantors

Beverly Hills Dialysis Partnership
Carroll County Dialysis Facility, Inc.
Continental Dialysis Center, Inc.
Continental Dialysis Center of Springfield-Fairfax, Inc.
Crescent City Dialysis Partnership
Dialysis Specialists of Dallas, Inc.
East End Dialysis Center, Inc.
Elberton Dialysis Center, Inc.
Flamingo Park Kidney Center, Inc.
Houston Kidney Center/Total Renal Care Integrated Service Network LP
Kenner Regional Dialysis Partnership
Lincoln Park Dialysis Services, Inc.
Mason-Dixon Dialysis Facilities, Inc.
Open Access Sonography, Inc.
Peninsula Dialysis Center, Inc.
Renal Treatment Centers, Inc.
Renal Treatment Centers - California
Renal Treatment Centers - Hawaii, Inc.
Renal Treatment Centers - Illinois, Inc.
Renal Treatment Centers - Mid-Atlantic, Inc.
Renal Treatment Centers - Northeast, Inc.
Renal Treatment Centers - Southeast, Inc.
Renal Treatment Centers - West, Inc.
RTC Holdings, Inc.
RTC - Texas Acquisition, Inc.
RTC TN, Inc.
Sunrise Dialysis Partnership
Total Acute Kidney Care, Inc.
Total Renal Care, Inc.
Total Renal Care of Colorado, Inc.
Total Renal Care/Peralta Renal Center Partnership
Total Renal Care/Piedmont Dialysis Center Partnership
Total Renal Care Texas Limited Partnership
Total Renal Care of Utah, L.L.C.
TRC of New York, Inc.

                                      B-1


TRC West, Inc.
Total Renal Laboratories, Inc.
Total Renal Research, Inc.
Total Renal Support Services, Inc.
TRC - Indiana LLC
Tri-City Dialysis Center, Inc.

                                      B-2


                                  SCHEDULE C



                          SUBSIDIARIES OF DAVITA INC.




- ----------------------------------------------------------------------------------------------------------
                                                                               Percentage Owned by
                   Subsidiary                                               DaVita and its Subsidiaries
- ----------------------------------------------------------------------------------------------------------
                                                                         
Astro, Hobby, West Mt., Renal Care Ltd. Partnership                                     98.5%
- ----------------------------------------------------------------------------------------------------------
Bay Area Dialysis Partnership                                                          66.67%
- ----------------------------------------------------------------------------------------------------------
Beverly Hills Dialysis Partnership                                                     100.0%
- ----------------------------------------------------------------------------------------------------------
Burbank Dialysis Partnership                                                            50.1%
- ----------------------------------------------------------------------------------------------------------
Capital Dialysis Partnership                                                            20.0%
- ----------------------------------------------------------------------------------------------------------
Carroll County Dialysis Facility, Inc.                                                 100.0%
- ----------------------------------------------------------------------------------------------------------
Carroll County Dialysis Facility Limited Partnership                                    66.7%
- ----------------------------------------------------------------------------------------------------------
Continental Dialysis Center, Inc.                                                      100.0%
- ----------------------------------------------------------------------------------------------------------
Continental Dialysis Center of Springfield-Fairfax, Inc.                               100.0%
- ----------------------------------------------------------------------------------------------------------
Crescent City Dialysis Partnership                                                     100.0%
- ----------------------------------------------------------------------------------------------------------
Dialysis Specialists of Dallas, Inc.                                                   100.0%
- ----------------------------------------------------------------------------------------------------------
Dialysis Treatment Centers of Macon, LLC                                                20.0%
- ----------------------------------------------------------------------------------------------------------
East End Dialysis Center, Inc.                                                         100.0%
- ----------------------------------------------------------------------------------------------------------
Eastmont Partnership                                                                   60.78%
- ----------------------------------------------------------------------------------------------------------
Eaton Canyon Dialysis Partnership                                                       87.5%
- ----------------------------------------------------------------------------------------------------------
Elberton Dialysis Center, Inc.                                                         100.0%
- ----------------------------------------------------------------------------------------------------------
Flamingo Park Kidney Center, Inc.                                                      100.0%
- ----------------------------------------------------------------------------------------------------------
Garey Dialysis Center Partnership                                                       60.0%
- ----------------------------------------------------------------------------------------------------------


                                      C-1



- ----------------------------------------------------------------------------------------------------------
                                                                                    
Guam Renal Care Partnership                                                            100.0%
- ----------------------------------------------------------------------------------------------------------
Houston Kidney Center/Total Renal Care Integrated Service Network LP                   100.0%
- ----------------------------------------------------------------------------------------------------------
Hutchinson Dialysis, L.L.C.                                                             50.0%
- ----------------------------------------------------------------------------------------------------------
Kenner Regional Dialysis Partnership                                                   100.0%
- ----------------------------------------------------------------------------------------------------------
Lincoln Park Dialysis Services, Inc.                                                   100.0%
- ----------------------------------------------------------------------------------------------------------
Los Angeles Dialysis Center                                                            64.62%
- ----------------------------------------------------------------------------------------------------------
Mason-Dixon Dialysis Facilities, Inc.                                                  100.0%
- ----------------------------------------------------------------------------------------------------------
MD Investments, LLC                                                                     50.1%
- ----------------------------------------------------------------------------------------------------------
Moncrief Dialysis Center/Total Renal Care, LP                                           30.0%
- ----------------------------------------------------------------------------------------------------------
Open Access Sonography, Inc.                                                           100.0%
- ----------------------------------------------------------------------------------------------------------
Pacific Coast Dialysis Center                                                           93.0%
- ----------------------------------------------------------------------------------------------------------
Pacific Dialysis Partnership                                                           100.0%
- ----------------------------------------------------------------------------------------------------------
Peninsula Dialysis Center, Inc.                                                        100.0%
- ----------------------------------------------------------------------------------------------------------
Renal Treatment Centers, Inc.                                                          100.0%
- ----------------------------------------------------------------------------------------------------------
Renal Treatment Centers - California                                                   100.0%
- ----------------------------------------------------------------------------------------------------------
Renal Treatment Centers - Hawaii, Inc.                                                 100.0%
- ----------------------------------------------------------------------------------------------------------
Renal Treatment Centers - Illinois, Inc.                                               100.0%
- ----------------------------------------------------------------------------------------------------------
Renal Treatment Centers - Mid-Atlantic, Inc.                                           100.0%
- ----------------------------------------------------------------------------------------------------------
Renal Treatment Centers - Northeast, Inc.                                              100.0%
- ----------------------------------------------------------------------------------------------------------
Renal Treatment Centers - Southeast, Inc.                                              100.0%
- ----------------------------------------------------------------------------------------------------------
Renal Treatment Centers - West, Inc.                                                   100.0%
- ----------------------------------------------------------------------------------------------------------
RTC Holdings, Inc.                                                                     100.0%
- ----------------------------------------------------------------------------------------------------------
RTC - Texas Acquisition, Inc.                                                          100.0%
- ----------------------------------------------------------------------------------------------------------
RTC TN, Inc.                                                                           100.0%
- ----------------------------------------------------------------------------------------------------------


                                      C-2




- ----------------------------------------------------------------------------------------------------------
                                                                                    
San Gabriel Valley Partnership                                                          75.0%
- ----------------------------------------------------------------------------------------------------------
Sunrise Dialysis Partnership                                                           100.0%
- ----------------------------------------------------------------------------------------------------------
Timpanogos, L.L.C (formerly Total Renal Care Provo, LLC)                                51.0%
- ----------------------------------------------------------------------------------------------------------
Total Acute Kidney Care, Inc.                                                          100.0%
- ----------------------------------------------------------------------------------------------------------
Total Renal Care, Inc.                                                                 100.0%
- ----------------------------------------------------------------------------------------------------------
Total Renal Care of Colorado, Inc.                                                     100.0%
- ----------------------------------------------------------------------------------------------------------
Total Renal Care/Crystal River Dialysis, L.C.                                           33.3%
- ----------------------------------------------------------------------------------------------------------
Total Renal Care Hollywood Partnership                                                  65.0%
- ----------------------------------------------------------------------------------------------------------
Total Renal Care North Carolina, LLC                                                    85.0%
- ----------------------------------------------------------------------------------------------------------
Total Renal Care/Peralta Renal Center Partnership                                      100.0%
- ----------------------------------------------------------------------------------------------------------
Total Renal Care Petersburg, LLC                                                        25.0%
- ----------------------------------------------------------------------------------------------------------
Total Renal Care/Piedmont Dialysis Center Partnership                                  100.0%
- ----------------------------------------------------------------------------------------------------------
Total Renal Care Puerto Rico, Inc.                                                     100.0%
- ----------------------------------------------------------------------------------------------------------
Total Renal Care Texas Limited Partnership                                             100.0%
- ----------------------------------------------------------------------------------------------------------
Total Renal Care of Utah, L.L.C.                                                       100.0%
- ----------------------------------------------------------------------------------------------------------
TRC of New York, Inc.                                                                  100.0%
- ----------------------------------------------------------------------------------------------------------
TRC West, Inc.                                                                         100.0%
- ----------------------------------------------------------------------------------------------------------
Total Renal Laboratories, Inc.                                                         100.0%
- ----------------------------------------------------------------------------------------------------------
Total Renal Research, Inc.                                                             100.0%
- ----------------------------------------------------------------------------------------------------------
Total Renal Support Services, Inc.                                                     100.0%
- ----------------------------------------------------------------------------------------------------------
Total Renal Support Services of North Carolina, LLC                                     85.0%
- ----------------------------------------------------------------------------------------------------------
TRC Dyker Heights, L.P.                                                                 70.0%
- ----------------------------------------------------------------------------------------------------------
TRC El Paso Limited Partnership                                                         50.1%
- ----------------------------------------------------------------------------------------------------------
TRC Four Corners Dialysis Clinics, LLC                                                  51.0%
- ----------------------------------------------------------------------------------------------------------


                                      C-3



- ----------------------------------------------------------------------------------------------------------
                                                                                    
TRC - Georgetown Regional Dialysis LLC                                                  80.0%
- ----------------------------------------------------------------------------------------------------------
TRC - Indiana LLC                                                                      100.0%
- ----------------------------------------------------------------------------------------------------------
TRC - Petersburg, LLC                                                                   25.0%
- ----------------------------------------------------------------------------------------------------------
Tri-City Dialysis Center, Inc.                                                         100.0%
- ----------------------------------------------------------------------------------------------------------
University Park Dialysis Partnership                                                    50.0%
- ----------------------------------------------------------------------------------------------------------
Wilshire Dialysis Partnership                                                           50.0%
- ----------------------------------------------------------------------------------------------------------


                                      C-4


                                   EXHIBIT A

                     Form of Registration Rights Agreement

EX-4.7

                                                                     Exhibit 4.7

                                   DaVita Inc.
                                   as Issuer,

                     THE SUBSIDIARY GUARANTORS NAMED HEREIN

                                  $225,000,000

                        9 1/4 % Senior Subordinated Notes
                               due April 15, 2011

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


                                    INDENTURE

                           Dated as of April 11, 2001


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



                               U.S. TRUST COMPANY
                         OF TEXAS, NATIONAL ASSOCIATION

                                   as Trustee


                               TABLE OF CONTENTS



                                                                                               Page
                                                                                               ----
                                                                                            
                                                 ARTICLE I
                                DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.1.      DEFINITIONS..................................................................     1
SECTION 1.2.      INCORPORATION BY REFERENCE OF TIA............................................    27
SECTION 1.3.      RULES OF CONSTRUCTION........................................................    27

                                                 ARTICLE II
                                               THE SECURITIES

SECTION 2.1.      FORM AND DATING..............................................................    28
SECTION 2.2.      EXECUTION AND AUTHENTICATION.................................................    29
SECTION 2.3.      REGISTRAR, PAYING AGENT AND DEPOSITARY.......................................    29
SECTION 2.4.      PAYING AGENT TO HOLD MONEY IN TRUST..........................................    30
SECTION 2.5.      HOLDER LISTS.................................................................    30
SECTION 2.6.      TRANSFER AND EXCHANGE........................................................    30
SECTION 2.7.      REPLACEMENT NOTES............................................................    45
SECTION 2.8.      OUTSTANDING NOTES............................................................    45
SECTION 2.9.      TREASURY NOTES...............................................................    45
SECTION 2.10.     TEMPORARY NOTES..............................................................    46
SECTION 2.11.     CANCELLATION.................................................................    46
SECTION 2.12.     DEFAULTED INTEREST...........................................................    46
SECTION 2.13.     CUSIP NUMBERS................................................................    47

                                                ARTICLE III
                                                REDEMPTION

SECTION 3.1.      OPTIONAL REDEMPTION..........................................................    47
SECTION 3.2.      NOTICES TO TRUSTEE...........................................................    48
SECTION 3.3.      SELECTION OF NOTES TO BE REDEEMED............................................    49
SECTION 3.4.      NOTICE OF REDEMPTION.........................................................    49
SECTION 3.5.      EFFECT OF NOTICE OF REDEMPTION...............................................    50
SECTION 3.6.      DEPOSIT OF REDEMPTION PRICE..................................................    50
SECTION 3.7.      NOTES REDEEMED IN PART.......................................................    51
SECTION 3.8.      NO MANDATORY REDEMPTION......................................................    51


                                       i




                                                                                                   Page
                                                                                                   ----
                                                                                                
                                              ARTICLE IV
                                               COVENANTS

SECTION 4.1.      PAYMENT OF NOTES...............................................................    51
SECTION 4.2.      MAINTENANCE OF OFFICE OR AGENCY................................................    52
SECTION 4.3.      LIMITATION ON RESTRICTED PAYMENTS..............................................    52
SECTION 4.4.      CORPORATE AND PARTNERSHIP EXISTENCE............................................    54
SECTION 4.5.      PAYMENT OF TAXES AND OTHER CLAIMS..............................................    54
SECTION 4.6.      MAINTENANCE OF PROPERTIES AND INSURANCE........................................    55
SECTION 4.7.      COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT......................................    55
SECTION 4.8.      REPORTS........................................................................    56
SECTION 4.9.      LIMITATION ON STATUS AS INVESTMENT COMPANY.....................................    56
SECTION 4.10.     LIMITATION ON TRANSACTIONS WITH AFFILIATES.....................................    56
SECTION 4.11.     LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS ...........................    57
SECTION 4.12.     LIMITATIONS ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS
                  AFFECTING SUBSIDIARIES.........................................................    59
SECTION 4.13.     LIMITATIONS ON LAYERING INDEBTEDNESS...........................................    60
SECTION 4.14.     LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK.............................    61
SECTION 4.15.     WAIVER OF STAY, EXTENSION OR USURY LAWS........................................    66
SECTION 4.16.     LIMITATION ON LIENS SECURING INDEBTEDNESS......................................    67
SECTION 4.17.     LIMITATIONS ON LINES OF BUSINESS...............................................    67

                                               ARTICLE V
                                         SUCCESSOR CORPORATION

SECTION 5.1.      LIMITATION ON MERGER, SALE OR CONSOLIDATION....................................    67
SECTION 5.2.      SUCCESSOR CORPORATION SUBSTITUTED..............................................    68

                                              ARTICLE VI
                                    EVENTS OF DEFAULT AND REMEDIES

SECTION 6.1.      EVENTS OF DEFAULT..............................................................    68


                                      ii




                                                                                                   Page
                                                                                                   ----
                                                                                                
SECTION 6.2.      ACCELERATION OF MATURITY DATE; RESCISSION AND ANNULMENT.......................     70
SECTION 6.3.      COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE...............     71
SECTION 6.4.      TRUSTEE MAY FILE PROOFS OF CLAIM..............................................     71
SECTION 6.5.      TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES........................     72
SECTION 6.6.      PRIORITIES....................................................................     72
SECTION 6.7.      LIMITATION ON SUITS...........................................................     73
SECTION 6.8.      UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND INTEREST.....     74
SECTION 6.9.      RIGHTS AND REMEDIES CUMULATIVE................................................     74
SECTION 6.10.     DELAY OR OMISSION NOT WAIVER..................................................     74
SECTION 6.11.     CONTROL BY HOLDERS............................................................     74
SECTION 6.12.     WAIVER OF EXISTING OR PAST DEFAULT............................................     75
SECTION 6.13.     UNDERTAKING FOR COSTS.........................................................     75
SECTION 6.14.     RESTORATION OF RIGHTS AND REMEDIES............................................     76

                                              ARTICLE VII
                                                TRUSTEE

SECTION 7.1.      DUTIES OF TRUSTEE.............................................................     76
SECTION 7.2.      RIGHTS OF TRUSTEE.............................................................     77
SECTION 7.3.      INDIVIDUAL RIGHTS OF TRUSTEE..................................................     79
SECTION 7.4.      TRUSTEE'S DISCLAIMER..........................................................     79
SECTION 7.5.      NOTICE OF DEFAULT.............................................................     79
SECTION 7.6.      REPORTS BY TRUSTEE TO HOLDERS.................................................     79
SECTION 7.7.      COMPENSATION AND INDEMNITY....................................................     79
SECTION 7.8.      REPLACEMENT OF TRUSTEE........................................................     81
SECTION 7.9.      SUCCESSOR TRUSTEE BY MERGER, ETC..............................................     82
SECTION 7.10.     ELIGIBILITY; DISQUALIFICATION.................................................     82
SECTION 7.11.     PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.............................     82

                                             ARTICLE VIII
                               LEGAL DEFEASANCE AND COVENANT DEFEASANCE

SECTION 8.1.      OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE......................     82
SECTION 8.2.      LEGAL DEFEASANCE AND DISCHARGE................................................     82
SECTION 8.3.      COVENANT DEFEASANCE...........................................................     83


                                      iii




                                                                                                   Page
                                                                                                   ----
                                                                                                
SECTION 8.4.      CONDITIONS TO LEGAL OR COVENANT DEFEASANCE....................................     83
SECTION 8.5.      DEPOSITED CASH AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD IN TRUST; OTHER
                  MISCELLANEOUS PROVISIONS......................................................     84
SECTION 8.6.      REPAYMENT TO THE COMPANY......................................................     85
SECTION 8.7.      REINSTATEMENT.................................................................     85

                                              ARTICLE IX
                                  AMENDMENTS, SUPPLEMENTS AND WAIVERS

SECTION 9.1.      SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS............................     86
SECTION 9.2.      AMENDMENTS, SUPPLEMENTAL INDENTURES AND WAIVERS WITH CONSENT OF HOLDERS.......     87
SECTION 9.3.      COMPLIANCE WITH TIA...........................................................     88
SECTION 9.4.      REVOCATION AND EFFECT OF CONSENTS.............................................     88
SECTION 9.5.      NOTATION ON OR EXCHANGE OF NOTES..............................................     89
SECTION 9.6.      TRUSTEE TO SIGN AMENDMENTS, ETC...............................................     89

                                               ARTICLE X
                                      RIGHT TO REQUIRE REPURCHASE

SECTION 10.1.     REPURCHASE OF NOTES AT THE OPTION OF THE HOLDER UPON A CHANGE OF CONTROL......     89

                                              ARTICLE XI
                                               GUARANTEE
SECTION 11.1.     GUARANTEE.....................................................................     93
SECTION 11.2.     EXECUTION AND DELIVERY OF GUARANTEE...........................................     95
SECTION 11.3.     CERTAIN BANKRUPTCY EVENTS.....................................................     95
SECTION 11.4.     LIMITATION ON MERGER OF SUBSIDIARIES AND RELEASE OF GUARANTORS................     95
SECTION 11.5.     SUBORDINATION OF GUARANTEES...................................................     96

                                              ARTICLE XII
                                             SUBORDINATION

SECTION 12.1.     NOTES SUBORDINATED TO SENIOR DEBT.............................................     96
SECTION 12.2.     NO PAYMENT ON NOTES IN CERTAIN CIRCUMSTANCES..................................     97


                                      iv




                                                                                                  Page
                                                                                                  ----
                                                                                               
SECTION 12.3.     NOTES SUBORDINATED TO PRIOR PAYMENT OF ALL SENIOR DEBT ON DISSOLUTION,
                  LIQUIDATION OR REORGANIZATION................................................     98
SECTION 12.4.     SECURITYHOLDERS TO BE SUBROGATED TO RIGHTS OF HOLDERS OF SENIOR DEBT.........     99
SECTION 12.5.     OBLIGATIONS OF THE COMPANY AND THE GUARANTORS UNCONDITIONAL..................     99
SECTION 12.6.     TRUSTEE ENTITLED TO ASSUME PAYMENTS NOT PROHIBITED IN ABSENCE OF NOTICE......    100
SECTION 12.7.     APPLICATION BY TRUSTEE OF ASSETS DEPOSITED WITH IT...........................    100
SECTION 12.8.     SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF THE COMPANY, THE
                  GUARANTORS OR HOLDERS OF SENIOR DEBT.........................................    100
SECTION 12.9.     SECURITYHOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE SUBORDINATION OF NOTES.......    101
SECTION 12.10.    RIGHT OF TRUSTEE TO HOLD SENIOR DEBT.........................................    101
SECTION 12.11.    ARTICLE XII NOT TO PREVENT EVENTS OF DEFAULT.................................    102
SECTION 12.12.    NO FIDUCIARY DUTY OF TRUSTEE TO HOLDERS OF SENIOR DEBT.......................    102

                                             ARTICLE XIII
                                             MISCELLANEOUS

SECTION 13.1.     TIA CONTROLS.................................................................    102
SECTION 13.2.     NOTICES .....................................................................    102
SECTION 13.3.     COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.................................    104
SECTION 13.4.     CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT...........................    104
SECTION 13.5.     STATEMENTS REQUIRED IN CERTIFICATE OR OPINION................................    104
SECTION 13.6.     RULES BY TRUSTEE, PAYING AGENT, REGISTRAR....................................    105
SECTION 13.7.     LEGAL HOLIDAYS...............................................................    105
SECTION 13.8.     GOVERNING LAW................................................................    105
SECTION 13.9.     NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS................................    106
SECTION 13.10.    NO RECOURSE AGAINST OTHERS...................................................    106
SECTION 13.11.    SUCCESSORS...................................................................    106
SECTION 13.12.    DUPLICATE ORIGINALS..........................................................    106
SECTION 13.13.    SEVERABILITY.................................................................    106
SECTION 13.14.    TABLE OF CONTENTS, HEADINGS, ETC.............................................    107


                                       v




                                                                                                  Page
                                                                                                  ----
                                                                                               
SECTION 13.15.    QUALIFICATION OF INDENTURE..................................................     107
SECTION 13.16.    REGISTRATION RIGHTS.........................................................     107
SECTION 13.17.    BENEFITS OF INDENTURE.......................................................     107

SIGNATURES....................................................................................     S-1

EXHIBIT A         FORM OF SECURITY............................................................     A-1
EXHIBIT B         FORM OF CERTIFICATE OF TRANSFER.............................................     B-1
EXHIBIT C         FORM OF CERTIFICATE OF EXCHANGE.............................................     C-1
EXHIBIT D         FORM OF CERTIFICATE FROM ACQUIRINGINSTITUTIONAL ACCREDITED INVESTOR.........     D-1


                                      vi


                            CROSS-REFERENCE TABLE



  TIA                                                                                             Indenture
Section                                                                                            Section
- -------                                                                                            -------
                                                                                               
310(a)(1).......................................................................................      7.10
   (a)(2).......................................................................................      7.10
   (a)(3).......................................................................................      N.A.
   (a)(4).......................................................................................      N.A.
   (a)(5).......................................................................................      7.10
   (b)..........................................................................................      7.10
   (c)..........................................................................................      N.A.

311(a)..........................................................................................      7.11
   (b)..........................................................................................      7.11
   (c)..........................................................................................      N.A.

312(a)..........................................................................................       2.5
   (b)..........................................................................................      13.3
   (c)..........................................................................................      13.3

313(a)..........................................................................................       7.6
   (b)..........................................................................................       7.6
   (c)..........................................................................................       7.6
   (d)..........................................................................................      N.A.

314(a)..........................................................................................    4.7(a)
   (b)(1).......................................................................................      N.A.
   (b)(2).......................................................................................      N.A.
   (c)(1).......................................................................................      N.A.
   (c)(2).......................................................................................      N.A.
   (c)(3).......................................................................................      N.A.
   (d)..........................................................................................      N.A.
   (e)..........................................................................................      N.A.
   (f)..........................................................................................      N.A.

315(a)..........................................................................................      N.A.
   (b)..........................................................................................      N.A.
   (c)..........................................................................................      N.A.
   (d)..........................................................................................      N.A.
   (e)..........................................................................................      N.A.

316(a)(last sentence)...........................................................................      N.A.


                                      vii




  TIA                                                                                            Indenture
Section                                                                                           Section
- -------                                                                                           -------
                                                                                              
   (a)(1)(A)....................................................................................      N.A.
   (a)(1)(B)....................................................................................      N.A.
   (a)(2).......................................................................................      N.A.
   (b)..........................................................................................      N.A.

317(a)(1).......................................................................................      N.A.
   (a)(2).......................................................................................      N.A.
   (b)..........................................................................................      N.A.


- ----------

N.A. means Not Applicable

Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of this Indenture.

                                     viii


          INDENTURE, dated as of April 11, 2001, by and between DaVita Inc., a
Delaware corporation (the "Company"), and U.S. Trust Company of Texas, National
Association, as trustee (the "Trustee").

          Each party hereto agrees as follows for the benefit of each other
party and for the equal and ratable benefit of the Holders of the Company's 9
1/4% Series A Senior Subordinated Notes due 2011 and the class of 9 1/4% Series
B Senior Subordinated Notes due 2011 to be exchanged for the 9 1/4% Series A
Senior Subordinated Notes due 2011:

                                   ARTICLE I

                  DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.1.      DEFINITIONS

     "144A Global Note" means one or more Global Notes bearing the Private
Placement Legend that will be issued in an aggregate amount of denominations
equal in total to the outstanding principal amount of the Notes sold in reliance
on Rule 144A.

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

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

     "Additional Notes" means additional Notes that may be issued pursuant to
this Indenture after the Issue Date, other than pursuant to an Exchange Offer or
otherwise in exchange for or in replacement of outstanding Notes.

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

     "Affiliate Transaction" shall have the meaning specified in Section 4.10.

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


     "Applicable Procedures" means, with respect to any transfer or exchange of
or for beneficial interests in any Global Note, the rules and procedures of the
Depositary, Euroclear and Clearstream that apply to such transfer or exchange at
the relevant time.

     "Asset Sale" shall have the meaning specified in Section 4.14.

     "Asset Sale Offer" shall have the meaning specified in Section 4.14.

     "Asset Sale Offer Amount" shall have the meaning specified in Section 4.14.

     "Asset Sale Offer Period" shall have the meaning specified in Section 4.14.

     "Asset Sale Offer Price" shall have the meaning specified in Section 4.14.

     "Attributable Indebtedness" means in respect of a Sale-Leaseback
Transaction, as at the time of determination, the present value (discounted at
the interest rate borne by the Notes, compounded annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale-Leaseback Transaction (including any period for
which such lease has been extended).

     "Authentication Order" shall have the meaning specified in Section 2.2.

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

     "Bankruptcy Law" means Title 11, U.S. Code, or any similar Federal, state
or foreign law for the relief of debtors.

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

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

     "Board Resolution" means, with respect to any Person, a duly adopted
resolution of the Board of Directors of such Person.

                                       2


     "Broker-Dealer" means any broker-dealer that receives Exchange Notes for
its own account in the Exchange Offer in exchange for Notes that were acquired
by such broker-dealer as a result of market-making or other trading activities.

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

     "Capital Expenditure Indebtedness" of any Person means any Indebtedness of
such Person to any seller or other Person incurred solely to finance the
acquisition (including in the case of a Capitalized Lease Obligation, the
lease), construction, installation or improvement of any real or personal
tangible property or computer software which is directly related to a Related
Business of the Company and which is incurred within 180 days of such
acquisition or concurrently with completion of such construction, installation
or improvement and which is secured only by the assets so financed and any
attachments thereto or proceeds thereof.

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

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

     "Cash" or "cash" means such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public or private debts.

     "Cash Equivalent" means:

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

     (2) U.S. dollar denominated and Eurodollar time deposits, bankers'
acceptances and certificates of deposit and commercial paper issued by the
parent corporation of any domestic commercial bank of recognized standing having
capital and surplus in excess of $500,000,000, or

     (3) commercial paper issued by others rated at least A-2 or the equivalent
thereof by S&P or at least P-2 or the equivalent thereof by Moody's, or

                                       3


     (4) readily marketable direct obligations issued by any state of the United
States of America or any political subdivision thereof having one of the two
highest rating categories obtainable from either Moody's or S&P, or

     (5) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (1) and (2) above
entered into with any financial institution meeting the qualifications specified
in clause (2) above, or

     (6) interests in regulated money market mutual funds that invest at least
95% of their funds in assets or securities of the type described in clauses (1)
through (5) above.

and in the case of each of (1), (2), (3) and (4) maturing within one year after
the date of acquisition.

     "Change of Control" means:

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

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

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

               (4) the Company adopts a plan of liquidation.

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

     "Change of Control Offer" shall have the meaning specified in Section 10.1.

     "Change of Control Offer Period" shall have the meaning specified in
Section 10.1.

     "Change of Control Purchase Date" shall have the meaning specified in
Section 10.1.

     "Change of Control Purchase Price" shall have the meaning specified in
Section 10.1.

     "Clearstream" means Clearstream Banking S.A., or its successors.

     "Code" means the Internal Revenue Code of 1986, as amended.


                                       4


     "Company" means the party named as such in this Indenture until a successor
replaces it pursuant to this Indenture, and thereafter means such successor.

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

     (1) Acquisitions which occurred during the Reference Period or subsequent
to the Reference Period and on or prior to the Transaction Date shall be assumed
to have occurred on the first day of the Reference Period without regard to the
effect of clause (c) of the definition of "Consolidated Net Income", and any pro
forma adjustments shall be made in accordance with Regulation S-X promulgated by
the Securities and Exchange Commission,

     (2) transactions giving rise to the need to calculate the Consolidated
Coverage Ratio shall be assumed to have occurred on the first day of the
Reference Period without regard to the effect of clause (c) of the definition of
"Consolidated Net Income",

     (3) other than with respect to Indebtedness under revolving credit
facilities incurred in the ordinary course of business for general corporate
purposes and not for Acquisitions, (i) the incurrence of any Indebtedness
(including issuance of any Disqualified Capital Stock), and the application of
the proceeds therefrom to the extent used to refinance or retire other
Indebtedness, or (ii) the repayment of any Indebtedness with the Net Cash
Proceeds from any Asset Sale applied to permanently reduce the outstanding
amounts or the commitments with respect to such Indebtedness pursuant to clause
(1)(b)(ii) of the first paragraph of Section 4.14, in each case, during the
Reference Period or subsequent to the Reference Period and on or prior to the
Transaction Date shall be assumed to have occurred on the first day of the
Reference Period, and

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

     "Consolidated EBITDA" means, with respect to any Person, for any period,
the Consolidated Net Income of such Person for such period adjusted to exclude
all losses that are either extraordinary

                                       5


(as determined in accordance with GAAP) or are either unusual or nonrecurring
and to add thereto (to the extent deducted from net revenues in determining
Consolidated Net Income), without duplication, the sum of

     (1) Consolidated income tax expense,

     (2) Consolidated depreciation and amortization expense,

     (3) Consolidated Fixed Charges,

     (4) all other non-recurring non-cash charges of such Person and its
         Consolidated Subsidiaries,

     (5) Goodwill Impairment Charges, and

     (6) Minority Interest,

less the amount of all cash payments made by such Person or any of its
Subsidiaries during such period to the extent such payments relate to
non-recurring non-cash charges that were added back in determining Consolidated
EBITDA for such period or any prior period; provided, that consolidated income
tax expense and depreciation and amortization and other non-recurring non-cash
charges of a Subsidiary that is a less than Wholly Owned Subsidiary shall only
be added to the extent of the equity interest of such Person in such Subsidiary,
and with respect to the Company, any cash payments made by the Company or one of
the Company's Subsidiaries, not exceeding $15,000,000 in the aggregate, paid to
settle or otherwise finally resolve the Florida Overpayment Dispute shall not be
so subtracted.

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

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

     (b) the amount of dividends accrued or payable (or guaranteed) by such
Person or any of its Consolidated Subsidiaries in respect of Preferred Stock
(other than by Subsidiaries of such Person to such Person or such Person's
Consolidated Subsidiaries), excluding all non-cash dividends which, pursuant to
the terms of the Preferred Stock in respect thereof, may not be converted to or
otherwise paid in cash prior to 91 days after the Stated Maturity.

                                       6


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

     "Consolidated Minority Adjusted EBITDA Ratio" of any Person on any date of
determination means the ratio, on a pro forma basis, of (a) the aggregate amount
of Consolidated EBITDA of such Person attributable to continuing operations and
businesses (exclusive of amounts attributable to operations and businesses
permanently discontinued or disposed of) for the Reference Period, less the
Minority Interest of such Person, to (b) the aggregate amount of Consolidated
EBITDA of such Person attributable to continuing operations and businesses
(exclusive of amounts attributable to operations and businesses permanently
discontinued or disposed of) for the Reference Period.

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

     (a) all gains (but not losses) that are either extraordinary (as determined
in accordance with GAAP) or are either unusual or nonrecurring (including any
gain from the sale or other disposition of assets outside the ordinary course of
business or from the issuance or sale of any capital stock),

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

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

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

     (e) the net income of, and all dividends and distributions from, any
Unrestricted Subsidiary, and

     (f) the cumulative effect of a change in accounting principles.

                                       7


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

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

     "Continuing Director" means during any period of 12 consecutive months
after the Issue Date, individuals who at the beginning of any such 12-month
period constituted the Board of Directors of the Company (together with any new
directors whose election by such Board of Directors or whose nomination for
election by the shareholders of the Company was approved by a vote of a majority
of the directors then still in office who were either directors at the beginning
of such period or whose election or nomination for election was previously so
approved, including new directors designated in or provided for in an agreement
regarding the merger, consolidation or sale, transfer or other conveyance, of
all or substantially all of the assets of the Company, if such agreement was
approved by a vote of such majority of directors).

     "Corporate Trust Office" means the office of the Trustee in the Borough of
Manhattan, The City of New York.

     "Covenant Defeasance" shall have the meaning specified in Section 8.3.

     "Credit Agreement" means the Second Amended and Restated Revolving Credit
Agreement and the Second Amended and Restated Term Loan Agreement, each dated as
of July 14, 2000, by and among the Company and certain financial institutions
and agents party thereto, and, in each case, any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, as such credit agreement and/or related documents may be amended,
restated, supplemented, renewed, replaced or otherwise modified from time to
time whether or not with the same agent, trustee, representative lenders or
holders, and, subject to the proviso to the next succeeding sentence,
irrespective of any changes in the terms and conditions thereof. Without
limiting the generality of the foregoing, the term "Credit Agreement" shall
include agreements in respect of Interest Swap and Hedging Obligations with
lenders party to the Credit Agreement (or any Affiliate of such lenders) and
shall also include any amendment, amendment and restatement, renewal, extension,
restructuring, supplement or modification to any Credit Agreement and all
refundings, refinancings and replacements in whole or in part of any Credit
Agreement with any other credit agreement, including any credit agreement:

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

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

                                       8


     (3) increasing the amount of Indebtedness incurred thereunder or available
to be borrowed thereunder; provided, that on the date such Indebtedness is
incurred it would not be prohibited by paragraph (c) of Section 4.11,or

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

     "Custodian" means any receiver, trustee, assignee, liquidator, sequestrator
or similar official under any Bankruptcy Law.

     "Debt Incurrence Ratio" shall have the meaning specified in Section 4.11.

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

     "Defaulted Interest" shall have the meaning specified in Section 2.12.

     "Definitive Notes" means one or more certificated Notes registered in the
name of the Holder thereof and issued in accordance with Section 2.6 hereof, in
the form of Exhibit A hereto except that such Note shall not include the
information called for by footnotes 3, 4 and 8 thereof.

     "Depositary" means, with respect to the Notes issuable or issued in whole
or in part in global form, the person specified in Section 2.3 as the Depositary
with respect to the Notes, until a successor shall have been appointed and
become such pursuant to the applicable provision of this Indenture, and,
thereafter, "Depositary" shall mean or include such successor.

     "Designated Senior Debt" means (i) all Indebtedness outstanding under the
Credit Agreement and (ii) any other Senior Indebtedness permitted to be incurred
under this Indenture that (a) at the time of determination exceeds $20,000,000
in aggregate principal amount outstanding and (b) is specifically designated in
the instrument evidencing such Senior Indebtedness as "Designated Senior
Indebtedness" by the Company.

     "Disqualified Capital Stock" means with respect to any Person, (a) Equity
Interests of such Person that, by its terms or by the terms of any security into
which it is convertible, exercisable or exchangeable, is, or upon the happening
of an event or the passage of time or both would be, required to be redeemed or
repurchased (including at the option of the holder thereof) by such Person or
any of its Subsidiaries, in whole or in part, on or prior to 91 days following
the Stated Maturity of the Notes and (b) any Equity Interests of any Subsidiary
of such Person other than any common equity with no preferences, privileges, and
no redemption or repayment provisions; provided, however, that any Equity
Interest that would constitute Disqualified Capital Stock solely because the
holders thereof have the right to require the issuer to repurchase such
Disqualified Capital Stock upon the occurrence of a change of control shall not
constitute Disqualified Capital Stock if the terms of such Equity Interest
provide that (i) any such repurchases may not be made sooner than 10 days after
the Change of Control Purchase Date for the Notes and (ii) such Equity Interests
so

                                       9


repurchased are fully and absolutely subordinated to the indefeasible payment
in full of all principal, interest and other amounts due under the Notes
repurchased on such Change of Control Purchase Date, and any Equity Interest not
so repurchased shall remain so fully and absolutely subordinated to the Notes
not so repurchased.

     "Distribution Compliance Period" means the 40-day restricted period as
defined in Regulation S.

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

     "Euroclear" means Euroclear Bank S.A/N.V., or its successor, as operator of
the Euroclear system.

     "Event of Default" shall have the meaning specified in Section 6.1.

     "Excess Proceeds" shall have the meaning specified in Section 4.14.

     "Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the SEC thereunder.

     "Exchange Notes" means Series B Notes issued pursuant to an Exchange Offer.

     "Exchange Offer" means an offer that may be made by the Company pursuant to
the Registration Rights Agreement to exchange Exchange Notes for Series A Notes.

     "Exchange Offer Registration Statement" shall have the meaning set forth in
the Registration Rights Agreement.

     "Exempted Affiliate Transaction" means (a) the payment of reasonable fees
and compensation to and indemnity provided for the benefit of directors,
officers or employees of the Company or any Guarantor in the ordinary course of
business, (b) transactions solely between the Company and any of its
Consolidated Subsidiaries or solely among Consolidated Subsidiaries of the
Company, (c) any issuance of securities pursuant to, or other payments, awards
or grants in cash, securities or otherwise pursuant to, or the funding of,
employment arrangements, stock option and stock ownership plans approved by the
Board of Directors of the Company, (d) loans or advances to employees in the
ordinary course of business in accordance with past practices of the Company or
any Guarantor, but in any event not to exceed $10,000,000 in the aggregate
outstanding at any one time; (e) the issuance or sale of any Qualified Capital
Stock of the Company approved by a majority of the members of the Board of
Directors and, if any, a majority of the independent members of such Board of
Directors, (f) Restricted Payments and Investments permitted by the provisions
of Section 4.3 and (g) transactions between the Company and any owner of a
Special Purpose Licensed Entity

                                       10


or between any Special Purpose Licensed Entity and any of its owners, in each
case, in the ordinary course of business to facilitate the operations of such
Special Purpose Licensed Entity.

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

     "Florida Overpayment Dispute" means the third-party carrier review relating
to claims that the Company's Florida-based laboratory subsidiary submitted for
Medicare reimbursement, pursuant to which the carrier has suspended Medicare
payments and issued formal overpayment determinations.

     "Foreign Subsidiary" means any Subsidiary of the Company which (i) is not
organized under the laws of the United States, any state thereof or the District
of Columbia and (ii) conducts substantially all of its business operations
outside the United States of America.

     "GAAP" means United States generally accepted accounting principles as in
effect on the Issue Date as set forth in (1) the opinions and pronouncements of
the Accounting Principles Board of the American Institute of Certified Public
Accountants, (2) statements and pronouncements of the Financial Accounting
Standards Board, (3) such other statements by such other entity as approved by a
significant segment of the accounting profession in the United States and (4)
the rules and regulations of the SEC governing the inclusion of financial
statements (including pro forma financial statements) in periodic reports
required to be filed pursuant to Section 13 of the Exchange Act, including
opinions and pronouncements in staff accounting bulletins and similar written
statements from the accounting staff of the SEC. All ratios and computations
based on GAAP contained in this Indenture shall be computed in conformity with
GAAP.

     "Global Notes" means one or more Notes in the form of Exhibit A hereto that
includes the information referred to in footnotes 3, 4 and 8 to the form of
Note, attached hereto as Exhibit A, issued under this Indenture, that is
deposited with or on behalf of and registered in the name of the Depositary or
its nominee.

     "Global Note Legend" means the legend set forth in Section 2.6(g)(2), which
is required to be placed on all Global Notes issued under this Indenture.

     "Goodwill Impairment Charges" means with respect to any Person, impairment
and valuation losses, as reflected on such Person's consolidated financial
statements.

     "Guarantee" shall have the meaning provided in Section 11.1.

     "Guarantor" means each of the Company's present and future Subsidiaries
(other than Non-Guarantor Subsidiaries and Foreign Subsidiaries) that at the
time are guarantors of the Notes in accordance with this Indenture.

                                       11


     "Holder" or "Securityholder" means the Person in whose name a Note is
registered on the Registrar's books.

     "Incur" or "incur" shall have the meaning specified in Section 4.11.

     "Incurrence Date" shall have the meaning specified in Section 4.11.

     "Indebtedness" of any Person means, without duplication,

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

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

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

     (d) all Capitalized Lease Obligations and Attributable Indebtedness of such
Person;

     (e) all liabilities and obligations of others of the kind described in the
preceding clause (a), (b) (c) or (d) to the extent that such Person has
guaranteed or provided credit support or that is otherwise its legal liability;

     (f) all liabilities and obligations of others of the kind described in the
preceding clause (a), (b), (c), (d) or (e) secured by any Lien on any property
or assets of such Person (whether or not such obligation is assumed by such
Person), the amount of such obligation being deemed to be the lesser of the
value of such property or assets or the amount of the obligation so secured;

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

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

     For purposes hereof, the "maximum fixed repurchase price" of any
Disqualified Capital Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms

                                       12


of such Disqualified Capital Stock as if such Disqualified Capital Stock were
purchased on any date on which Indebtedness shall be required to be determined
pursuant to the terms hereof, and if such price is based upon, or measured by,
the fair market value of such Disqualified Capital Stock, such fair market value
to be determined in good faith by the board of directors of the issuer (or
managing general partner of the issuer) of such Disqualified Capital Stock.

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

     "Indenture" means this Indenture, as amended or supplemented from time to
time in accordance with the terms hereof.

     "Indirect Participant" means any entity that, with respect to DTC, clears
through or maintains a direct or indirect, custodial relationship with a
Participant.

     "Initial Purchasers" means Credit Suisse First Boston Corporation, Banc of
America Securities LLC, SunTrust Equitable Securities Corporation, BNY Capital
Markets, Inc. and Scotia Capital (USA) Inc.

     "Initial Notes" means the 9 1/4% Series A Senior Subordinated Notes due
2011, as supplemented from time to time in accordance with the terms hereof,
issued under this Indenture that contain the information referred to in
footnotes 6 and 7 to the form of Note attached hereto as Exhibit A.

     "Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who is not also a QIB.

     "Interest Payment Date" means the stated due date of an installment of
interest on the Notes.

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

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

                                       13


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

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

     (c) other than guarantees of Indebtedness of the Company or any Guarantor
to the extent permitted by Section 4.11, the entering into by such Person of any
guarantee of, or other credit support or contingent obligation with respect to,
Indebtedness or other liability of such other Person;

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

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

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

     "Issue Date" means the date of first issuance of the Notes under this
Indenture.

     "Junior Security" means any Qualified Capital Stock and any Indebtedness of
the Company or a Guarantor, as applicable, that is contractually subordinated in
right of payment to Senior Debt at least to the same extent as the Notes or the
Guarantee, as applicable, and has no scheduled installment of principal due, by
redemption, sinking fund payment or otherwise, on or prior to the Stated
Maturity of the Notes; provided, that in the case of subordination in respect of
Senior Debt under the Credit Agreement, "Junior Security" shall mean any
Qualified Capital Stock and any Indebtedness of the Company or a Guarantor, as
applicable, that:

                                       14


     (1) has a final maturity date occurring after the final maturity date of,
all Senior Debt outstanding under the Credit Agreement on the date of issuance
of such Qualified Capital Stock or Indebtedness,

     (2) is unsecured,

     (3) has an Average Life longer than the security for which such Qualified
Capital Stock or Indebtedness is being exchanged, and

     (4) by their terms or by law are subordinated to Senior Debt outstanding
under the Credit Agreement on the date of issuance of such Qualified Capital
Stock or Indebtedness at least to the same extent as the Notes.

     "Legal Defeasance" shall have the meaning specified in Section 8.2.

     "Legal Holiday" shall have the meaning specified in Section 13.7.

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

     "Liquidated Damages" means all liquidated damages then owing pursuant to
the Registration Rights Agreement.

     "Maturity Date" means, when used with respect to any Note, the date
specified on such Note as the fixed date on which the final installment of
principal of such Note is due and payable (in the absence of any acceleration
thereof pursuant to the provisions of this Indenture regarding acceleration of
Indebtedness or any Change of Control Offer or Asset Sale Offer).

     "Minority Interest" means, with respect to any Person, interests in income
of such Person's Consolidated Subsidiaries held by Persons other than such
Person or another Subsidiary of such Person, as reflected on such Person's
consolidated financial statements.

     "Moody's" means Moody's Investors Service, Inc. and its successors.

     "Net Cash Proceeds" means the aggregate amount of cash or Cash Equivalents
received by the Company in the case of a sale of Qualified Capital Stock and by
the Company and its Subsidiaries in respect of an Asset Sale plus, in the case
of an issuance of Qualified Capital Stock upon any exercise, exchange or
conversion of securities (including options, warrants, rights and convertible or
exchangeable debt) of the Company that were issued for cash on or after the
Issue Date, the amount of cash originally received by the Company upon the
issuance of such securities (including options, warrants, rights and convertible
or exchangeable debt) less, (1) in each case, the sum of all payments, fees,
commissions and (in the case of Asset Sales, reasonable) expenses (including,
without limitation, the fees and expenses of legal counsel and investment
banking fees

                                       15


and expenses) incurred in connection with such Asset Sale or sale of Qualified
Capital Stock, and (2) in the case of an Asset Sale only, less

     (a) the amount (estimated reasonably and in good faith by the Company) of
income, franchise, sales and other applicable taxes required to be paid by the
Company or any of its respective Subsidiaries in connection with such Asset Sale
in the taxable year that such sale is consummated or in the immediately
succeeding taxable year (the "Asset Sale Tax Liability"), the computation of
which shall take into account (estimated reasonably and in good faith by the
Company) the reduction in tax liability resulting from any available operating
losses and net operating loss carryovers, tax credits and tax credit
carryforwards, and similar tax attributes ("Available Tax Attributes"). The
determination of the Available Tax Attributes shall be estimated reasonably and
in good faith by the Company and, in connection therewith, the Company may
exclude from its determination those Available Tax Attributes as to which there
exists an issue of law or fact which may ultimately result in such attributes
not being available to effectuate a reduction in the Asset Sale Tax Liability,

     (b) amounts used to retire Indebtedness (other than Subordinated
Indebtedness) secured by the asset that was the subject of the Asset Sale,

     (c) 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,

     (d) appropriate amounts to be provided by the Company or any Subsidiary as
a reserve against any liabilities (other than tax liabilities) associated with
such Asset Sale, including, without limitation, pension and other
post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale, all as determined in conformity with GAAP.

     "Non-Guarantor Subsidiary" means each non-Wholly Owned Subsidiary of the
Company that is not a Foreign Subsidiary, provided, that

     (a) any Equity Interest in such Subsidiary not owned by the Company or any
Guarantor is owned by a physician, physician group or other strategic joint
venture partner;

     (b) such Subsidiary was formed to and exists solely for the purpose of
owning and operating one or more dialysis centers and providing services related
thereto; and

     (c) on each date that a non-Wholly Owned Subsidiary is formed or a Wholly
Owned Subsidiary becomes a non-Wholly Owned Subsidiary, the Company's
Consolidated Minority Adjusted EBITDA Ratio for the Reference Period immediately
preceding such date would be at least 0.80 to 1.00, on a pro forma basis after
giving effect to such formation or transformation to a non-Wholly Owned
Subsidiary.

                                       16


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

     "Notes" means, collectively (i) the Initial Notes, (ii) the Exchange Notes,
when and if issued as provided in the Registration Rights Agreement, and (iii)
the Additional Notes.

     "Offering" means the offering of the Notes by the Company.

     "Officer" means, with respect to the Company or any Guarantor, the Chief
Executive Officer, the President, any Vice President, the Chief Financial
Officer, the Treasurer, the Controller, or the Secretary of the Company or such
Guarantor.

     "Officers' Certificate" means, with respect to the Company or any
Guarantor, a certificate signed by two Officers or by an Officer and an
Assistant Secretary of the Company or such Guarantor and otherwise complying
with the requirements of Sections 13.4 and 13.5.

     "Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee complying with the requirements of Sections
13.4 and 13.5. An Opinion of Counsel delivered hereunder may have qualifications
that are customary for the opinions of the type required.

     "Participant" means, with respect to the Depositary, Euroclear or
Clearstream, a Person who has an account with the Depositary, Euroclear or
Clearstream, respectively (and, with respect to The Depository Trust Company,
shall include Euroclear and Clearstream).

     "Paying Agent" shall have the meaning specified in Section 2.3.

     "Payment Default" shall have the meaning specified in Section 12.2.

     "Payment Notice" shall have the meaning specified in Section 12.2.

     "Permitted Indebtedness" means that:

          (a) the Company and the Guarantors may incur Indebtedness evidenced by
the Notes and the Guarantees issued pursuant to this Indenture up to the amounts
being issued on the original Issue Date, less any amounts repaid or retired;

                                       17


          (b) the Company and the Guarantors, as applicable, may incur
Refinancing Indebtedness with respect to any Existing Indebtedness or any
Indebtedness (including Disqualified Capital Stock) described in clause (a) of
this definition or incurred pursuant to the Debt Incurrence Ratio, or which was
refinanced pursuant to this clause (b);

          (c) the Company and its Subsidiaries may incur Indebtedness solely in
respect of bankers' acceptances, performance bonds and letters of credit to the
extent not drawn upon (to the extent that such incurrence does not result in the
incurrence of any obligation to repay any obligation relating to borrowed money
or other Indebtedness), all in the ordinary course of business in accordance
with customary industry practices, in amounts and for the purposes customary in
the Company's industry; provided, that the aggregate principal amount
outstanding of such Indebtedness (including any Refinancing Indebtedness and any
other Indebtedness issued to retire, refinance, refund, defease or replace such
Indebtedness) shall at no time exceed $15,000,000;

          (d) the Company may incur Indebtedness owed to (borrowed from) any
Subsidiary, and any Subsidiary may incur Indebtedness owed to (borrowed from)
any other Subsidiary or the Company; provided, that (i) the aggregate amount of
Indebtedness that may be incurred and outstanding at any one time (including any
Refinancing Indebtedness issued to retire, defease, refinance, replace or refund
such Indebtedness) pursuant to this clause (d) by Subsidiaries that are not
Guarantors shall not exceed $35,000,000, and (ii) in the case of Indebtedness of
the Company, such obligations shall be unsecured and contractually subordinated
in all respects to the Company's obligations pursuant to the Notes and any event
that causes any Guarantor no longer to be a Guarantor (including by designation
to be an Unrestricted Subsidiary) shall be deemed to be a new incurrence by such
issuer of such Indebtedness and any guarantor thereof subject to the provisions
of Section 4.11; and

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

     "Permitted Investment" means:

          (a) any Investment in any of the Notes;

          (b) any Investment in Cash Equivalents;

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

                                       18


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

          (e) other Investments in any Person or Persons, provided, that after
giving pro forma effect to each such Investment, the aggregate amount of all
such Investments made on and after the Issue Date pursuant to this clause (e)
that are outstanding (after giving effect to any such Investments that are
returned to the Company or the Guarantor that made such prior Investment,
without restriction, in cash on or prior to the date of any such calculation,
but only up to the amount of the Investment made under this clause (e) in such
Person) at any time does not in the aggregate exceed $35,000,000 (measured by
the value attributed to the Investment at the time made or returned, as
applicable); and

          (f) any asset exchange permitted under clause (7) of Section 4.14.

     "Permitted Lien" means:

          (a) Liens existing on the Issue Date;

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

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

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

          (e) easements, rights-of-way, zoning, similar restrictions and other
similar encumbrances or title defects which, singly or in the aggregate, do not
in any case materially detract from the value of the property, subject thereto
(as such property is used by the Company or any of its Subsidiaries) or
materially interfere with the ordinary conduct of the business of the Company or
any of its Subsidiaries;

          (f) Liens arising from the rendering of a final judgment, only to the
extent, for an amount and for a period not resulting in an Event of Default with
respect thereto;

                                       19


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

          (h) Liens securing the Notes;

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

          (j) Liens arising from Capital Expenditure Indebtedness permitted to
be incurred pursuant to clause (a) of Section 4.11 provided such Liens relate
solely to the property which is subject to such Capital Expenditure Indebtedness
or the proceeds thereof;

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

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

          (m) Liens securing Refinancing Indebtedness incurred to refinance any
Indebtedness that was previously so secured in a manner no more adverse to the
Holders of the Notes than the terms of the Liens securing such refinanced
Indebtedness, and provided that the Indebtedness secured is not increased and
the Lien is not extended to any additional assets or property that would not
have been security for the Indebtedness refinanced;

          (n) Liens securing Senior Debt of the Company or any Guarantor,
including Indebtedness incurred under the Credit Agreement in accordance with
the provisions of Section 4.11; and

          (o) Liens securing reimbursement obligations with respect to letters
of credit that encumber only documents and other property relating to such
letters of credit and the products and proceeds thereof.

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

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

                                       20


     "Private Placement Legend" means the legend set forth in Section 2.6(g)(1)
to be placed on all Notes issued under this Indenture except where specifically
stated otherwise by the provisions of this Indenture.

     "principal" of any Indebtedness means the principal of such Indebtedness.

     "property" means any right or interest in or to property or assets of any
kind whatsoever, whether real, personal or mixed and whether tangible,
intangible, contingent, direct or indirect.

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

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

     "Purchase Agreement" means the Purchase Agreement, dated April 6, 2001, by
and among the Company, the Guarantors and the Initial Purchasers, as such
agreement may be amended, modified or supplemented from time to time in
accordance with the terms thereof.

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

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

     "Qualified Exchange" means:

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

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

     "Record Date" means a Record Date specified in the Notes whether or not
such Record Date is a Business Day, or, if applicable, as specified in Section
2.12.

     "Redemption Date," when used with respect to any Note to be redeemed, means
the date fixed for such redemption pursuant to Article III of this Indenture and
Section 5 in the form of Note attached hereto as Exhibit A.


     "Redemption Price," when used with respect to any Note to be redeemed,
means the redemption price for such redemption pursuant to Section 5 in the form
of Note attached hereto as

                                       21


Exhibit A, which shall include, without duplication, in each case, accrued and
unpaid interest and Liquidated Damages, if any, to the Redemption Date.

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

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

     "Reg S Permanent Global Note" means one or more permanent Global Notes
bearing the Private Placement Legend, that will be issued in an aggregate amount
of denominations equal in total to the outstanding principal amount of the Reg S
Temporary Global Note upon expiration of the Distribution Compliance Period.

     "Reg S Temporary Global Note" means one or more temporary Global Notes
bearing the Private Placement Legend and the Reg S Temporary Global Note Legend,
issued in an aggregate amount of denominations equal in total to the outstanding
principal amount of the Notes initially sold in reliance on Rule 903 of
Regulation S.

                                       22


     "Reg S Temporary Global Note Legend" means the legend set forth in Section
2.6(g)(iii), which is required to be placed on all Reg S Temporary Global Notes
issued under this Indenture.

     "Registrar" shall have the meaning specified in Section 2.3.

     "Registration Rights Agreement" means the Registration Rights Agreement,
dated as of the Issue Date, by and among the Company and the other parties named
on the signature pages thereof, as such agreement may be amended, modified or
supplemented from time to time.

     "Regulation S" means Regulation S promulgated under the Securities Act, as
it may be amended from time to time, and any successor provision thereto.

     "Regulation S Global Note" means a Reg S Temporary Global Note or a Reg S
Permanent Global Note, as the case may be.

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

     "Restricted Definitive Note" means one or more Definitive Notes bearing the
Private Placement Legend, issued under this Indenture.

     "Restricted Global Note" means one or more Global Notes bearing the Private
Placement Legend, issued under this Indenture; provided, that in no case shall
an Exchange Note issued in accordance with this Indenture and the terms of the
Registration Rights Agreement be a Restricted Global Note.

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

     "Restricted Note" means a Note, unless or until it has been (i) effectively
registered under the Securities Act and disposed of in accordance with the
registration statement covering it or (ii) distributed to the public pursuant to
Rule 144 (or any similar provision then in force) under the Securities Act;
provided, that in no case shall an Exchange Note issued in accordance with this
Indenture and the terms and provisions of the Registration Rights Agreement be a
Restricted Note.

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

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

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

                                       23


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

          (d)  any Restricted Investment by such Person;

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

     "Rule 144A" means Rule 144A promulgated under the Securities Act, as it may
be amended from time to time, and any successor provision thereto.

     "S&P" means Standard & Poor's, a division of The McGraw-Hill Companies, and
its successors.

     "Sale-Leaseback Transaction" means any arrangement with any Person
providing for the leasing (other than operating leases in the ordinary course of
business) by the Company or any Subsidiary of any real or tangible personal
property owned by the Company or a Subsidiary of the Company as of the Issue
Date or thereafter acquired, which property has been or is to be sold or
transferred by the Company or such Subsidiary to a Person and leased back from
such Person.

     "SEC" means the Securities and Exchange Commission.

     "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.

     "Securities Custodian" means the Trustee, as custodian with respect to the
Notes in global form, or any successor entity thereto.

     "Securityholder" or "Holder" means the Person in whose name a Note is
registered on the Registrar's books.

     "Senior Debt" of the Company or any Guarantor means Indebtedness (including
any monetary obligation in respect of the Credit Agreement, and interest,
whether or not allowable, accruing on Indebtedness incurred pursuant to the
Credit Agreement after the filing of a petition initiating any proceeding under
any bankruptcy, insolvency or similar law) of the Company or such Guarantor,
including Indebtedness arising under the Credit Agreement, unless by the terms
of the instrument creating or evidencing such Indebtedness, such Indebtedness is
expressly designated equal or junior in right of payment to the Notes or the
applicable Guarantee; provided, that in no

                                       24


event shall Senior Debt include (a) Indebtedness to any Subsidiary of the
Company or any officer, director or employee of the Company or any Subsidiary of
the Company, (b) Indebtedness incurred in violation of the terms of this
Indenture, (c) Indebtedness to trade creditors, (d) Disqualified Capital Stock,
and (e) any liability for taxes owed or owing by the Company or such Guarantor.

     "Shelf Registration Statement" shall have the meaning set forth in the
Registration Rights Agreement.

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

     "Special Purpose Licensed Entity" means any Person in a Related Business
that (i) the Company and its Subsidiaries are prohibited from engaging in
directly under applicable law, including provisions of state law (a) prohibiting
the ownership of healthcare facilities by public companies, (b) prohibiting the
corporate practice of medicine or (c) otherwise restricting the ability of the
Company or one of its Subsidiaries to acquire directly a required license to
operate a healthcare facility, and (ii) has entered into a transaction or series
of transactions with the Company or any of its Subsidiaries under which

          (x)  the Company or any of its Subsidiaries provides management,
administrative or consulting services to the Special Purpose Licensed Entity,

          (y)  the owners of the Special Purpose Licensed Entity are prohibited
from transferring any of their interests in the Special Purpose Licensed Entity
without the consent of the Company or one of its Subsidiaries, and

          (z)  the Company or one of its Subsidiaries has the right to require
the owners of the Special Purpose Licensed Entity to transfer all of their
interests in the Special Purpose Licensed Entity to a Person designated by the
Company or one of its Subsidiaries.

     "Special Record Date" for payment of any Defaulted Interest means a date
fixed by the Trustee pursuant to Section 2.12.

     "Stated Maturity," when used with respect to any Note, means April 15,
2011.

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

     "Subsidiary," with respect to any Person, means (1) a corporation a
majority of whose Equity Interests with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such Person, by such Person and one or more Subsidiaries of such Person or by
one or more Subsidiaries of such Person, (2) any other Person (other than a
corporation) in which such Person, one or more Subsidiaries of such Person, or
such Person and one or more

                                       25


Subsidiaries of such Person, directly or indirectly, at the date of
determination thereof has a majority ownership interest, or (3) a partnership in
which such Person or a Subsidiary of such Person is, at the time, a general
partner. Notwithstanding the foregoing, an Unrestricted Subsidiary shall not be
a Subsidiary of the Company or of any Subsidiary of the Company and any Special
Purpose Licensed Entity shall be considered a Subsidiary of the Company. Unless
the context requires otherwise, Subsidiary means each direct and indirect
Subsidiary of the Company.

     "TIA" means the Trust Indenture Act of 1939, as amended, (15 U.S. Code
(S)(S) 77aaa-77bbbb) as in effect on the date of the execution of this
Indenture, except as provided in Section 9.3.

     "Transfer Restricted Notes" means Global Notes and Definitive Notes that
bear or are required to bear the Private Placement Legend, issued under this
Indenture.

     "Trustee" means the party named as such in this Indenture until a successor
replaces it in accordance with the provisions of this Indenture and thereafter
means such successor.

     "Trust Officer" means any officer within the corporate trust division (or
any successor group) of the Trustee or any other officer of the Trustee
customarily performing functions similar to those performed by the Persons who
at that time shall be such officers, and also means, with respect to a
particular corporate trust matter, any other officer of the Trustee to whom such
trust matter is referred because of his knowledge of and familiarity with the
particular subject.

     "Unrestricted Definitive Note" means one or more Definitive Notes that do
not bear and are not required to bear the Private Placement Legend, issued under
this Indenture.

     "Unrestricted Global Note" means one or more permanent Global Notes
representing a series of Notes that does not bear and is not required to bear
the Private Placement Legend, issued under this Indenture.

     "Unrestricted Subsidiary" means any subsidiary of the Company that does not
own any Capital Stock of, or own or hold any Lien on any property of, the
Company or any other Subsidiary of the Company and that, at the time of
determination, shall be an Unrestricted Subsidiary (as designated by the Board
of Directors of the Company); provided, that such Subsidiary at the time of such
designation (a) has no Indebtedness other than Non-Recourse Indebtedness; (b) is
not party to any agreement, contract, arrangement or understanding with the
Company or any Subsidiary of the Company unless the terms of any such agreement,
contract, arrangement or understanding are no less favorable to the Company or
such Subsidiary than those that might be obtained at the time from Persons who
are not Affiliates of the Company; (c) is a Person with respect to which neither
the Company nor any of its Subsidiaries has any direct or indirect obligation
(x) to subscribe for additional Equity Interests or (y) to maintain or preserve
such Person's financial condition or to cause such Person to achieve any
specified levels of operating results; and (d) has not guaranteed or otherwise
directly or indirectly provided credit support for any Indebtedness of the
Company or any of its Subsidiaries. The Board of Directors of the Company may
designate any Unrestricted Subsidiary to be a Subsidiary, provided, that (1) no
Default or Event of Default is existing or will

                                       26


occur as a consequence thereof and (2) immediately after giving effect to such
designation, on a pro forma basis, the Company could incur at least $1.00 of
Indebtedness pursuant to the Debt Incurrence Ratio. Each such designation shall
be evidenced by filing with the Trustee a certified copy of the resolution
giving effect to such designation and an Officers' Certificate certifying that
such designation complied with the foregoing conditions. Any subsidiary of an
Unrestricted Subsidiary must also be an Unrestricted Subsidiary.

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

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

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

SECTION 1.2.   INCORPORATION BY REFERENCE OF TIA

          Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:

          "Commission" means the SEC.

          "indenture securities" means the Notes.

          "indenture securityholder" means a Holder or a Securityholder.

          "indenture to be qualified" means this Indenture.

          "indenture trustee" or "institutional trustee" means the Trustee.

          "obligor" on the indenture securities means the Company, each
Guarantor and any other obligor on the Notes.

          All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them thereby.

SECTION 1.3.   RULES OF CONSTRUCTION

          Unless the context otherwise requires:

                                       27


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

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

               (3)  "or" is not exclusive;

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

               (5)  provisions apply to successive events and transactions;

               (6)  "herein," "hereof" and other words of similar import refer
     to this Indenture as a whole and not to any particular Article, Section or
     other subdivision; and

               (7)  references to Sections or Articles means reference to such
     Section or Article in this Indenture, unless stated otherwise.

                                  ARTICLE II

                                THE SECURITIES

SECTION 2.1.   FORM AND DATING

          (a)  General. The Notes and the Trustee's certificate of
               -------
authentication shall be substantially in the form of Exhibit A hereto. The Notes
may have notations, legends or endorsements required by law, stock exchange rule
or usage. Each Note shall be dated the date of its authentication. The Notes
shall be in denominations of $1,000 and integral multiples thereof.

          The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture, and the Company, the
Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Note conflicts with the express provisions of
this Indenture, the provisions of this Indenture shall govern and be
controlling.

          (b)  Global Notes. Notes issued in global form shall be substantially
               ------------
in the form of Exhibit A attached hereto (including the Global Note Legend
thereon and the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Notes issued in definitive form shall be substantially in the form of
Exhibit A attached hereto (but without the Global Note Legend thereon and
without the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate principal amount of outstanding Notes from time to time endorsed
thereon and that the aggregate principal amount of outstanding Notes represented

                                       28


thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or the
Securities Custodian, at the direction of the Trustee, in accordance with
instructions given by the Holder thereof as required by Section 2.6 hereof.

          (c)  Euroclear and Clearstream Procedures Applicable. The provisions
               -----------------------------------------------
of the "Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Clearstream
Banking" and "Customer Handbook" of Clearstream in effect at the relevant time
shall be applicable to transfers of beneficial interests in the Regulation S
Global Notes that are held by Participants through Euroclear or Clearstream
Bank.

SECTION 2.2.   EXECUTION AND AUTHENTICATION

          Two Officers shall sign the Notes for the Company by manual or
facsimile signature. In the case of Definitive Notes, such signatures may be
imprinted or otherwise reproduced on such Notes. If an Officer whose signature
is on a Note no longer holds that office at the time a Note is authenticated,
the Note shall nevertheless be valid. A Note shall not be valid until
authenticated by the manual signature of the Trustee. The signature shall be
conclusive evidence that the Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by an Officer (an
"Authentication Order"), authenticate Notes for issuance up to the aggregate
principal amount stated in such Authentication Order; provided that Notes
authenticated for issuance on the Issue Date shall not exceed $225,000,000 in
aggregate principal amount. The Trustee may appoint an authenticating agent
acceptable to the Company to authenticate Notes. An authenticating agent may
authenticate Notes whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as an Agent to deal with
Holders or an Affiliate of the Company.

SECTION 2.3.   REGISTRAR, PAYING AGENT AND DEPOSITARY

          The Company shall maintain an office or agency in the Borough of
Manhattan, The City of New York, where Notes may be presented for registration
of transfer or for exchange ("Registrar") and an office or agency where Notes
may be presented for payment ("Paying Agent"). The Registrar shall keep a
register of the Notes and of their transfer and exchange. The Company may
appoint one or more co-registrars and one or more additional paying agents. The
term "Registrar" includes any co-registrar and the term "Paying Agent" includes
any additional paying agent. The Company may change any Paying Agent or
Registrar without notice to any Holder. The Company shall notify the Trustee in
writing of the name and address of any Agent not a party to this Indenture. If
the Company fails to appoint or maintain another entity as Registrar or Paying
Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may
act as Paying Agent or Registrar. The Company initially appoints The Depository
Trust Company ("DTC") to act as Depositary with respect to the Global Notes. The
Company initially appoints the Trustee to act as the Registrar and Paying Agent
and to act as Notes Custodian with respect to the Global Notes.

                                       29


SECTION 2.4.   PAYING AGENT TO HOLD MONEY IN TRUST

          The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
will notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.

SECTION 2.5.   HOLDER LISTS

          The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss.312(a). If the Trustee is not
the Registrar, the Company shall furnish, or shall cause the Registrar (if other
than the Company) to furnish, to the Trustee at least seven Business Days before
each Interest Payment Date and at such other times as the Trustee may request in
writing, a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of the Holders of Notes and the Company shall
otherwise comply with TIA ss.312(a).

SECTION 2.6.   TRANSFER AND EXCHANGE

          (a)  Transfer and Exchange of Global Notes. A Global Note may not be
               -------------------------------------
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. All Global Notes will be exchanged by
the Company for Definitive Notes if (i) the Company delivers to the Trustee
notice from the Depositary that (x) the Depositary is unwilling or unable to
continue to act as Depositary for the Global Notes and the Company thereupon
fails to appoint a successor Depositary within 90 days or (y) the Depositary is
no longer a clearing agency registered under the Exchange Act, (ii) the Company
in its sole discretion determines that the Global Notes (in whole but not in
part) should be exchanged for Definitive Notes and delivers a written notice to
such effect to the Trustee or (iii) upon request of the Trustee or Holders of a
majority of the aggregate principal amount of outstanding Notes if there shall
have occurred and be continuing a Default or Event of Default with respect to
the Notes; provided that in no event shall the Reg S Temporary Global Note be
exchanged by the Company for Definitive Notes prior to (x) the expiration of the
Distribution Compliance Period and (y) the receipt by the Registrar of any
certificate identified by the Company and its counsel to be required pursuant to
Rule 903 or Rule 904 under the Securities Act. Upon the occurrence of any of the
preceding events in (i), (ii) or (iii) above, Definitive Notes shall be issued
in such names as the Depositary shall instruct the Trustee. Global Notes also
may be exchanged or

                                       30


replaced, in whole or in part, as provided in Sections 2.7 and 2.10 hereof.
Every Note authenticated and delivered in exchange for, or in lieu of, a Global
Note or any portion thereof, pursuant to this Section 2.6 or Section 2.7 or 2.10
hereof, shall be authenticated and delivered in the form of, and shall be, a
Global Note. A Global Note may not be exchanged for another Note other than as
provided in this Section 2.6(a), however, beneficial interests in a Global Note
may be transferred and exchanged as provided in Section 2.6(b), (c) or (f)
hereof.

          (b)  Transfer and Exchange of Beneficial Interests in the Global
               -----------------------------------------------------------
Notes. The transfer and exchange of beneficial interests in the Global Notes
- -----
shall be effected through the Depositary, in accordance with the provisions of
this Indenture and the Applicable Procedures. Beneficial interests in the
Restricted Global Notes shall be subject to restrictions on transfer comparable
to those set forth herein to the extent required by the Securities Act.
Transfers of beneficial interests in the Global Notes also shall require
compliance with either subparagraph (1) or (2) below, as applicable, as well as
one or more of the other following subparagraphs, as applicable:

               (1)  Transfer of Beneficial Interests in the Same Global Note.
                    --------------------------------------------------------
     Beneficial interests in any Restricted Global Note may be transferred to
     Persons who take delivery thereof in the form of a beneficial interest in
     the same Restricted Global Note in accordance with the transfer
     restrictions set forth in the Private Placement Legend; provided, however,
     that prior to the expiration of the Distribution Compliance Period,
     transfers of beneficial interests in the Reg S Temporary Global Note may
     not be made to a U.S. Person or for the account or benefit of a U.S. Person
     (other than an Initial Purchasers). Beneficial interests in any
     Unrestricted Global Note may be transferred to Persons who take delivery
     thereof in the form of a beneficial interest in an Unrestricted Global
     Note. No written orders or instructions shall be required to be delivered
     to the Registrar to effect the transfers described in this Section
     2.6(b)(1).

               (2)  All Other Transfers and Exchanges of Beneficial Interests in
                    ------------------------------------------------------------
     Global Notes. In connection with all transfers and exchanges of beneficial
     ------------
     interests that are not subject to Section 2.6(b)(1) above, the transferor
     of such beneficial interest must deliver to the Registrar either (A) (1) an
     order from a Participant or an Indirect Participant given to the Depositary
     in accordance with the Applicable Procedures directing the Depositary to
     credit or cause to be credited a beneficial interest in another Global Note
     in an amount equal to the beneficial interest to be transferred or
     exchanged and (2) instructions given in accordance with the Applicable
     Procedures containing information regarding the Participant account to be
     credited with such increase or (B) (1) an order from a Participant or an
     Indirect Participant given to the Depositary in accordance with the
     Applicable Procedures directing the Depositary to cause to be issued a
     Definitive Note in an amount equal to the beneficial interest to be
     transferred or exchanged and (2) instructions given by the Depositary to
     the Registrar containing information regarding the Person in whose name
     such Definitive Note shall be registered to effect the transfer or exchange
     referred to in (B)(1) above; provided, that in no event shall Definitive
     Notes be issued upon the transfer or exchange of beneficial interests in
     the Reg S Temporary Global Note prior to (x) the expiration of the
     Distribution

                                       31


     Compliance Period and (y) the receipt by the Registrar of any certificates
     identified by the Company or its counsel to be required pursuant to Rule
     903 and Rule 904 under the Securities Act. Upon consummation of an Exchange
     Offer by the Company in accordance with Section 2.6(f) hereof, the
     requirements of this Section 2.6(b)(2) shall be deemed to have been
     satisfied upon receipt by the Registrar of the instructions contained in
     the Letter of Transmittal delivered by the Holder of such beneficial
     interests in the Restricted Global Notes. Upon satisfaction of all of the
     requirements for transfer or exchange of beneficial interests in Global
     Notes contained in this Indenture and the Notes or otherwise applicable
     under the Securities Act, the Trustee shall adjust the principal amount of
     the relevant Global Note(s) pursuant to Section 2.6(h) hereof.

               (3)  Transfer of Beneficial Interests to Another Restricted
                    ------------------------------------------------------
     Global Note. A beneficial interest in any Restricted Global Note may be
     -----------
     transferred to a Person who takes delivery thereof in the form of a
     beneficial interest in another Restricted Global Note if the transfer
     complies with the requirements of Section 2.6(b)(2) above and the Registrar
     receives the following:

                    (A)  if the transferee will take delivery in the
          form of a beneficial interest in the 144A Global Note, then
          the transferor must deliver a certificate in the form of
          Exhibit B hereto, including the certifications in item (1)
          thereof; and

                    (B)  if the transferee will take delivery in the
          form of a beneficial interest in the Reg S Temporary Global
          Note or the Reg S Permanent Global Note, then the transferor
          must deliver a certificate in the form of Exhibit B hereto,
          including the certifications in item (2) thereof.

               (4)  Transfer and Exchange of Beneficial Interests in a
                    --------------------------------------------------
     Restricted Global Note for Beneficial Interests in an Unrestricted Global
     -------------------------------------------------------------------------
     Note. A beneficial interest in any Restricted Global Note may be exchanged
     ----
     by any holder thereof for a beneficial interest in an Unrestricted Global
     Note or transferred to a Person who takes delivery thereof in the form of a
     beneficial interest in an Unrestricted Global Note if the exchange or
     transfer complies with the requirements of Section 2.6(b)(2) above and:

                    (A)  such exchange or transfer is effected pursuant
          to the Exchange Offer in accordance with the Registration
          Rights Agreement and Section 2.6(f) hereof, and the holder
          of the beneficial interest to be transferred, in the case of
          an exchange, or the transferee, in the case of a transfer,
          certifies in the applicable Letter of Transmittal that it is
          not (1) a Broker-Dealer, (2) a Person participating in the
          distribution of the Exchange Notes or (3) a Person who is an
          affiliate (as defined in Rule 144) of the Company;

                                       32


                   (B) such transfer is effected pursuant to the Shelf
          Registration Statement in accordance with the Registration Rights
          Agreement;

                   (C) such transfer is effected by a Broker-Dealer pursuant to
          the Exchange Offer Registration Statement in accordance with the
          Registration Rights Agreement; or

                   (D) the Registrar receives the following: (1) if the holder
          of such beneficial interest in a Restricted Global Note proposes to
          exchange such beneficial interest for a beneficial interest in an
          Unrestricted Global Note, a certificate from such holder in the form
          of Exhibit C hereto, including the certifications in item (1)(a)
          thereof; or (2) if the holder of such beneficial interest in a
          Restricted Global Note proposes to transfer such beneficial interest
          to a Person who shall take delivery thereof in the form of a
          beneficial interest in an Unrestricted Global Note, a certificate from
          such holder in the form of Exhibit B hereto, including the
          certifications in item (4) thereof; and, in each such case set forth
          in this subparagraph (D), an Opinion of Counsel in form, and from
          legal counsel, reasonably acceptable to the Registrar and the Company
          to the effect that such exchange or transfer is in compliance with the
          Securities Act and that the restrictions on transfer contained herein
          and in the Private Placement Legend are no longer required in order to
          maintain compliance with the Securities Act.

          If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an Authentication Order in accordance
with Section 2.2 hereof, the Trustee shall authenticate one or more Unrestricted
Global Notes in an aggregate principal amount equal to the aggregate principal
amount of beneficial interests transferred pursuant to subparagraph (B) or (D)
above. Beneficial interests in an Unrestricted Global Note cannot be exchanged
for, or transferred to Persons who take delivery thereof in the form of, a
beneficial interest in a Restricted Global Note.

          (c)  Transfer or Exchange of Beneficial Interests for Definitive Notes
               -----------------------------------------------------------------

               (1)  Beneficial Interests in Restricted Global Notes to
                    --------------------------------------------------
Restricted Definitive Notes. If any holder of a beneficial interest in a
- ---------------------------
Restricted Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Note or to transfer such beneficial interest to a Person
who takes delivery thereof in the form of a Restricted Definitive Note, then,
upon receipt by the Registrar of the following documentation:


                    (A)  if the holder of such beneficial interest in a
          Restricted Global Note proposes to exchange such beneficial interest

                                       33


          for a Restricted Definitive Note, a certificate from such holder in
          the form of Exhibit C hereto, including the certifications in item
          (2)(a) thereof;

                    (B) if such beneficial interest is being transferred to a
          QIB in accordance with Rule 144A under the Securities Act, a
          certificate to the effect set forth in Exhibit B hereto, including the
          certifications in item (1) thereof;

                    (C) if such beneficial interest is being transferred to a
          Non-U.S. Person in an offshore transaction in accordance with Rule 903
          or Rule 904 under the Securities Act, a certificate to the effect set
          forth in Exhibit B hereto, including the certifications in item (2)
          thereof;

                    (D) if such beneficial interest is being transferred
          pursuant to an exemption from the registration requirements of the
          Securities Act in accordance with Rule 144 under the Securities Act, a
          certificate to the effect set forth in Exhibit B hereto, including the
          certifications in item (3)(a) thereof;

                    (E) if such beneficial interest is being transferred to an
          Institutional Accredited Investor in reliance on an exemption from the
          registration requirements of the Securities Act other than those
          listed in subparagraphs (B) through (D) above, a certificate to the
          effect set forth in Exhibit B hereto, including the certifications,
          certificates and Opinion of Counsel required by item (3) thereof, if
          applicable;

                    (F) if such beneficial interest is being transferred to the
          Company or any of its Subsidiaries, a certificate to the effect set
          forth in Exhibit B hereto, including the certifications in item (3)(b)
          thereof; or

                    (G) if such beneficial interest is being transferred
          pursuant to an effective registration statement under the Securities
          Act, a certificate to the effect set forth in Exhibit B hereto,
          including the certifications in item (3)(c) thereof,

the Trustee shall cause the aggregate principal amount of the applicable
Restricted Global Note to be reduced accordingly pursuant to Section 2.6(h)
hereof, and the Company shall execute and, upon receipt of an Authentication
Order pursuant to Section 2.2, the Trustee shall authenticate and deliver or
cause to be delivered to the Person designated in the instructions a Restricted
Definitive Note in the appropriate principal amount. Any Restricted Definitive
Note issued in exchange for a beneficial

                                       34


interest in a Restricted Global Note pursuant to this Section 2.6(c) shall be
registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the
Registrar through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall deliver or cause to be delivered such
Restricted Definitive Notes to the Persons in whose names such Notes are so
registered. Any Restricted Definitive Note issued in exchange for a beneficial
interest in a Restricted Global Note pursuant to this Section 2.6(c)(1) shall
bear the Private Placement Legend and shall be subject to all restrictions on
transfer contained therein.

               (2)   Beneficial Interests in Restricted Global Notes to
                     --------------------------------------------------
     Unrestricted Definitive Notes. A holder of a beneficial interest in a
     -----------------------------
     Restricted Global Note may exchange such beneficial interest for an
     Unrestricted Definitive Note or may transfer such beneficial interest to a
     Person who takes delivery thereof in the form of an Unrestricted Definitive
     Note only if:

                     (A) such exchange or transfer is effected pursuant to the
          Exchange Offer in accordance with the Registration Rights Agreement
          and Section 2.6(f) hereof, and the holder of such beneficial interest,
          in the case of an exchange, or the transferee, in the case of a
          transfer, certifies in the applicable Letter of Transmittal that it is
          not (1) a Broker-Dealer, (2) a Person participating in the
          distribution of the Exchange Notes or (3) a Person who is an affiliate
          (as defined in Rule 144) of the Company;

                     (B) such transfer is effected pursuant to the Shelf
          Registration Statement in accordance with the Registration Rights
          Agreement;

                     (C) such transfer is effected by a Broker-Dealer pursuant
          to the Exchange Offer Registration Statement in accordance with the
          Registration Rights Agreement; or

                     (D) the Registrar receives the following: (1) if the holder
          of such beneficial interest in a Restricted Global Note proposes to
          exchange such beneficial interest for a Definitive Note that does not
          bear the Private Placement Legend, a certificate from such holder in
          the form of Exhibit C hereto, including the certifications in item
          (1)(b) thereof; or (2) if the holder of such beneficial interest in a
          Restricted Global Note proposes to transfer such beneficial interest
          to a Person who shall take delivery thereof in the form of a
          Definitive Note that does not bear the Private Placement Legend, a
          certificate from such holder in the form of Exhibit B hereto,
          including the certifications in item (4) thereof; and, in each such
          case set forth in this subparagraph (D), an Opinion of Counsel

                                       35


          in form, and from legal counsel, reasonably acceptable to the
          Registrar and the Company to the effect that such exchange or transfer
          is in compliance with the Securities Act and that the restrictions on
          transfer contained herein and in the Private Placement Legend are no
          longer required in order to maintain compliance with the Securities
          Act.

               (3)   Beneficial Interests in Unrestricted Global Notes to
                     ----------------------------------------------------
     Unrestricted Definitive Notes. If any holder of a beneficial interest in an
     -----------------------------
     Unrestricted Global Note proposes to exchange such beneficial interest for
     an Unrestricted Definitive Note or to transfer such beneficial interest to
     a Person who takes delivery thereof in the form of an Unrestricted
     Definitive Note, then, upon satisfaction of the conditions set forth in
     Section 2.6(b)(2) hereof, the Trustee shall cause the aggregate principal
     amount of the applicable Unrestricted Global Note to be reduced accordingly
     pursuant to Section 2.6(h) hereof, and the Company shall execute and, upon
     receipt of an Authentication Order pursuant to Section 2.2, the Trustee
     shall authenticate and deliver to the Person designated in the instructions
     an Unrestricted Definitive Note in the appropriate principal amount. Any
     Unrestricted Definitive Note issued in exchange for a beneficial interest
     pursuant to this Section 2.6(c)(3) shall be registered in such name or
     names and in such authorized denomination or denominations as the holder of
     such beneficial interest shall instruct the Registrar through instructions
     from the Depositary and the Participant or Indirect Participant. The
     Trustee shall deliver such Unrestricted Definitive Notes to the Persons in
     whose names such Notes are so registered. Any Unrestricted Definitive Note
     issued in exchange for a beneficial interest pursuant to this Section
     2.6(c)(3) shall not bear the Private Placement Legend.

               (4)   Transfer or Exchange of Reg S Temporary Global Notes.
                     ----------------------------------------------------
     Notwithstanding the other provisions of this Section 2.6, a beneficial
     interest in the Reg S Temporary Global Note may not be (A) exchanged for a
     Definitive Note prior to (x) the expiration of the Distribution Compliance
     Period (unless such exchange is effected by the Company, does not require
     an investment decision on the part of the holder thereof and does not
     violate the provisions of Regulation S) and (y) the receipt by the
     Registrar of any certificates identified by the Company or its counsel to
     be required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act or
     (B) transferred to a Person who takes delivery thereof in the form of a
     Definitive Note prior to the events set forth in clause (A) above or unless
     the transfer is pursuant to an exemption from the registration requirements
     of the Securities Act other than Rule 903 or Rule 904.

          (d)  Transfer and Exchange of Definitive Notes for Beneficial
               --------------------------------------------------------
     Interests.
     ---------

               (1) Restricted Definitive Notes to Beneficial Interests in
                   ------------------------------------------------------
     Restricted Global Notes. If any Holder of a Restricted Definitive Note
     -----------------------
     proposes to exchange such Note for a beneficial interest in a Restricted
     Global Note or to transfer such Restricted Definitive Notes to a Person who
     takes delivery thereof in the form of a beneficial interest in a Restricted
     Global Note, then, upon receipt by the Registrar of the following
     documentation:

                                       36


                    (A) if the Holder of such Restricted Definitive Note
          proposes to exchange such Note for a beneficial interest in a
          Restricted Global Note, a certificate from such Holder in the form of
          Exhibit C hereto, including the certifications in item (2)(b) thereof;

                    (B) if such Restricted Definitive Note is being transferred
          to a QIB in accordance with Rule 144A under the Securities Act, a
          certificate to the effect set forth in Exhibit B hereto, including the
          certifications in item (1) thereof; or

                    (C) if such Restricted Definitive Note is being transferred
          to a Non-U.S. Person in an offshore transaction in accordance with
          Rule 903 or Rule 904 under the Securities Act, a certificate to the
          effect set forth in Exhibit B hereto, including the certifications in
          item (2) thereof,

the Trustee shall cancel the Restricted Definitive Note, increase or cause to be
increased the aggregate principal amount of, in the case of clause (A) above,
the appropriate Restricted Global Note, in the case of clause (B) above, the
144A Global Note, and in the case of clause (C) above, the Regulation S Global
Note.

               (2)  Restricted Definitive Notes to Beneficial Interests in
                    ------------------------------------------------------
     Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
     -------------------------
     exchange such Note for a beneficial interest in an Unrestricted Global Note
     or transfer such Restricted Definitive Note to a Person who takes delivery
     thereof in the form of a beneficial interest in an Unrestricted Global Note
     only if:

                    (A) such exchange or transfer is effected pursuant to the
          Exchange Offer in accordance with the Registration Rights Agreement
          and Section 2.6(f) hereof, and the Holder, in the case of an exchange,
          or the transferee, in the case of a transfer, certifies in the
          applicable Letter of Transmittal that it is not (1) a Broker-Dealer,
          (2) a Person participating in the distribution of the Exchange Notes
          or (3) a Person who is an affiliate (as defined in Rule 144) of the
          Company;

                    (B) such transfer is effected pursuant to the Shelf
          Registration Statement in accordance with the Registration Rights
          Agreement;

                    (C) such transfer is effected by a Broker-Dealer pursuant to
          the Exchange Offer Registration Statement in accordance with the
          Registration Rights Agreement; or

                                       37


                    (D) the Registrar receives the following: (1) if the Holder
          of such Restricted Definitive Notes proposes to exchange such Notes
          for a beneficial interest in the Unrestricted Global Note, a
          certificate from such Holder in the form of Exhibit C hereto,
          including the certifications in item (1)(c) thereof; or (2) if the
          Holder of such Restricted Definitive Notes proposes to transfer such
          Notes to a Person who shall take delivery thereof in the form of a
          beneficial interest in the Unrestricted Global Note, a certificate
          from such Holder in the form of Exhibit B hereto, including the
          certifications in item (4) thereof; and, in each such case set forth
          in this subparagraph (D), an Opinion of Counsel in form, and from
          legal counsel, reasonably acceptable to the Registrar and the Company
          to the effect that such exchange or transfer is in compliance with the
          Securities Act and that the restrictions on transfer contained herein
          and in the Private Placement Legend are no longer required in order to
          maintain compliance with the Securities Act. Upon satisfaction of the
          conditions of any of the subparagraphs in this Section 2.6(d)(2), the
          Trustee shall cancel the Restricted Definitive Notes so transferred or
          exchanged and increase or cause to be increased the aggregate
          principal amount of the Unrestricted Global Note.

               (3)  Unrestricted Definitive Notes to Beneficial Interests in
                    --------------------------------------------------------
     Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
     -------------------------
     exchange such Note for a beneficial interest in an Unrestricted Global Note
     or transfer such Definitive Notes to a Person who takes delivery thereof in
     the form of a beneficial interest in an Unrestricted Global Note at any
     time. Upon receipt of a request for such an exchange or transfer, the
     Trustee shall cancel the applicable Unrestricted Definitive Note and
     increase or cause to be increased the aggregate principal amount of one of
     the Unrestricted Global Notes. If any such exchange or transfer from a
     Definitive Note to a beneficial interest is effected pursuant to
     subparagraphs (2)(B), (2)(D) or (3) of this Section 2.6(d) at a time when
     an Unrestricted Global Note has not yet been issued, the Company shall
     issue and, upon receipt of an Authentication Order in accordance with
     Section 2.2 hereof, the Trustee shall authenticate one or more Unrestricted
     Global Notes in an aggregate principal amount equal to the principal amount
     of Definitive Notes so transferred.

          (e)  Transfer and Exchange of Definitive Notes for Definitive Notes.
               --------------------------------------------------------------
Upon request by a Holder of Definitive Notes and such Holder's compliance with
the provisions of this Section 2.6(e), the Registrar shall register the transfer
or exchange of Definitive Notes. Prior to such registration of transfer or
exchange, the requesting Holder shall present or surrender to the Registrar the
Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by its attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.6(e).

                                       38


              (1)  Restricted Definitive Notes to Restricted Definitive Notes.
                   ----------------------------------------------------------
     Any Restricted Definitive Note may be transferred to and registered in the
     name of Persons who take delivery thereof in the form of a Restricted
     Definitive Note if the Registrar receives the following:

                   (A) if the transfer will be made pursuant to Rule 144A under
          the Securities Act, then the transferor must deliver a certificate in
          the form of Exhibit B hereto, including the certifications in item (1)
          thereof;

                   (B) if the transfer will be made pursuant to Rule 903 or
          Rule 904, then the transferor must deliver a certificate in the form
          of Exhibit B hereto, including the certifications in item (2) thereof;
          and

                   (C) if the transfer will be made pursuant to any other
          exemption from the registration requirements of the Securities Act,
          then the transferor must deliver a certificate in the form of Exhibit
          B hereto, including the certifications, certificates and Opinion of
          Counsel required by item (3) thereof, if applicable.

              (2)  Restricted Definitive Notes to Unrestricted Definitive Notes.
                   -------------------------------------------------------------
     Any Restricted Definitive Note may be exchanged by the Holder thereof for
     an Unrestricted Definitive Note or transferred to a Person or Persons who
     take delivery thereof in the form of an Unrestricted Definitive Note if:

                   (A) such exchange or transfer is effected pursuant to the
          Exchange Offer in accordance with the Registration Rights Agreement
          and Section 2.6(f) hereof, and the Holder, in the case of an exchange,
          or the transferee, in the case of a transfer, certifies in the
          applicable Letter of Transmittal that it is not (1) a Broker-Dealer,
          (2) a Person participating in the distribution of the Exchange Notes
          or (3) a Person who is an affiliate (as defined in Rule 144) of the
          Company;

                   (B) any such transfer is effected pursuant to the Shelf
          Registration Statement in accordance with the Registration Rights
          Agreement;

                   (C) any such transfer is effected by a Broker-Dealer pursuant
          to the Exchange Offer Registration Statement in accordance with the
          Registration Rights Agreement; or

                   (D) the Registrar receives the following: (1) if the Holder
          of such Restricted Definitive Notes proposes to exchange such

                                       39


          Notes for an Unrestricted Definitive Note, a certificate from such
          Holder in the form of Exhibit C hereto, including the certifications
          in item (1)(d) thereof; or (2) if the Holder of such Restricted
          Definitive Notes proposes to transfer such Notes to a Person who shall
          take delivery thereof in the form of an Unrestricted Definitive Note,
          a certificate from such Holder in the form of Exhibit B hereto,
          including the certifications in item (4) thereof; and, in each such
          case set forth in this subparagraph (D), an Opinion of Counsel in
          form, and from legal counsel, reasonably acceptable to the Registrar
          and the Company to the effect that such exchange or transfer is in
          compliance with the Securities Act and that the restrictions on
          transfer contained herein and in the Private Placement Legend are no
          longer required in order to maintain compliance with the Securities
          Act.

              (3)  Unrestricted Definitive Notes to Unrestricted Definitive
                   --------------------------------------------------------
     Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes to
     -----
     a Person who takes delivery thereof in the form of an Unrestricted
     Definitive Note. Upon receipt of a request to register such a transfer, the
     Registrar shall register the Unrestricted Definitive Notes pursuant to the
     instructions from the Holder thereof.

          (f)  Exchange Offer. Upon the occurrence of the Exchange Offer in
               --------------
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.2 and an
Opinion of Counsel for the Company as to certain matters discussed in this
Section 2.6(f), the Trustee shall authenticate (i) one or more Unrestricted
Global Notes in an aggregate principal amount equal to the sum of (A) the
principal amount of the beneficial interests in the Restricted Global Notes
tendered for acceptance by Persons that certify in the applicable Letters of
Transmittal that (x) they are not Broker-Dealers, (y) they are not participating
in a distribution of the Exchange Notes and (z) they are not affiliates (as
defined in Rule 144) of the Company, and accepted for exchange in the Exchange
Offer and (B) the principal amount of Definitive Notes exchanged or transferred
for beneficial interests in Unrestricted Global Notes in connection with the
Exchange Offer pursuant to Section 2.6(d)(2) and (ii) Definitive Notes in an
aggregate principal amount equal to the principal amount of the Restricted
Definitive Notes accepted for exchange in the Exchange Offer (other than
Definitive Notes described in clause (i)(B) immediately above). Concurrently
with the issuance of such Notes, the Trustee shall cause the aggregate principal
amount of the applicable Restricted Global Notes to be reduced accordingly, and
the Company shall execute and, upon receipt of an Authentication Order pursuant
to Section 2.2, the Trustee shall authenticate and deliver to the Persons
designated by the Holders of Definitive Notes so accepted Definitive Notes in
the appropriate principal amount.

          The Opinion of Counsel for the Company referenced above shall state
          that:


                   (A) the issuance and sale of the Exchange Notes by the
          Company have been duly authorized and, when executed and authenticated
          in accordance with the provisions of this Indenture and

                                       40


          delivered in exchange for Series A Notes in accordance with this
          Indenture and the Exchange Offer, will be entitled to the benefits of
          this Indenture and will be valid and binding obligations of the
          Company, enforceable against the Company in accordance with their
          terms except as the enforceability thereof may be limited by (x)
          bankruptcy, fraudulent transfer, insolvency, reorganization,
          moratorium or similar laws affecting creditors' rights generally and
          (y) equitable principles of general applicability (regardless of
          whether enforceability is considered at equity or in law); and

                   (B) when the Exchange Notes are executed and authenticated in
          accordance with the provisions of this Indenture and delivered in
          exchange for Series A Notes in accordance with this Indenture and the
          Exchange Offer, the Guarantees by the Guarantors endorsed thereon will
          be entitled to the benefits of this Indenture and will be valid and
          binding obligations of the Guarantors, enforceable against the
          Guarantors in accordance with their terms except as the enforceability
          thereof may be limited by (x) bankruptcy, fraudulent transfer,
          insolvency, reorganization, moratorium or similar laws affecting
          creditors' rights generally and (y) equitable principles of general
          applicability (regardless of whether enforceability is considered at
          equity or in law).

          (g) Legends. The following legends shall appear on the face of all
              -------
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.

              (1)   Private Placement Legend.
                    ------------------------

                    (A) Except as permitted by subparagraph (B) below, each
          Global Note and each Definitive Note (and all Notes issued in exchange
          therefor or substitution thereof) shall bear the legend in
          substantially the following form:

         "THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
         EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933
         (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD OR
         OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
         APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY
         NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION
         FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE
         144A THEREUNDER."

                                       41


         "THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A)
         THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED,
         ONLY (1) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY
         BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A
         UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
         RULE 144A, (2) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
         ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (3) PURSUANT TO AN
         EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE
         144 THEREUNDER (IF AVAILABLE), (4) TO AN INSTITUTIONAL "ACCREDITED
         INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D
         UNDER THE SECURITIES ACT THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE
         TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
         AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE AND, IF SUCH TRANSFER
         IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN
         $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH
         TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, OR (5) PURSUANT TO
         AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH
         OF CASES (1) THROUGH (5) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
         LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND
         EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS
         NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE."

                       (B) Notwithstanding the foregoing, any Global Note or
              Definitive Note issued pursuant to subparagraphs (b)(4), (c)(2),
              (c)(3), (d)(2), (d)(3), (e)(2), (e)(3) or (f) to this Section 2.6
              (and all Notes issued in exchange therefor or substitution
              thereof) shall not bear the Private Placement Legend.

                  (2)  Global Note Legend. To the extent required by the
                       ------------------
         Depositary, each Global Note shall bear legends in substantially the
         following forms:

         "THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
         INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
         BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY
         PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE
         SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.6 OF THE
         INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN
         PART PURSUANT TO SECTION 2.6(a) OF THE INDENTURE, (III) THIS GLOBAL
         NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO
         SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE
         TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF
         THE COMPANY."

                                       42


         "UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
         DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
         THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
         DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY
         THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A
         NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS
         PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
         COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY
         OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
         CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH
         OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
         (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE
         REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE
         OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
         WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
         INTEREST HEREIN."

                    (3)   Reg S Temporary Global Note Legend. To the extent
                          ----------------------------------
         required by the Depositary, each Reg S Temporary Global Note shall bear
         a legend in substantially the following form:

         "THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND
         THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR DEFINITIVE
         NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER
         THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY
         GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE CASH PAYMENTS OF INTEREST
         DURING THE PERIOD WHICH SUCH HOLDER HOLDS THIS NOTE. NOTHING IN THIS
         LEGEND SHALL BE DEEMED TO PREVENT INTEREST FROM ACCRUING ON THIS NOTE."

               (h)  Cancellation and/or Adjustment of Global Notes. At such time
                    ----------------------------------------------
as all beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
cancelled in whole and not in part, each such Global Note shall be returned to
or retained and cancelled by the Trustee in accordance with Section 2.11 hereof.
At any time prior to such cancellation, if any beneficial interest in a Global
Note is exchanged for or transferred to a Person who will take delivery thereof
in the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement may be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement may be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.

                                       43


           (i) General Provisions Relating to Transfers and Exchanges.
               ------------------------------------------------------

               (1) To permit registrations of transfers and exchanges, the
     Company shall execute and the Trustee shall authenticate Global Notes and
     Definitive Notes upon receipt of an Authentication Order.

               (2) No service charge shall be made to a holder of a beneficial
     interest in a Global Note or to a Holder of a Definitive Note for any
     registration of transfer or exchange, but the Company may require payment
     of a sum sufficient to cover any transfer tax or similar governmental
     charge payable in connection therewith (other than any such transfer taxes
     or similar governmental charge payable upon exchange or transfer pursuant
     to Sections 2.10, 3.7, 4.14 and 10.1 hereof).

               (3) The Registrar shall not be required to register the transfer
     of or exchange any Note selected for redemption in whole or in part, except
     the unredeemed portion of any Note being redeemed in part.

               (4) All Global Notes and Definitive Notes issued upon any
     registration of transfer or exchange of Global Notes or Definitive Notes
     shall be the valid obligations of the Company, evidencing the same
     Indebtedness, and entitled to the same benefits under this Indenture, as
     the Global Notes or Definitive Notes surrendered upon such registration of
     transfer or exchange.

               (5) The Company and the Registrar shall not be required (A) to
     issue, to register the transfer of or to exchange any Notes during a period
     beginning at the opening of business 15 days before the day of any
     selection of Notes for redemption under Section 3.3 hereof and ending at
     the close of business on the day of selection, (B) to register the transfer
     of or to exchange any Note so selected for redemption in whole or in part,
     except the unredeemed portion of any Note being redeemed in part or (C) to
     register the transfer of or to exchange a Note between a Record Date and
     the next succeeding Interest Payment Date.

               (6) Prior to due presentment for the registration of a transfer
     of any Note, the Trustee, any Agent and the Company may deem and treat the
     Person in whose name any Note is registered as the absolute owner of such
     Note for the purpose of receiving payment of principal of and interest on
     such Notes and for all other purposes, and none of the Trustee, any Agent
     or the Company shall be affected by notice to the contrary.

               (7) The Trustee shall authenticate Global Notes and Definitive
     Notes in accordance with the provisions of Section 2.2 hereof.

               (8) All certifications, certificates and Opinions of Counsel
     required to be submitted to the Registrar pursuant to this Section 2.6 to
     effect a registration of transfer or exchange may be submitted by
     facsimile.

                                       44


          Notwithstanding anything herein to the contrary, as to any
certifications and certificates delivered to the Registrar pursuant to this
Section 2.6, the Registrar's duties shall be limited to confirming that any such
certifications and certificates delivered to it are in the form of Exhibits B, C
and D attached hereto. The Registrar shall not be responsible for confirming the
truth or accuracy of representations made in any such certifications or
certificates.

SECTION 2.7.   REPLACEMENT NOTES

          If any mutilated Note is surrendered to the Trustee or the Company and
the Trustee and the Company receive evidence (which evidence may be from the
Trustee) to their satisfaction of the destruction, loss or theft of any Note and
if the requirements of Section 8-405 of the New York Uniform Commercial Code are
met, the Company shall issue and the Trustee, upon receipt of an Authentication
Order, shall authenticate a replacement Note if the Trustee's requirements are
met. If required by the Trustee or the Company, an indemnity bond must be
supplied by the Holder that is sufficient in the judgment of the Trustee and the
Company to protect the Company, the Trustee, any Agent and any authenticating
agent from any loss that any of them may suffer if a Note is replaced. The
Company may charge for its expenses in replacing a Note. Every replacement Note
is an additional obligation of the Company and shall be entitled to all of the
benefits of this Indenture equally and proportionately with all other Notes duly
issued hereunder.

SECTION 2.8.   OUTSTANDING NOTES

          The Notes outstanding at any time are all the Notes authenticated by
the Trustee (including any Note represented by a Global Note) except for those
cancelled by it or at its direction, those delivered to it for cancellation,
those reductions in the interest in a Global Note effected by the Trustee in
accordance with the provisions hereof, and those described in this Section as
not outstanding. Except as set forth in Section 2.9 hereof, a Note does not
cease to be outstanding because the Company or an Affiliate of the Company holds
the Note. If a Note is replaced pursuant to Section 2.7 hereof, such Note,
together with the Guarantee of that particular Note endorsed thereon, ceases to
be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser. If the principal amount of any
Note is considered paid under Section 4.1 hereof, it ceases to be outstanding
and interest on it ceases to accrue. If the Paying Agent (other than the
Company, a Subsidiary or an Affiliate of any thereof) holds, on a redemption
date or the maturity date, money sufficient to pay Notes payable on that date,
then on and after that date such Notes shall be deemed to be no longer
outstanding and shall cease to accrue interest.

SECTION 2.9.   TREASURY NOTES

          In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that the Trustee knows are so owned shall be so disregarded.

                                       45


SECTION 2.10.  TEMPORARY NOTES

          Until certificates representing Notes are ready for delivery, the
Company may prepare and the Trustee, upon receipt of an Authentication Order,
shall authenticate temporary Notes. Temporary Notes shall be substantially in
the form of Definitive Notes but may have variations that the Company considers
appropriate for temporary Notes and as shall be reasonably acceptable to the
Trustee. Without unreasonable delay, the Company shall prepare and the Trustee
shall authenticate Definitive Notes in exchange for temporary Notes. Holders of
temporary Notes shall be entitled to all of the benefits of this Indenture.

SECTION 2.11.  CANCELLATION

          The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent
(other than the Company or an Affiliate of the Company), and no one else shall
cancel all Notes surrendered for registration of transfer, exchange, payment,
replacement or cancellation and shall destroy cancelled Notes (subject to the
record retention requirement of the Exchange Act). Certification of the
destruction of all cancelled Notes shall be delivered to the Company. The
Company may not issue new Notes to replace Notes that it has paid or that have
been delivered to the Trustee for cancellation.

SECTION 2.12.  DEFAULTED INTEREST

          Any interest on any Note which is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date plus, to the extent lawful,
any interest payable on the defaulted interest at the rate and in the manner
provided in Section 4.1 hereof and in the Note (herein called "Defaulted
Interest") shall forthwith cease to be payable to the registered holder on the
relevant Record Date, and such Defaulted Interest may be paid by the Company, at
its election in each case, as provided in clause (1) or (2) below:


               (1) The Company may elect to make payment of any Defaulted
     Interest to the Persons in whose names the Notes are registered at the
     close of business on a Special Record Date for the payment of such
     Defaulted Interest, which shall be fixed in the following manner. The
     Company shall notify the Trustee and the Paying Agent in writing of the
     amount of Defaulted Interest proposed to be paid on each Note and the date
     of the proposed payment, and at the same time the Company shall deposit
     with the Paying Agent an amount of cash equal to the aggregate amount
     proposed to be paid in respect of such Defaulted Interest or shall make
     arrangements reasonably satisfactory to the Paying Agent for such deposit
     prior to the date of the proposed payment, such cash when deposited to be
     held in trust for the benefit of the Persons entitled to such Defaulted
     Interest as provided in this clause (1). Thereupon the Paying Agent shall
     fix a "Special Record Date" for the payment of such Defaulted Interest
     which shall be not more than 15 days and not less than 10 days prior to the
     date of the proposed payment and not less than 10 days after the receipt by
     the

                                       46


     Paying Agent of the notice of the proposed payment. The Paying Agent shall
     promptly notify the Company and the Trustee of such Special Record Date
     and, in the name and at the expense of the Company, shall cause notice of
     the proposed payment of such Defaulted Interest and the Special Record Date
     therefor to be mailed, first-class postage prepaid, to each Holder at its
     address as it appears in the Note register maintained by the Registrar not
     less than 10 days prior to such Special Record Date. Notice of the proposed
     payment of such Defaulted Interest and the Special Record Date therefor
     having been mailed as aforesaid, such Defaulted Interest shall be paid to
     the persons in whose names the Notes (or their respective predecessor
     Notes) are registered on such Special Record Date and shall no longer be
     payable pursuant to the following clause (2).

               (2) The Company may make payment of any Defaulted Interest in any
     other lawful manner not inconsistent with the requirements of any
     securities exchange on which the Notes may be listed, and upon such notice
     as may be required by such exchange, if, after notice given by the Company
     to the Trustee and the Paying Agent of the proposed payment pursuant to
     this clause, such manner shall be deemed practicable by the Trustee and the
     Paying Agent.

               Subject to the foregoing provisions of this Section, each Note
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Note shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Note.

SECTION 2.13.  CUSIP NUMBERS

          The Company in issuing the Notes may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided, that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Notes or as contained in any notice of a redemption and
that reliance may be placed only on the other identification numbers printed on
the Notes, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Company will promptly notify the Trustee of any
change in the "CUSIP" numbers.

                                   ARTICLE III

                                   REDEMPTION

SECTION 2.1.  OPTIONAL REDEMPTION

          (a) Except as set forth in clause (b) of this Section 3.1, the Company
shall not have the option to redeem the Notes pursuant to this Section 3.1 prior
to April 15, 2006. The Notes will be redeemable for cash at the option of the
Company, in whole or in part, at any time on or after April 15, 2006, upon not
less than 30 days nor more than 60 days prior notice mailed by first class mail
to each Holder at its last registered address, at the following redemption
prices (expressed as

                                       47


percentages of the principal amount) if redeemed during the 12-month period
commencing April 15, of the years indicated below, in each case (subject to the
right of Holders of record on a Record Date to receive the corresponding
interest due (and the corresponding Liquidated Damages, if any) on the
corresponding Interest Payment Date that is on or prior to such Redemption Date)
together with accrued and unpaid interest and Liquidated Damages, if any,
thereon to the Redemption Date:

            Year                                Percentage
            ----                                ----------

            2006................................  104.625%
            2007................................  103.083%
            2008................................  101.542%
            2009 and thereafter.................  100.000%

          (b) Notwithstanding the provisions of clause (a) of this Section 3.1,
at any time on or prior to April 15, 2004, upon any Public Equity Offering, up
to 35% of the aggregate principal amount of the Notes issued pursuant to this
Indenture may be redeemed at the option of the Company within 90 days of such
Public Equity Offering, on not less than 30 days, but not more than 60 days,
prior notice to each Holder of the Notes to be redeemed, with cash from the Net
Cash Proceeds of such Public Equity Offering, at a redemption price equal to
109.25% of the principal amount thereof (subject to the right of Holders of
record on a Record Date to receive the corresponding interest (and the
corresponding Liquidated Damages, if any) due on the Interest Payment Date that
is on or prior to such Redemption Date) together with accrued and unpaid
interest and Liquidated Damages, if any, thereon to the Redemption Date;
provided that immediately following such redemption not less than 65% of the
aggregate principal amount of the Notes originally issued pursuant to this
Indenture remain outstanding.

          (c) Any redemption pursuant to this Section 3.1 shall be made pursuant
to the provisions of Sections 3.2 through 3.7 hereof.

SECTION 3.2.  NOTICES TO TRUSTEE

          If the Company elects to redeem Notes pursuant to Section 5 of the
Notes, it shall notify the Trustee and the Paying Agent in writing of the
Redemption Date and the principal amount of Notes to be redeemed and whether it
wants the Paying Agent to give notice of redemption to the Holders.

          If the Company elects to reduce the principal amount of Notes to be
redeemed pursuant to Section 5 of the Notes by crediting against any such
redemption Notes it has not previously delivered to the Trustee and the Paying
Agent for cancellation, it shall so notify the Trustee, in the form of an
Officers' Certificate, and the Paying Agent of the amount of the reduction and
deliver such Notes with such notice.

                                       48


          The Company shall give each notice to the Trustee and the Paying Agent
provided for in this Section 3.2 at least 45, but not more than 75, days before
the Redemption Date (unless a shorter notice shall be satisfactory to the
Trustee and the Paying Agent). Any such notice may be cancelled at any time
prior to notice of such redemption being mailed to any Holder and shall thereby
be void and of no effect.

SECTION 3.3.   SELECTION OF NOTES TO BE REDEEMED

          If less than all of the Notes are to be redeemed at any time, the
Trustee shall select the Notes or portions thereof to be redeemed among the
Holders of the Notes in compliance with the requirements of the principal
national securities exchange, if any, on which the Notes are listed or, if the
Notes are not so listed, on a pro rata basis, by lot or in accordance with any
other method the Trustee considers fair and appropriate.

          The Trustee shall make the selection from the Notes outstanding and
not previously called for redemption and shall promptly notify the Company and
the Paying Agent in writing of the Notes selected for redemption and, in the
case of any Note selected for partial redemption, the principal amount thereof
to be redeemed. Notes in denominations of $1,000 may be redeemed only in whole.
The Trustee may select for redemption portions (equal to $1,000 or any integral
multiple thereof) of the principal of Notes that have denominations larger than
$1,000. Provisions of this Indenture that apply to Notes called for redemption
also apply to portions of Notes called for redemption.

SECTION 3.4.   NOTICE OF REDEMPTION

          At least 30 days, but not more than 60 days prior to the Redemption
Date, the Company shall mail a notice of redemption by first class mail, postage
prepaid, to the Trustee, the Paying Agent and each Holder whose Notes are to be
redeemed. At the Company's request, the Paying Agent shall give the notice of
redemption in the Company's name and at the Company's expense. Each notice for
redemption shall identify the Notes to be redeemed and shall state:

               (1) the Redemption Date;

               (2) the Redemption Price, including accrued and unpaid interest
     and Liquidated Damages, if any, to be paid upon such redemption;

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

               (4) that Notes called for redemption must be surrendered to the
     Paying Agent at the address specified in such notice to collect the
     Redemption Price;

               (5) that, unless (a) the Company defaults in its obligation to
     deposit with the Paying Agent cash which through the scheduled payment of
     principal and interest (and Liquidated Damages, if any) in respect thereof
     in accordance with their terms shall provide

                                       49


     the amount to fund the Redemption Price in accordance with Section 3.6
     hereof or (b) such redemption payment is prohibited, interest (and
     Liquidated Damages, if any) on Notes called for redemption ceases to accrue
     on and after the Redemption Date and the only remaining right of the
     Holders of such Notes is to receive payment of the Redemption Price,
     including accrued and unpaid interest (and Liquidated Damages, if any) to
     the Redemption Date, upon surrender to the Paying Agent of the Notes called
     for redemption and to be redeemed;

               (6) if any Note is being redeemed in part, the portion of the
     principal amount, equal to $1,000 or any integral multiple thereof, of such
     Note to be redeemed and that, after the Redemption Date, and upon surrender
     of such Note, a new Note or Notes in aggregate principal amount equal to
     the unredeemed portion thereof shall be issued;

               (7) if less than all the Notes are to be redeemed, the
     identification of the particular Notes (or portion thereof) to be redeemed,
     as well as the aggregate principal amount of such Notes to be redeemed and
     the aggregate principal amount of Notes to be outstanding after such
     partial redemption;

               (8) the CUSIP number of the Notes to be redeemed; and

               (9) that the notice is being sent pursuant to this Section 3.4
     and pursuant to the optional redemption provisions of Section 5 of the
     Notes.

SECTION 3.5.   EFFECT OF NOTICE OF REDEMPTION

          Once notice of redemption is mailed in accordance with Section 3.4
hereof, Notes called for redemption become due and payable on the Redemption
Date and at the Redemption Price, including accrued and unpaid interest (and
Liquidated Damages, if any) to the Redemption Date. Upon surrender to the
Trustee or Paying Agent, such Notes called for redemption shall be paid at the
Redemption Price, including interest and Liquidated Damages, if any, accrued and
unpaid to the Redemption Date; provided, that if the Redemption Date is on or
after an interest Record Date on which the Holders of record have a right to
receive the corresponding interest due, and Liquidated Damages, if any, and on
or before the associated Interest Payment Date, any accrued and unpaid interest
and Liquidated Damages, if any, due on such Interest Payment Date shall be paid
to the Person in whose name a Note is registered at the close of business on
such Record Date on the corresponding Interest Payment Date; and provided,
further, that if a Redemption Date is a Legal Holiday, payment shall be made on
the next succeeding Business Day and no interest (or Liquidated Damages, if any)
shall accrue for the period from such Redemption Date to such succeeding
Business Day.

SECTION 3.6.   DEPOSIT OF REDEMPTION PRICE

          Prior to 10:00 a.m. New York City time on the Redemption Date, the
Company shall deposit with the Paying Agent (which may not for purposes of this
Section 3.6, notwithstanding anything in this Indenture to the contrary, be the
Company or any Affiliate of the Company) cash

                                       50


sufficient to pay the Redemption Price of all Notes to be redeemed on such
Redemption Date (other than Notes or portions thereof called for redemption on
that date that have been delivered by the Company to the Trustee for
cancellation). The Paying Agent shall promptly return to the Company any cash so
deposited (together with all money earned on funds so held in trust, if
applicable) which is not required for that purpose upon the written request of
the Company.

          If the Company complies with the preceding paragraph and payment of
the Notes called for redemption is not prohibited for any reason, interest (and
Liquidated Damages, if any) on the Notes to be redeemed shall cease to accrue on
the applicable Redemption Date, whether or not such Notes are presented for
payment. Notwithstanding anything herein to the contrary, if any Note
surrendered for redemption in the manner provided in the Notes shall not be so
paid upon surrender for redemption because of the failure of the Company to
comply with the preceding paragraph, interest (and Liquidated Damages, if any)
shall continue to accrue and be paid from the Redemption Date until such payment
is made on the unpaid principal, and, to the extent lawful, on any interest not
paid on such unpaid principal, in each case at the rate and in the manner
provided in Section 4.1 hereof and the Note.

SECTION 3.7.  NOTES REDEEMED IN PART

          Upon surrender of a Note that is to be redeemed in part, the Company
shall execute and the Trustee shall authenticate and deliver to the Holder,
without service charge to the Holder, a new Note or Notes equal in principal
amount to the unredeemed portion of the Note surrendered.

SECTION 3.8.  NO MANDATORY REDEMPTION

          The Company shall not be required to make mandatory redemption
payments with respect to the Notes. The Notes shall not have the benefit of any
sinking fund.

                                   ARTICLE IV

                                    COVENANTS

SECTION 4.1.  PAYMENT OF NOTES

          The Company shall pay the principal of and interest (and Liquidated
Damages, if any) on the Notes on the dates and in the manner provided herein and
in the Notes. An installment of principal of or interest (or Liquidated Damages,
if any) on the Notes shall be considered paid on the date it is due if the
Trustee or Paying Agent (other than the Company or an Affiliate of the Company)
holds for the benefit of the Holders (on or before 10:00 a.m. New York City time
to the extent necessary to provide the funds to the Depositary in accordance
with the Depositary's procedures) on that date cash deposited and designated for
and sufficient to pay the installment.

                                       51


          The Company shall pay interest on overdue principal and on overdue
installments of interest (and Liquidated Damages, if any) at the rate specified
in the Notes compounded semi-annually, to the extent lawful.

SECTION 4.2.   MAINTENANCE OF OFFICE OR AGENCY

          The Company and the Guarantors shall maintain in the Borough of
Manhattan, The City of New York, an office or agency where Notes may be
presented or surrendered for payment, where Notes may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company and the Guarantors in respect of the Notes and this Indenture may be
served. The Company and the Guarantors shall give prompt written notice to the
Trustee and the Paying Agent of the location, and any change in the location, of
such office or agency. If at any time the Company and the Guarantors shall fail
to maintain any such required office or agency or shall fail to furnish the
Trustee and the Paying Agent with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the address of the
Trustee set forth in Section 13.2 hereof.

          The Company and the Guarantors may also from time to time designate
one or more other offices or agencies where the Notes may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company and the Guarantors of their obligation to
maintain an office or agency in the Borough of Manhattan, The City of New York,
for such purposes. The Company and the Guarantors shall give prompt written
notice to the Trustee and the Paying Agent of any such designation or rescission
and of any change in the location of any such other office or agency. The
Company hereby initially designates the Corporate Trust Office of the Trustee as
such office.

SECTION 4.3.  LIMITATION ON RESTRICTED PAYMENTS

          The Company and the Guarantors shall not, and neither the Company nor
the Guarantors shall permit any of their respective Subsidiaries to, directly or
indirectly, make any Restricted Payment if, after giving effect to such
Restricted Payment on a pro forma basis:

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

               (2)  the Company is not permitted to incur at least $1.00 of
     additional Indebtedness pursuant to the Debt Incurrence Ratio, or

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

                    (a) $25,000,000, plus

                                       52


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

                    (c) the aggregate Net Cash Proceeds received by the Company
from the sale of its Qualified Capital Stock (other than (i) to one of the
Company's Subsidiaries and (ii) to the extent applied in connection with a
Qualified Exchange or a Permitted Investment pursuant to clause (f) thereof or,
to avoid duplication, otherwise given credit for in any provision of the
following paragraph), after the Issue Date, plus

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

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

                    (v) Restricted Payments in an amount not to exceed
$25,000,000 in the aggregate (exclusive of any accrued and unpaid interest
payable in connection with repurchases of Subordinated Indebtedness) consisting
solely of repurchases of the Company's Capital Stock and the Company's
Subordinated Indebtedness on and after the Issue Date,

                    (w) in addition to the amounts permitted under clause (v)
above, Restricted Payments in an amount not to exceed $50,000,000 in the
aggregate (excluding accrued and unpaid interest) consisting solely of
repurchases of the Company's Capital Stock and the Company's Subordinated
Indebtedness on and after the Issue Date, provided, that, after giving effect to
any such repurchase on a pro forma basis, on the date of any such repurchase,
the Company's Consolidated Coverage Ratio for the Reference Period immediately
preceding the date of repurchase would be at least 3.25 to 1.0,

and the provisions of the immediately preceding paragraph will not prohibit,

                                       53


                    (x) any dividend, distribution or other payments by any of
the Company's Subsidiaries on its Equ Equity Interests that is paid pro rata to
all holders of such Equity Interests,ity Interests that is paid pro rata to all
holders of such Equity Interests,

                    (y) a Qualified Exchange, or


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

          The full amount of any Restricted Payment made pursuant to the
foregoing clauses (x) and (z) (but not pursuant to clause (v) or (w) or (y)) of
the immediately preceding sentence, however, will be counted as Restricted
Payments made for purposes of the calculation of the aggregate amount of
Restricted Payments available to be made referred to in clause (3) of the first
paragraph under this Section 4.3.

          For purposes of this Section 4.3, the amount of any Restricted Payment
made or returned, if other than in cash, shall be the fair market value thereof,
as determined in the good faith reasonable judgment of the Company's Board of
Directors, unless stated otherwise, at the time made or returned, as applicable.
Additionally, (a) concurrently with each Restricted Payment in excess of
$10,000,000 and (b) on February 15 of each year (or if such day is not a
Business Day, the next succeeding Business Day) with respect to all Restricted
Payments made during the preceding 12-month period and not previously reported
pursuant to clause (a) of this paragraph, the Company shall deliver an Officers'
Certificate to the Trustee describing in reasonable detail the nature of such
Restricted Payment, stating that the Restricted Payment is permitted and setting
forth the basis upon with the calculations required by this covenant were
computed.

SECTION 4.4.   CORPORATE AND PARTNERSHIP EXISTENCE

          Except as otherwise permitted by Article V, Section 4.14 or Section
11.4, the Company and the Guarantors shall do or cause to be done all things
necessary to preserve and keep in full force and effect their respective
corporate, partnership or other organizational existence, as the case may be,
and the corporate, partnership or other organizational existence, as the case
may be, of each of their Subsidiaries in accordance with the respective
organizational documents of each of them and the material rights (charter and
statutory) and material corporate franchises of the Company, the Guarantors and
each of their respective Subsidiaries; provided, however, that neither the
Company nor any Guarantor shall be required to preserve, with respect to
themselves, any right or franchise, and with respect to any of their respective
Subsidiaries, any such existence, right or franchise, if (a) the Company shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company and (b) the loss thereof would not have a material
adverse effect on the Company's or any Guarantor's ability to perform its
obligations under this Indenture or the Notes.

SECTION 4.5.   PAYMENT OF TAXES AND OTHER CLAIMS

                                       54


          The Company and the Guarantors shall, and each of the Company and the
Guarantors shall cause each of their Subsidiaries to, pay or discharge or cause
to be paid or discharged, before the same shall become delinquent, (a) all
material taxes, assessments and governmental charges (including withholding
taxes and any penalties, interest and additions to taxes) levied or imposed upon
the Company, any Guarantor or any of their Subsidiaries or any of their
respective properties and assets and (b) all lawful claims, whether for labor,
materials, supplies or services, which have become due and payable and which by
law have or may become a Lien upon any material property and assets of the
Company, any Guarantor or any of their Subsidiaries; provided, however, that
neither the Company nor any Guarantor shall be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings and for which disputed amounts adequate reserves have
been established in accordance with GAAP.

SECTION 4.6.   MAINTENANCE OF PROPERTIES AND INSURANCE

          The Company and the Guarantors shall cause all material properties
used or useful in the conduct of their business and the business of each of
their Subsidiaries to be maintained and kept in good condition, repair and
working order (reasonable wear and tear excepted) so that the business carried
on in connection therewith may be properly conducted at all times; provided,
however, that nothing in this Section 4.6 shall prevent the Company or any
Guarantor from discontinuing any operation or maintenance of any of such
properties, or disposing of any of them, if such discontinuance or disposal is
(a)(i) in the judgment of the Board of Directors of the Company, desirable in
the conduct of the business of the Company and (ii) would not have a material
adverse effect on the Company's or any Guarantor's ability to perform its
obligations under this Indenture or the Notes or (b) otherwise permitted under
Section 4.14.

          The Company and the Guarantors shall provide, or cause to be provided,
for themselves and each of their Subsidiaries, insurance (including appropriate
self-insurance) against loss or damage of the kinds that, in the reasonable,
good faith opinion of the Board of Directors of the Company is adequate and
appropriate for the conduct of the business of the Company, the Guarantors and
such Subsidiaries in a prudent manner, with (except for self-insurance)
reputable insurers or with the government of the United States of America or an
agency or instrumentality thereof, in such amounts, with such deductibles, and
by such methods as shall be customary, in the reasonable, good faith opinion of
the Company and adequate and appropriate for the conduct of the business of the
Company, the Guarantors and such Subsidiaries in a prudent manner for entities
similarly situated in the industry in which, at any time of determination, they
are then operating.

SECTION 4.7.   COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT

          (a)  The Company shall deliver to the Trustee within 120 days after
the end of its fiscal year an Officers' Certificate, one of the signers of which
shall be the principal executive, principal financial or principal accounting
officer of the Company, complying with TIA 314(a)(4) and stating that a review
of its activities and the activities of its Subsidiaries, if any, during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to

                                       55


determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture (without regard to notice requirements or grace
periods) and further stating, as to each such Officer signing such certificate,
whether or not the signer knows of any failure by the Company, any Guarantor or
any Subsidiary of the Company to comply with any conditions or covenants in this
Indenture and, if such signer does know of such a failure to comply, the
certificate shall describe such failure with reasonable particularity. The
Officers' Certificate shall also notify the Trustee should the relevant fiscal
year end on any date other than the current fiscal year end date.

          (b)  The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, promptly upon becoming aware of any Default or Event of
Default, an Officers' Certificate specifying such Default or Event of Default
and what action the Company is taking or proposes to take with respect thereto.
The Trustee shall not be deemed to have knowledge of any Default, any Event of
Default or any such fact unless one of its Trust Officers receives written
notice thereof from the Company or any of the Holders.

SECTION 4.8. REPORTS

          Whether or not the Company is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall furnish to the
Trustee, to each Holder and to prospective purchasers of Notes identified to the
Company by an Initial Purchaser, within 5 days after the Company is or would
have been (if it were subject to such reporting obligations) required to file
such with the SEC, annual and quarterly financial statements substantially
equivalent to financial statements that would have been included in reports
filed with the SEC, if the Company were subject to the requirements of Section
13 or 15(d) of the Exchange Act, including, with respect to annual information
only, a report thereon by the Company's certified independent public accountants
as such would be required in such reports to the SEC, and, in each case,
together with a management's discussion and analysis of financial condition and
results of operations which would be so required and, unless the SEC will not
accept such reports, file with the SEC the annual, quarterly and other reports
which the Company is or (if it were subject to such reporting requirements)
would have been required to file with the SEC.

          For so long as any Transfer Restricted Notes remain outstanding, the
Company shall make available (which shall include filings by EDGAR) to all
Holders and to securities analysts and prospective investors, upon their
reasonable request, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act.

SECTION 4.9. LIMITATION ON STATUS AS INVESTMENT COMPANY

          Neither the Company nor any of its Subsidiaries shall become required
to register as an "investment company" (as that term is defined in the
Investment Company Act of 1940, as amended).

                                       56


SECTION 4.10. LIMITATION ON TRANSACTIONS WITH AFFILIATES

          Neither the Company nor any of its Subsidiaries shall, on or after the
Issue Date, enter into or suffer to exist any contract, agreement, arrangement
or transaction with any Affiliate (an "Affiliate Transaction"), or any series of
related Affiliate Transactions, (other than Exempted Affiliate Transactions),
(1) unless it is determined that the terms of such Affiliate Transaction are
fair and reasonable to the Company, and no less favorable to the Company than
could have been obtained in an arm's length transaction with a non-Affiliate,
and (2) if involving consideration to either party in excess of $5,000,000,
unless such Affiliate Transaction(s) is evidenced by an Officers' Certificate
addressed and delivered to the Trustee certifying that such Affiliate
Transaction(s) has been approved by a majority of the members of the Company's
Board of Directors that are disinterested in such transaction, if there are any
directors who are so disinterested, and (3) if involving consideration to either
party in excess of $10,000,000, unless in addition the Company, prior to the
consummation thereof, obtains a written favorable opinion as to the fairness of
such transaction to the Company from a financial point of view from an
independent investment banking firm of national reputation in the United States
or, if pertaining to a matter for which such investment banking firms do not
customarily render such opinions, an accounting, appraisal or valuation firm of
national reputation in the United States.

SECTION 4.11.  LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS

          Except as set forth in this Section 4.11, the Company and the
Guarantors shall not, and neither the Company nor the Guarantors shall permit
any of their respective Subsidiaries to, directly or indirectly, issue, assume,
guarantee, incur, become directly or indirectly liable with respect to
(including as a result of an Acquisition), or otherwise become responsible for,
contingently or otherwise (individually and collectively, to "incur" or, as
appropriate, an "incurrence"), any Indebtedness (including Disqualified Capital
Stock and Acquired Indebtedness), other than Permitted Indebtedness.

          Notwithstanding the foregoing if:

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

               (2)  on the date of such incurrence (the "Incurrence Date"), the
     Company's Consolidated Coverage Ratio for the Reference Period immediately
     preceding the Incurrence Date, after giving effect on a pro forma basis to
     such incurrence of such Indebtedness and, to the extent set forth in the
     definition of Consolidated Coverage Ratio, the use of proceeds thereof,
     would be at least 2.5 to 1.0 (the "Debt Incurrence Ratio"),

then the Company and the Guarantors may incur such Indebtedness (including
Disqualified Capital Stock).

                                       57


          In addition, the foregoing limitations of the first paragraph of this
Section 4.11 will not prohibit:

          (a)  the Company's incurrence or the incurrence by any Guarantor or
Non-Guarantor Subsidiary of Capital Expenditure Indebtedness; provided, that

               (1)  the aggregate amount of such Indebtedness incurred and
     outstanding at any time pursuant to this paragraph (a) (plus any
     Refinancing Indebtedness issued to retire, defease, refinance, replace or
     refund such Indebtedness) shall not exceed $25,000,000, and

               (2)  in each case, such Indebtedness shall not constitute more
     than 100% of the Company's cost or the cost to such Guarantor or
     Non-Guarantor Subsidiary (determined in accordance with GAAP), as
     applicable, of the property so acquired, constructed, installed, improved
     or leased;

          (b)  if no Event of Default shall have occurred and be continuing, the
Company's incurrence or the incurrence by any Guarantor or Non-Guarantor
Subsidiary of Indebtedness in an aggregate amount incurred and outstanding at
any time pursuant to this paragraph (b) (plus any Refinancing Indebtedness
incurred to retire, defease, refinance, replace or refund such Indebtedness) of
up to $25,000,000; and

          (c)  the Company's incurrence or the incurrence by any Guarantor of
Indebtedness pursuant to the Credit Agreement in an aggregate amount incurred
and outstanding at any time pursuant to this paragraph (c) (plus any Refinancing
Indebtedness incurred to retire, defease, refinance, replace or refund such
Indebtedness) of up to $600,000,000, minus the amount of any such Indebtedness
(1) retired with the Net Cash Proceeds from any Asset Sale applied to
permanently reduce the outstanding amounts or the commitments with respect to
such Indebtedness pursuant to clause (1)(b)(ii) of Section 4.14 or (2) assumed
by a transferee in an Asset Sale so long as neither the Company nor such
Guarantor continues to be an obligor under such Indebtedness.

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

          Notwithstanding any other provision of this Section 4.11, but only to
avoid duplication, a guarantee of the Company's Indebtedness or of the
Indebtedness of a Guarantor or a Non-Guarantor Subsidiary incurred in accordance
with the terms of this Indenture issued at the time such Indebtedness was
incurred or if later at the time the guarantor thereof became one of the
Company's Subsidiaries will not constitute a separate incurrence, or amount
outstanding, of Indebtedness. Upon each incurrence the Company may determine
pursuant to which provision of

                                       58


this Section 4.11 such Indebtedness is being incurred and the Company may
subdivide an amount of Indebtedness and determine more than one provision
pursuant to which such amount of Indebtedness is being incurred and such
Indebtedness shall not be deemed to have been incurred or outstanding under any
other provision of this Section 4.11, except as stated otherwise in the
foregoing provisions.

SECTION 4.12.  LIMITATIONS ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING
               SUBSIDIARIES

          The Company and the Guarantors shall not, and neither the Company nor
the Guarantors shall permit any of their respective Subsidiaries to, directly or
indirectly, create, assume or suffer to exist any consensual restriction on the
ability of any of the Subsidiary of the Company (w) to pay dividends or make
other distributions to or on behalf of, or (x) to pay any obligation to or on
behalf of, or (y) otherwise to transfer assets or property to or on behalf of,
or (z) to make or pay loans or advances to or on behalf of, the Company or any
of its Subsidiaries except:

               (1)  restrictions imposed by the Notes or this Indenture or by
     the Company's other Indebtedness (which may also be guaranteed by the
     Guarantors) ranking senior to the Notes or the Guarantees, as applicable;
     provided, that such restrictions are no more restrictive than those imposed
     by this Indenture and the Notes.

               (2)  restrictions imposed by applicable law,

               (3)  existing restrictions under Existing Indebtedness,

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

               (5)  any restriction imposed by Indebtedness incurred under the
     Credit Agreement pursuant to clause (c) of Section 4.11; provided, that
     such restriction or requirement is no more restrictive than that imposed by
     the Credit Agreement as of the Issue Date,

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

                                       59


               (7)  restrictions on transfer contained in Capital Expenditure
     Indebtedness incurred pursuant to clause (a) of Section 4.11; provided,
     that such restrictions relate only to the transfer of the property financed
     with the proceeds of such Capital Expenditure Indebtedness, and

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

               (9)  solely with respect to Non-Guarantor Subsidiaries,
     restrictions under the organizational documents governing such Subsidiary:

                    (a)  with respect to existing Non-Guarantor Subsidiaries,
existing on the Issue Date, and

                    (b)  with respect to Non-Guarantor Subsidiaries created
after the Issue Date:

                         (i)   prohibiting such Subsidiary from guaranteeing
          Indebtedness of the Company or another Subsidiary,

                         (ii)  on dividend payments and other distributions
          solely to permit pro rata dividends and other distributions in respect
          of any Equity Interests of such Subsidiary, and

                         (iii) with respect to clauses (y) and (z) above,
          limiting such transactions to those with terms that are fair and
          reasonable to such Subsidiary and no less favorable to such Subsidiary
          than could have been obtained in an arm's length transaction with an
          unrelated third party.

          Notwithstanding the foregoing, in the case of clause (y) above,
encumbrances or restrictions (A) that restrict in a customary manner the
subletting, assignment or transfer of any property or asset that is subject to a
lease, license or similar contract entered into in the ordinary course of
business, or the assignment or transfer of any lease, license or contract
entered into in the ordinary course of business, (B) by virtue of any transfer
of, agreement to transfer, option or right with respect to, or Lien on, any
property or assets of the Company or any Subsidiary not otherwise prohibited by
this Indenture in respect of the assets subject thereto or (C) contained in
security agreements or mortgages securing Indebtedness to the extent such
encumbrances or restrictions restrict the transfer of the property subject to
such security agreements or mortgages may be subject to customary restrictions
on the transfer or disposition thereof pursuant to such Lien.

SECTION 4.13.  LIMITATIONS ON LAYERING INDEBTEDNESS

                                       60


          The Company and the Guarantors shall not, and neither the Company nor
the Guarantors shall permit any of their respective Subsidiaries to, directly or
indirectly, incur, create, issue, assume, guarantee or otherwise become liable
for any Indebtedness that is contractually subordinate in right of payment to
any of the Company's other Indebtedness or any other Indebtedness of a Guarantor
unless, by its terms, such Indebtedness is contractually subordinate in right of
payment to, or ranks pari passu with, the Notes or the Guarantee, as applicable.

SECTION 4.14.  LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK

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

               (1)  (a) the Net Cash Proceeds therefrom (the "Asset Sale Offer
     Amount") are applied within 365 days after the date of such Asset Sale, to
     the extent not applied in accordance with paragraph (b) below, to the:

                         (i)   optional redemption of the Notes in accordance
          with the terms of this Indenture and the Company's other Indebtedness
          ranking on a parity with the Notes and with similar provisions
          requiring the Company to redeem such Indebtedness with the proceeds
          from such Asset Sale, pro rata in proportion to the respective
          principal amounts (or accreted values in the case of Indebtedness
          issued with an original issue discount) of the Notes and such other
          Indebtedness then outstanding, or

                         (ii)  repurchase of the Notes and such other
          Indebtedness ranking on a parity with the Notes and with similar
          provisions requiring the Company to make an offer to purchase such
          Indebtedness with the proceeds from such Asset Sale pursuant to a cash
          offer (subject only to conditions required by applicable law, if any)
          (pro rata in proportion to the respective principal amounts (or
          accreted values in the case of Indebtedness issued with an original
          issue discount) of the Notes and such other Indebtedness then
          outstanding) (the "Asset Sale Offer") at a purchase price of 100% of
          the principal amount (or accreted value in the case of Indebtedness
          issued with an original issue discount) (the "Asset Sale Offer Price")
          together with accrued and unpaid interest and Liquidated Damages, if
          any, to the date of payment, made within 335 days of such Asset Sale,
          or

                                       61


                    (b)  within 365 days following such Asset Sale, the Asset
Sale Offer Amount is:

                         (i)  invested in assets or property (other than notes,
          bonds, obligations and securities, except in connection with the
          acquisition of a Wholly Owned Subsidiary that immediately becomes a
          Guarantor in a Related Business) which will constitute or be a part of
          a Related Business of the Company or such Subsidiary (if it continues
          to be a Subsidiary) immediately following such transaction or

                         (ii) used to retire Senior Debt and to permanently
          reduce the amount of such Senior Debt outstanding on the Issue Date or
          permitted pursuant to paragraphs (b) and (c) of Section 4.11
          (including that in the case of a revolver or similar arrangement that
          makes credit available, such commitment is so permanently reduced by
          such amount);

provided, however, that with respect to any Asset Sale occurring during 2001,
the Asset Sale Offer Amount received therefrom may be applied as provided in (a)
or (b) above at any time prior to December 31, 2002, and any Asset Sale Offer
made in accordance with (a)(ii) above may be made at any time prior to December
1, 2002,

               (2)  at least 75% of the total consideration for such Asset Sale
     or series of related Asset Sales consists of cash or Cash Equivalents,
     provided, that up to one-third of such 75% may consist of notes or other
     obligations received by the Company or such Subsidiary from such transferee
     that are converted by the Company or such Subsidiary into cash (to the
     extent of the cash received) within 365 days after receipt, which shall
     constitute Net Cash Proceeds attributable to the original Asset Sale for
     which such notes or other obligations were received, and provided further
     that any Indebtedness of the Company or any Subsidiary (as shown on the
     Company's or such Subsidiary's most recent balance sheet), other than
     Subordinated Indebtedness, that is assumed by the transferee of any such
     assets shall constitute cash for purposes hereof, so long as the Company
     and all of its Subsidiaries are fully and unconditionally released
     therefrom, and

               (3)  the Company or such Subsidiary, as applicable, receives fair
     market value for such Asset Sale, such determination to be made in good
     faith by the Company's Board of Directors, for Asset Sales exceeding
     $25,000,000.

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

          An acquisition of Notes pursuant to an Asset Sale Offer may be
deferred until the accumulated Net Cash Proceeds from Asset Sales not applied to
the uses and in the time periods set forth in 1(a)(i) or 1(b) above (the "Excess
Proceeds") exceeds $10,000,000 and that each Asset Sale

                                       62


Offer shall remain open for at least 20 Business Days following its commencement
(the "Asset Sale Offer Period").

          Upon expiration of the Asset Sale Offer Period, the Company shall
apply the Asset Sale Offer Amount plus an amount equal to accrued and unpaid
interest and Liquidated Damages, if any, to the purchase of all Indebtedness
properly tendered in accordance with the provisions hereof (on a pro rata basis
if the Asset Sale Offer Amount is insufficient to purchase all Indebtedness so
tendered) at the Asset Sale Offer Price (together with accrued interest and
Liquidated Damages, if any). To the extent that the aggregate amount of Notes
and such other pari passu Indebtedness tendered pursuant to an Asset Sale Offer
is less than the Asset Sale Offer Amount, the Company may use any remaining Net
Cash Proceeds for general corporate purposes as otherwise permitted by this
Indenture and following the consummation of each Asset Sale Offer the Excess
Proceeds amount shall be reset to zero.

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

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

               (2)  the Company may and its Subsidiaries may convey, sell,
     transfer, assign or otherwise dispose of assets pursuant to and in
     accordance with Article V,

               (3)  the Company may and its Subsidiaries may sell or dispose of
     damaged, worn out surplus or obsolete personal property in the ordinary
     course of business so long as such property is no longer necessary for the
     proper conduct of the Company's business or the business of such
     Subsidiary, as applicable,

               (4)  the Company may and its Subsidiaries may convey, sell,
     lease, transfer, assign or otherwise dispose of assets to the Company or
     any of the Guarantors,

               (5)  the Company may and its Subsidiaries may, in the ordinary
     course of business, convey, sell, lease, transfer, assign, or otherwise
     dispose of assets (or related assets in related transactions) with a fair
     market value of less than $1,000,000,

               (6)  the Company may and each of its Subsidiaries may settle or
     release litigation claims in the ordinary course of business or grant Liens
     not prohibited by this Indenture,

               (7)  the Company may and its Subsidiaries may exchange assets
     held by the Company or such Subsidiaries for assets held by any Person or
     entity; provided, that (a) at the time of or when entering into any such
     exchange of assets and immediately after giving effect thereto, no Default
     or Event of Default shall have occurred and be continuing or would

                                       63


     occur as a consequence thereof, (b) the assets received by the Company or
     such Subsidiaries in any such exchange will immediately constitute, be a
     part of, or be used in, a Related Business of the Company or such
     Subsidiaries, (c) with respect to transactions involving assets with a fair
     market value of $25,000,000 or more, the Company's Board of Directors has
     determined that the terms of any exchange are fair and reasonable, and (d)
     any such exchange shall be deemed to be an Asset Sale to the extent that
     the Company or any of the Company's Subsidiaries receives cash or Cash
     Equivalents in such exchange, and

               (8)  the Company and its Subsidiaries may enter into operating
     leases of real or personal property in the ordinary course of business.

          In addition to the foregoing and notwithstanding anything herein to
the contrary, the Company will not, and will not permit any of its Subsidiaries
to, directly or indirectly, make any Asset Sale of any of the Equity Interests
of any of its Subsidiaries (other than to the Company or to a Wholly Owned
Subsidiary that is a Guarantor) except (i) pursuant to an Asset Sale of all the
Equity Interests of such Subsidiary or (ii) provided, that after such sale the
Company or its Subsidiaries own a majority of the voting and economic Equity
Interests of such Subsidiary, an Asset Sale of Equity Interests with no
preferences or special rights or privileges and with no redemption or prepayment
provisions, or (iii) up to $10,000,000 in the aggregate per fiscal year, not to
exceed $50,000,000 in the aggregate, of sales of Equity Interests in excess of
50% of the Equity Interests of such Subsidiary, provided, that (x) such
Subsidiary exists solely for the purpose of owning and operating one or more
dialysis centers and providing services related thereto, (y) the Company or its
Subsidiaries own at least 20% of the voting and economic Equity Interests in
such Subsidiary after such Asset Sale, and (z) the Company or any of its
Subsidiaries enter into a management contract with respect to all of the
dialysis centers owned by the Subsidiary that was the subject of the Asset Sale.
In the case of clause (iii) of the preceding sentence, to the extent that the
aggregate amount available for sales of Equity Interests has been reduced as a
result of such sales, and the Company, a Guarantor or a Non-Guarantor Subsidiary
thereafter shall either (A) sell in an Asset Sale in compliance with the
provisions of this covenant all of the remaining Equity Interests in such
Subsidiary owned by the Company and its Subsidiaries or (B) repurchase Equity
Interests of such Subsidiary such that the Company, a Guarantor and/or a
Non-Guarantor Subsidiary own(s) in the aggregate in excess of 50% of the Equity
Interests of such Subsidiary upon repurchase, then an amount equal to the sales
price received for such Equity Interests sold in the case of clause (A), or the
purchase price paid for such Equity Interests so repurchased in the case of
clause (B), in either case as determined in good faith, shall increase the
aggregate amount available for future sales under such clause (iii); provided,
that

          (a)  the amount added back to the aggregate amount shall not exceed
the amount originally deducted therefrom upon the original sale of the Equity
Interests in such Subsidiary;

          (b)  the aggregate amount available shall in no event exceed
$50,000,000 at any time;

                                       64


               (c)  the aggregate amount available per year shall in no event
     exceed $10,000,000 in any year; and

               (d)  to the extent a Non-Guarantor Subsidiary repurchases such
     Equity Interests, such repurchase shall be deemed a formation of a
     Non-Guarantor Subsidiary on the date of repurchase for purposes of the
     definition of Non-Guarantor Subsidiary.

          Any Asset Sale Offer shall be made in compliance with all applicable
laws, rules, and regulations, including, if applicable, Regulation 14E of the
Exchange Act and the rules and regulations thereunder and all other applicable
federal and state securities laws. To the extent that the provisions of any
securities laws or regulations conflict with the provisions of this paragraph,
the Company's compliance or the compliance of any of the Company's subsidiaries
with such laws and regulations shall not in and of itself cause a breach of the
Company's obligations under this Section 4.14.

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

          Notice of an Asset Sale Offer shall be sent, on or prior to the
commencement of the Asset Sale Offer, by first-class mail, by the Company to
each Holder at its registered address, with a copy to the Trustee. At the
Company's request, the Paying Agent shall give the notice of Asset Sale Offer in
the Company's name and at the Company's expense. The notice to the Holders shall
contain all information, instructions and materials required by applicable law
or which the Company in good faith believes will enable such Holders to make an
informed decision with respect to the Asset Sale Offer. The notice, which (to
the extent consistent with this Indenture) shall govern the terms of an Asset
Sale Offer, shall state:

               (1)  that the Asset Sale Offer is being made pursuant to such
     notice and this Section 4.14;

               (2)  the Asset Sale Offer Amount, the Asset Sale Offer Price
     (including the amount of accrued but unpaid interest (and Liquidated
     Damages, if any)), and the date of purchase;

               (3)  that any Note or portion thereof not tendered or accepted
     for payment will continue to accrue interest (and Liquidated Damages, if
     any) if interest (and Liquidated Damages, if any) is then accruing;

               (4)  that, unless the Company defaults in depositing cash with
     the Paying Agent (which may not for purposes of this Section 4.14,
     notwithstanding anything in this Indenture to the contrary, be the Company
     or any Affiliate of the Company) in accordance

                                       65


     with the last paragraph of this Section 4.14, any Note, or portion thereof,
     accepted for payment pursuant to the Asset Sale Offer shall cease to accrue
     interest (and Liquidated Damages, if any) after the payment date in
     connection with an Asset Sale Offer;

               (5)  that Holders electing to have a Note, or portion thereof,
     purchased pursuant to an Asset Sale Offer will be required to surrender
     their Note, with the form entitled "Option of Holder to Elect Purchase" on
     the reverse of the Note completed, to the Paying Agent (which may not for
     purposes of this Section 4.14, notwithstanding any other provision of this
     Indenture, be the Company or any Affiliate of the Company) prior to the
     close of business on the date specified in the notice, which shall not be
     earlier than the date on which the Asset Sale Offer expires, at the address
     specified in the notice;

               (6)  that Holders will be entitled to withdraw their elections,
     in whole or in part, if the Paying Agent receives, prior to the expiration
     of the Asset Sale Offer, a facsimile transmission or letter setting forth
     the name of the Holder, the principal amount of the Notes the Holder is
     withdrawing and a statement containing a facsimile signature and stating
     that such Holder is withdrawing his election to have such principal amount
     of the Notes purchased;

               (7)  that if Indebtedness in an aggregate principal amount in
     excess of the aggregate principal amount of Notes to be acquired pursuant
     to the Asset Sale Offer are tendered and not withdrawn, the Company shall
     purchase Indebtedness on a pro rata basis in proportion to the respective
     principal amounts (or accreted values in the case of Indebtedness issued
     with an original issue discount) thereof (with such adjustments as may be
     deemed appropriate by the Company so that only Notes in denominations of
     $1,000 or integral multiples of $1,000 shall be acquired);

               (8)  that Holders whose Notes were purchased only in part will be
     issued new Notes equal in principal amount to the unpurchased portion of
     the Notes surrendered; and

               (9)  the circumstances and relevant facts regarding such Asset
     Sales.

          On or before the date of purchase, the Company shall (i) accept for
payment Notes or portions thereof properly tendered pursuant to the Asset Sale
Offer (on a pro rata basis if required pursuant to paragraph (7) above), (ii)
deposit with the Paying Agent cash sufficient to pay the Asset Sale Offer Price
for all Notes or portions thereof so accepted and (iii) deliver to the Trustee
Notes so accepted together with an Officers' Certificate setting forth the Notes
or portions thereof being purchased by the Company. The Paying Agent shall
promptly mail or deliver to Holders of Notes so accepted payment in an amount
equal to the Asset Sale Offer Price for such Notes, and the Trustee shall
promptly authenticate and mail or deliver to such Holders a new Note equal in
principal amount to any unpurchased portion of the Note surrendered. Any Notes
not so accepted shall be promptly mailed or delivered by the Company to the
Holder thereof.

                                       66


SECTION 4.15.  WAIVER OF STAY, EXTENSION OR USURY LAWS

          Each of the Company and the Guarantors covenants (to the extent that
it may lawfully do so) that it shall not at any time insist upon, plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law which would prohibit or forgive the
Company or any Guarantor from paying all or any portion of the principal of,
premium of, or interest (or Liquidated Damages, if any) on the Notes as
contemplated herein, wherever enacted, now or at any time hereafter in force, or
which may affect the covenants or the performance of this Indenture; and (to the
extent that it may lawfully do so) each of the Company and the Guarantors hereby
expressly waives all benefit or advantage of any such law, and covenants that it
shall not hinder, delay or impede the execution of any power herein granted to
the Trustee, but shall suffer and permit the execution of every such power as
though no such law had been enacted.

SECTION 4.16.  LIMITATION ON LIENS SECURING INDEBTEDNESS

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

SECTION 4.17.  LIMITATIONS ON LINES OF BUSINESS

          Neither the Company nor any of its Subsidiaries shall directly or
indirectly engage to any substantial extent in any line or lines of business
activity other than that which is a Related Business.

                                   ARTICLE V

                             SUCCESSOR CORPORATION

SECTION 5.1.   LIMITATION ON MERGER, SALE OR CONSOLIDATION

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

                                       67


               (1)  either (a) the Company is the continuing entity or (b) the
     resulting, surviving or transferee entity is a corporation organized under
     the laws of the United States, any state thereof or the District of
     Columbia and expressly assumes by supplemental indenture all of the
     Company's obligations in connection with the Notes and this Indenture;

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

               (3)  unless such transaction is solely the merger of the Company
     and one of its previously existing Subsidiaries and which transaction is
     not for the purpose of evading this provision and not in connection with
     any other transaction, immediately after giving effect to such transaction
     on a pro forma basis, the consolidated resulting, surviving or transferee
     entity would immediately thereafter be permitted to incur at least $1.00 of
     additional Indebtedness pursuant to the Debt Incurrence Ratio set forth in
     Section 4.11; and

               (4)  each Guarantor shall have by amendment to this Indenture
     confirmed that its Guarantee shall apply to the obligations of the Company
     or the surviving entity in accordance with the Notes and this Indenture.

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

SECTION 5.2.   SUCCESSOR CORPORATION SUBSTITUTED

          Upon any consolidation or merger or any transfer of all or
substantially all of the assets of the Company in accordance with Section 5.1,
the successor corporation formed by such consolidation or into which the Company
is merged or to which such transfer is made, shall succeed to and (except in the
case of a lease) be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
corporation had been named herein as the Company, and (except in the case of a
lease) when a successor corporation duly assumes all of the obligations of the
Company pursuant hereto and pursuant to the Notes, the Company shall be released
from such obligations (except with respect to any obligations that arise from,
or are related to, such transaction).

                                  ARTICLE VI

                        EVENTS OF DEFAULT AND REMEDIES

SECTION 6.1.   EVENTS OF DEFAULT

                                       68


          "Event of Default," wherever used herein, means any one of the
following events (whatever reason for such Event of Default and whether it shall
be caused voluntarily or involuntarily or effected, without limitation, by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):


                    (i)   the Company's failure to pay any installment of
     interest (or Liquidated Damages, if any) on the Notes as and when the same
     becomes due and payable and the continuance of any such failure for 30
     days,

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

                    (iii) the Company's failure or the failure by any of its
     Subsidiaries to observe or perform any other covenant or agreement
     contained in the Notes or this Indenture and, except for the provisions
     under Section 4.3 and Article V the continuance of such failure for a
     period of 30 days after written notice is given to the Company by the
     Trustee or to the Company and the Trustee by the Holders of at least 25% in
     aggregate principal amount of the Notes outstanding,

                    (iv)  a decree, judgment, or order by a court of competent
     jurisdiction shall have been entered adjudicating the Company or any of its
     Significant Subsidiaries as bankrupt or insolvent, or approving as properly
     filed a petition seeking reorganization of the Company or any of its
     Significant Subsidiaries under any bankruptcy or similar law, and such
     decree or order shall have continued undischarged and unstayed for a period
     of 60 days; or a decree, judgment or order of a court of competent
     jurisdiction appointing a receiver, liquidator, trustee, or assignee in
     bankruptcy or insolvency for the Company, any of its Significant
     Subsidiaries, or any substantial part of the property of any such Person,
     or for the winding up or liquidation of the affairs of any such Person,
     shall have been entered, and such decree, judgment, or order shall have
     remained in force undischarged and unstayed for a period of 60 days;

                    (v)   the Company or any of its Significant Subsidiaries
     shall institute proceedings to be adjudicated a voluntary bankrupt, or
     shall consent to the filing of a bankruptcy proceeding against it, or shall
     file a petition or answer or consent seeking reorganization under any
     bankruptcy or similar law or similar statute, or shall consent to the
     filing of any such petition, or shall consent to the appointment of a
     custodian, receiver, liquidator, trustee, or assignee in bankruptcy or
     insolvency of it or any substantial part of its assets or property, or
     shall make a general assignment for the benefit of creditors, or shall
     admit in writing its inability to pay its debts generally as they become
     due, fail generally to

                                       69


     pay its debts as they become due, or take any corporate action in
     furtherance of any of the foregoing;

                    (vi)   a default in the Company's Indebtedness or the
     Indebtedness of any of its Subsidiaries with an aggregate amount
     outstanding in excess of $10,000,000 (a) resulting from the failure to pay
     principal at the stated maturity of such Indebtedness or (b) as a result of
     which the maturity of such Indebtedness has been accelerated prior to its
     stated maturity,

                    (vii)  final unsatisfied judgments not covered by insurance
     aggregating in excess of $5,000,000, at any one time rendered against the
     Company or any of its Subsidiaries and not stayed, bonded or discharged
     within 60 days, and

                    (viii) any Guarantee of a Guarantor ceases to be in full
     force and effect or becomes unenforceable or invalid or is declared null
     and void or any Guarantor denies or disaffirms its obligations under its
     Guarantee, in any case, other than in accordance with the terms of the
     Guarantee and this Indenture.

SECTION 6.2.   ACCELERATION OF MATURITY DATE; RESCISSION AND ANNULMENT

          If an Event of Default occurs and is continuing (other than an Event
of Default specified in Section 6.1(iv) or Section 6.1(v) above relating to the
Company or any of its Significant Subsidiaries), then, and in every such case,
unless the principal of all of the Notes shall have already become due and
payable, either the Trustee or the Holders of at least 25% in aggregate
principal amount of then outstanding Notes, by notice in writing to the Company
(and to the Trustee if given by Holders) (an "Acceleration Notice"), may declare
all principal, determined as set forth below, and accrued interest (and
Liquidated Damages, if any) thereon to be due and payable immediately, provided,
however, that if any Senior Debt is outstanding pursuant to the Credit
Agreement, upon a declaration of such acceleration, such principal and interest
shall be due and payable upon the earlier of (x) the fifth Business Day after
sending the Company and such Senior Debt representatives such written notice,
unless such Event of Default is cured or waived prior to such date and (y) the
date of acceleration of any Senior Debt under the Credit Agreement.

          In the event a declaration of acceleration resulting from an Event of
Default described in Section 6.1(vi) above with respect to any Senior Debt has
occurred and is continuing, such declaration of acceleration shall be
automatically annulled if such default is cured or waived or the holders of the
Indebtedness which is the subject of such default have rescinded their
declaration of acceleration in respect of such Indebtedness within 10 days
thereof and the Trustee has received written notice of such cure, waiver or
rescission and no other Event of Default described in clause (vi) above has
occurred that has not been cured or waived within 10 days of the declaration of
such acceleration in respect of such Indebtedness.

                                       70


          If an Event of Default specified in Section 6.1(iv) or Section 6.1(v)
above relating the Company or any of its Significant Subsidiaries occurs, all
principal and accrued interest (and Liquidated Damages, if any) thereon will be
immediately due and payable on all outstanding Notes without any declaration or
other act on the part of the Trustee or the Holders.

          The Holders of a majority in aggregate principal amount of the then
outstanding Notes by written notice to the Trustee may rescind an acceleration
and its consequences if the rescission would not conflict with any judgment or
decree and if all existing Events of Default (except nonpayment of principal of,
premium, if any, interest or Liquid Damages, if any, that has become due solely
because of the acceleration) have been cured or waived as provided in Section
6.12.

SECTION 6.3.   COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE

          The Company covenants that if an Event of Default in payment of
principal, premium or interest specified in clause (i) or (ii) of Section 6.1
hereof occurs and is continuing, the Company shall, upon demand of the Trustee,
pay to it, for the benefit of the Holders of such Notes, the whole amount then
due and payable on such Notes for principal, premium (if any), and interest (and
Liquidated Damages, if any), and, to the extent that payment of such interest
shall be legally enforceable, interest on any overdue principal (and premium, if
any), and on any overdue interest (and Liquidated Damages, if any), at the rate
borne by the Notes, and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including compensation
to, and expenses, disbursements and advances of the Trustee and its agents and
counsel and all other amounts due the Trustee under Section 7.7.

          If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust in favor of the
Holders, may institute a judicial proceeding for the collection of the sums so
due and unpaid, may prosecute such proceeding to judgment or final decree and
may enforce the same against the Company or any other obligor upon the Notes and
collect the moneys adjudged or decreed to be payable in the manner provided by
law out of the property of the Company or any other obligor upon the Notes,
wherever situated.

          If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.

SECTION 6.4.   TRUSTEE MAY FILE PROOFS OF CLAIM

          In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the Notes
or the property of the Company or of such other

                                       71


obligor or their creditors, the Trustee (irrespective of whether the principal
of the Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have made
any demand on the Company for the payment of overdue principal, premium, if any,
or interest (and Liquidated Damages, if any)) shall be entitled and empowered,
by intervention in such proceeding or otherwise to take any and all actions
under the TIA, including

               (1)  to file and prove a claim for the whole amount of principal
     (and premium, if any) and interest (and Liquidated Damages, if any) owing
     and unpaid in respect of the Notes and to file such other papers or
     documents as may be necessary or advisable in order to have the claims of
     the Trustee (including any claim for the reasonable compensation, expenses,
     disbursements and advances of the Trustee and its agent and counsel and all
     other amounts due the Trustee under Section 7.7) and of the Holders allowed
     in such judicial proceeding, and

               (2)  to collect and receive any moneys or other property payable
     or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the compensation, expenses,
disbursements and advances of the Trustee and its agents and counsel, and any
other amounts due the Trustee under Section 7.7 hereof.

          Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding; provided, however, that the
Trustee may, on behalf of the Holders, vote for the election of a Trustee in
bankruptcy or a similar official and may be a member of any creditor's committee
approved in such matter.

SECTION 6.5.   TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES

          All rights of action and claims under this Indenture or the Notes may
be prosecuted and enforced by the Trustee without the possession of any of the
Notes or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name as trustee
of an express trust in favor of the Holders, and any recovery of judgment shall,
after provision for the payment of compensation to, and expenses, disbursements
and advances of the Trustee and its agents and counsel and all other amounts due
the Trustee under Section 7.7, be for the ratable benefit of the Holders of the
Notes in respect of which such judgment has been recovered.

SECTION 6.6.   PRIORITIES

                                       72


          Any money collected by the Trustee pursuant to this Article VI shall
be applied in the following order, at the date or dates fixed by the Trustee
and, in case of the distribution of such money on account of principal, premium
(if any), or interest (or Liquidated Damages, if any), upon presentation of the
Notes and the notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid:

          FIRST: To the Trustee in payment of all amounts due pursuant to
Section 7.7 hereof;

          SECOND: To the holders of Senior Debt if and to the extent required by
Articles XI and XII;

          THIRD: To the Holders in payment of the amounts then due and unpaid
for principal of, premium (if any), and interest (and Liquidated Damages, if
any) on, the Notes in respect of which or for the benefit of which such money
has been collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Notes for principal, premium
(if any), and interest (and Liquidated Damages, if any), respectively; and

          FOURTH: To the Company, the Guarantors or such other Person as may be
lawfully entitled thereto, the remainder, if any, each as their respective
interests may appear.

          The Trustee may, but shall not be obligated to, fix a record date and
payment date for any payment to the Holders under this Section 6.6.

SECTION 6.7.   LIMITATION ON SUITS

          No Holder of any Note shall have any right to order or direct the
Trustee to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless

                    (A)   such Holder has previously given written
          notice to the Trustee of a continuing Event of Default;

                    (B)   the Holders of not less than 25% in
          aggregate principal amount of then outstanding Notes shall
          have made written request to the Trustee to institute
          proceedings in respect of such Event of Default in its own
          name as Trustee hereunder;

                    (C)   such Holder or Holders have offered to the
          Trustee reasonable security or indemnity against the costs,
          expenses and liabilities to be incurred or reasonably
          probable to be incurred in compliance with such request;

                                       73


                    (D)   the Trustee for 60 days after its receipt of
          such notice, request and offer of indemnity has failed to
          institute any such proceeding; and

                    (E)   no direction inconsistent with such written
          request has been given to the Trustee during such 60-day
          period by the Holders of a majority in aggregate principal
          amount of the outstanding Notes;

it being understood and intended that no one or more Holders shall have any
right in any manner whatsoever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.

SECTION 6.8.   UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND
               INTEREST

          Notwithstanding any other provision of this Indenture, the Holder of
any Note shall have the right, which, subject to the provisions of Section 11.5
and Article XII, is absolute and unconditional, to receive payment of the
principal of, and premium (if any), and interest (and Liquidated Damages, if
any) on, such Note on the Maturity Dates of such payments as expressed in such
Note (in the case of redemption, the Redemption Price on the applicable
Redemption Date, in the case of a Change of Control, the Change of Control
Purchase Price on the Change of Control Purchase Date, and in the case of an
Asset Sale, the Asset Sale Offer Price on the relevant purchase date) and to
institute suit for the enforcement of any such payment after such respective
dates, and such rights shall not be impaired without the consent of such Holder.

SECTION 6.9.   RIGHTS AND REMEDIES CUMULATIVE

          Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes in Section 2.7 hereof, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.

SECTION 6.10.  DELAY OR OMISSION NOT WAIVER

          No delay or omission by the Trustee or by any Holder of any Note to
exercise any right or remedy arising upon any Event of Default shall impair the
exercise of any such right or remedy or constitute a waiver of any such Event of
Default. Every right and remedy given by this

                                       74


Article VI or by law to the Trustee or to the Holders may be exercised
from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders, as the case may be.

SECTION 6.11.  CONTROL BY HOLDERS

          The Holder or Holders of a majority in aggregate principal amount of
then outstanding Notes shall have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred upon the Trustee, provided, that

               (1)  such direction shall not be in conflict with any rule of law
     or with this Indenture,

               (2)  the Trustee shall not determine that the action so directed
     would be unjustly prejudicial to the Holders not taking part in such
     direction, and

               (3)  the Trustee may take any other action deemed proper by the
     Trustee which is not inconsistent with such direction.

SECTION 6.12.  WAIVER OF EXISTING OR PAST DEFAULT

          Subject to Section 6.8, the Holder or Holders of not less than a
majority in aggregate principal amount of the outstanding Notes may, on behalf
of all Holders, waive any existing or past Default or Event of Default hereunder
and its consequences under this Indenture, except a continuing Default or Event
of Default

                    (A)   in the payment of the principal of, premium,
          if any, or interest (or Liquidated Damages, if any) on, any
          Note as specified in clauses (i) and (ii) of Section 6.1
          hereof and not yet cured, or

                    (B)   in respect of a covenant or provision hereof
          which, under Article IX, cannot be modified or amended
          without the consent of the Holders of each outstanding Note
          affected.

          Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture, but no such waiver shall extend to any subsequent or
other default or impair the exercise of any right arising therefrom.

SECTION 6.13.  UNDERTAKING FOR COSTS

          All parties to this Indenture agree, and each Holder of any Note by
his acceptance thereof shall be deemed to have agreed, that in any suit for the
enforcement of any right or remedy

                                       75


under this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted to be taken by it as Trustee, any court may in its
discretion require the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees and
expenses, against any party litigant in such suit, having due regard to the
merits and good faith of the claims or defenses made by such party litigant; but
the provisions of this Section 6.13 shall not apply to any suit instituted by
the Company, to any suit instituted by the Trustee, to any suit instituted by
any Holder, or group of Holders, holding in the aggregate more than 10% in
aggregate principal amount of the outstanding Notes, or to any suit instituted
by any Holder for enforcement of the payment of principal of, or premium (if
any), or interest (or Liquidated Damages, if any) on, any Note on or after the
respective Maturity Date expressed in such Note (including, in the case of
redemption, on or after the Redemption Date).

SECTION 6.14.  RESTORATION OF RIGHTS AND REMEDIES

          If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every case, subject to any
determination in such proceeding, the Company, the Guarantors, the Trustee and
the Holders shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Trustee and
the Holders shall continue as though no such proceeding had been instituted.


                                  ARTICLE VII

                                    TRUSTEE

          The Trustee hereby accepts the trust imposed upon it by this Indenture
and covenants and agrees to perform the same, as herein expressed, subject to
the terms hereof.

SECTION 7.1.   DUTIES OF TRUSTEE

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

          (b)  Except during the continuance of an Event of Default:

               (1)  The Trustee need perform only those duties as are
     specifically set forth in this Indenture and no others, and no covenants or
     obligations shall be implied in or read into this Indenture which are
     adverse to the Trustee, and

                                       76


               (2)  In the absence of bad faith on its part, the Trustee may
     conclusively rely, as to the truth of the statements and the correctness of
     the opinions expressed therein, upon certificates or opinions furnished to
     the Trustee and conforming to the requirements of this Indenture. However,
     in the case of any such certificates or opinions which by any provision
     hereof are specifically required to be furnished to the Trustee, the
     Trustee shall examine the certificates and opinions to determine whether or
     not they conform to the requirements of this Indenture (but need not
     confirm or investigate the accuracy of mathematical calculations or other
     facts stated therein or otherwise verify the contents thereof).

          (c)  The Trustee shall not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:

               (1)  This paragraph does not limit the effect of paragraph (b) of
     this Section 7.1,

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

               (3)  The Trustee shall not be liable with respect to any action
     it takes or omits to take in good faith in accordance with a direction
     received by it pursuant to Section 6.11 hereof.

          (d)  No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or to take or omit to take any action
under this Indenture or at the request, order or direction of the Holders or in
the exercise of any of its rights or powers if it shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it.

          (e)  Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c), (d) and (f) of this Section 7.1.

          (f)  The Trustee shall not be liable for interest on any assets
received by it except as the Trustee may agree in writing with the Company
(including without limitation to the extent the Trustee receives funds prior to
the interest payment date in order to comply with the provisions of Section
4.1). Assets held in trust by the Trustee need not be segregated from other
assets except to the extent required by law.

SECTION 7.2.   RIGHTS OF TRUSTEE

          Subject to Section 7.1 hereof:

                                       77


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

          (b)  Before the Trustee acts or refrains from acting, it may consult
with counsel and may require an Officers' Certificate or an Opinion of Counsel,
which shall conform to Sections 13.4 and 13.5 hereof. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such certificate or, if in writing, advice of counsel.

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

          (d)  The Trustee shall not be liable for any action it or its agent
takes or omits to take in good faith which it reasonably believes to be
authorized or within its rights or powers conferred upon it by this Indenture.

          (e)  The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, notice, request, direction, consent, order, bond, debenture or other
paper or document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit.

          (f)  The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders, pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby.

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

          (h)  The Trustee shall have no duty to inquire as to the performance
of the Company's or any Guarantor's covenants in Article IV hereof or as to the
performance by any Agent of its duties hereunder. In addition, the Trustee shall
not be deemed to have knowledge of any Default or Event of Default except (i)
any Event of Default occurring pursuant to Sections 6.1(i), 6.1(ii) and 4.1
hereof, or (ii) any Default or Event of Default of which the Trustee shall have
received written notification or obtained actual knowledge.

          (i)  Whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate, an Opinion of Counsel or both.

                                       78


          (j)  No permissive right of the Trustee to act hereunder shall be
construed as a duty.

          (k)  The Trustee shall not be deemed to have notice or knowledge
(including actual knowledge) of any matter unless a Trust Officer has actual
knowledge thereof or unless written notice thereof is received by the Trustee at
the office specified in Section 13.2 and such notice references the Notes
generally, the Company or this Indenture.

SECTION 7.3.   INDIVIDUAL RIGHTS OF TRUSTEE

          The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company, any
Guarantor, any of their Subsidiaries, or their respective Affiliates with the
same rights it would have if it were not Trustee. Any Agent may do the same with
like rights. However, the Trustee must comply with Sections 7.10 and 7.11
hereof.

SECTION 7.4.   TRUSTEE'S DISCLAIMER

          The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Notes and it shall not be accountable for the Company's
use of the proceeds from the Notes, and it shall not be responsible for any
statement or recital herein or any other document in connection with the sale of
the Notes, other than the Trustee's certificate of authentication, or the use or
application of any funds received by a Paying Agent other than the Trustee.

SECTION 7.5.   NOTICE OF DEFAULT

          If a Default or an Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to each Securityholder notice of
the uncured Default or Event of Default within 90 days after such Default or
Event of Default occurs. The Trustee may withhold such notice if and so long as
a Trust Officer in good faith determines that withholding the notice is in the
interest of the Holders, except in the case of a Default in payment of principal
(or premium, if any) of, interest on or Liquidated Damages with respect to, any
Notes (including the repayment of the Redemption Price on the Redemption Date).

SECTION 7.6.   REPORTS BY TRUSTEE TO HOLDERS

          Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, the Trustee shall, if required by law, mail to each
Securityholder a brief report dated as of such May 15 that complies with TIA (S)
313(a). The Trustee also shall comply with TIA (S)(S) 313(b) and 313(c).

          The Company shall promptly notify the Trustee in writing if the Notes
become listed on any stock exchange or automatic quotation system.

                                       79


          A copy of each report at the time of its mailing to Securityholders
shall be mailed to the Company and filed with the SEC and each stock exchange,
if any, on which the Notes are listed.

SECTION 7.7.  COMPENSATION AND INDEMNITY

          The Company and the Guarantors jointly and severally agree to pay to
the Trustee from time to time reasonable compensation for its services. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company and the Guarantors shall reimburse the
Trustee upon request for all reasonable disbursements, expenses and advances
incurred or made by it in accordance with this Indenture. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents, accountants, experts and counsel.

          The Company and the Guarantors jointly and severally agree to
indemnify the Trustee (in its capacity as Trustee) and each of its officers,
directors, attorneys-in-fact and agents for, and hold it harmless against, any
claim, demand, expense (including but not limited to reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel), loss or
liability incurred by it without negligence, bad faith or willful misconduct on
the part of the Trustee, arising out of or in connection with the administration
of this trust, including the costs and expenses of enforcement of this Indenture
against the Company and the Guarantors (including this Section 7.7), and its
rights or duties hereunder, including the reasonable costs and expenses of
defending itself against any claim (whether asserted by any Holder, the Company,
any Guarantor or third party) or liability in connection with the exercise or
performance of any of its powers or duties hereunder, but excluding any
franchise taxes imposed on the Trustee and any taxes based on the income of the
Trustee. The Trustee shall notify the Company promptly of any claim asserted
against the Trustee for which it may seek indemnity. The Company and the
Guarantors shall defend the claim and the Trustee shall provide reasonable
cooperation at the Company's and the Guarantors' expense in the defense. The
Trustee may have separate counsel and the Company and the Guarantors shall pay
the reasonable fees and expenses of such counsel; provided, that the Company and
the Guarantors will not be required to pay such fees and expenses if they assume
the Trustee's defense and the Trustee is not advised in writing by counsel that
there is a conflict of interest between the Company and the Guarantors and the
Trustee in connection with such defense. The Company and the Guarantors need not
pay for any settlement made without their written consent, which consent shall
not be unreasonably withheld, delayed or conditioned. The Company and the
Guarantors need not reimburse any expense or indemnify against any loss or
liability to the extent incurred by the Trustee through its negligence, bad
faith or willful misconduct.

          To secure the Company's and the Guarantors' payment obligations in
this Section 7.7, the Trustee shall have a perfected lien prior to the Notes on
all assets held or collected by the Trustee, in its capacity as Trustee, except
assets held in trust to pay principal and premium, if any, of or interest on
particular Notes.

                                       80


          When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.1(iv) or (v) of this Indenture occurs, the
expenses and the compensation for the services are intended to constitute
expenses of administration under any Bankruptcy Law.

          The Company's and the Guarantors' obligations under this Section 7.7
and any lien arising hereunder shall survive the resignation or removal of the
Trustee, the discharge of the Company's and the Guarantors' obligations pursuant
to Article VIII of this Indenture and any rejection or termination of this
Indenture under any Bankruptcy Law.

SECTION 7.8.   REPLACEMENT OF TRUSTEE

          The Trustee may resign by so notifying the Company in writing. The
Holder or Holders of a majority in aggregate principal amount of the outstanding
Notes may remove the Trustee by so notifying the Company and the Trustee in
writing and may appoint a successor trustee with the Company's consent. The
Company may remove the Trustee if:

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

          (b)  the Trustee is adjudged bankrupt or insolvent;

          (c)  a receiver, Custodian or other public officer takes charge of the
Trustee or its property; or

          (d)  the Trustee becomes incapable of acting.

          If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. No resignation of the Trustee and no appointment of a successor Trustee
pursuant to this Article VII shall become effective until the acceptance of
appointment by the successor Trustee under this Section 7.8. Within one year
after the successor Trustee takes office, the Holder or Holders of a majority in
principal amount of the Notes may appoint a successor Trustee to replace the
successor Trustee appointed by the Company.

          A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that
and provided that all sums owing to the retiring Trustee provided for in Section
7.7 hereof have been paid, the retiring Trustee shall transfer all property held
by it as trustee to the successor Trustee, subject to the lien provided in
Section 7.7 hereof, the resignation or removal of the retiring Trustee shall
become effective, and the successor Trustee shall have all the rights, powers
and duties of the Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Holder.

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

                                       81


          If the Trustee fails to comply with Section 7.10 hereof, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.

          Notwithstanding replacement of the Trustee pursuant to this Section
7.8, the Company's and the Guarantors' obligations under Section 7.7 hereof
shall continue for the benefit of the retiring Trustee.

SECTION 7.9.   SUCCESSOR TRUSTEE BY MERGER, ETC.

          If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee.

SECTION 7.10.  ELIGIBILITY; DISQUALIFICATION

          The Trustee shall at all times satisfy the requirements of TIA (S)
310(a)(1), (2) and (5). The Trustee shall have a combined capital and surplus of
at least $25,000,000 as set forth in its most recent published annual report of
condition. The Trustee shall comply with TIA (S) 310(b).

SECTION 7.11.  PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.

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

                                 ARTICLE VIII

                   LEGAL DEFEASANCE AND COVENANT DEFEASANCE

SECTION 8.1.   OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE

          The Company may elect to have Section 8.2, at the Company's option and
at any time, or Section 8.3, at the Company's option and at any time, of this
Indenture applied to all outstanding Notes upon compliance with the conditions
set forth below in this Article VIII.

SECTION 8.2.   LEGAL DEFEASANCE AND DISCHARGE

          Upon the Company's exercise under Section 8.1 hereof of the option
applicable to this Section 8.2, the Company and the Guarantors shall be deemed
to have been discharged from their respective obligations with respect to all
outstanding Notes and Guarantees on the date the

                                       82


conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For
this purpose, such Legal Defeasance means that the Company shall be deemed to
have paid and discharged the entire indebtedness represented by the Notes and
this Indenture shall cease to be of further effect as to all outstanding Notes
and Guarantees, except as to be deemed to be "outstanding" only for the purposes
of the Sections of this Indenture referred to in (a) and (b) below, and the
Company and the Guarantors shall be deemed to have satisfied all other of their
respective obligations under such Notes and this Indenture (and the Trustee, on
demand of and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (a) the rights of Holders of
outstanding Notes to receive payments in respect of the principal of, premium,
if any, and interest (and Liquidated Damages, if any) on such Notes when such
payments are due from the trust described in Section 8.5, (b) the Company's
obligations with respect to such Notes under Sections 2.4, 2.6, 2.7, 2.10, 4.2,
8.5, 8.6 and 8.7 hereof and (c) the rights, powers, trusts, duties and
immunities of the Trustee hereunder and the Company's obligations in connection
therewith. Subject to compliance with this Article VIII, the Company may
exercise its option under this Section 8.2 notwithstanding the prior exercise of
its option under Section 8.3 hereof with respect to the Notes.

SECTION 8.3.   COVENANT DEFEASANCE

          Upon the Company's exercise under Section 8.1 hereof of the option
applicable to this Section 8.3, the Company and the Guarantors shall be released
from their respective obligations under the covenants contained in Sections 4.3,
4.6, 4.7, 4.8, 4.10, 4.11, 4.12, 4.13, 4.14, 4.16 and 4.17, Article V and
Article X hereof with respect to the outstanding Notes on and after the date the
conditions set forth below are satisfied (hereinafter, "Covenant Defeasance"),
and the Notes shall thereafter be deemed not "outstanding" for the purposes of
any direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder. For this
purpose, such Covenant Defeasance means that, with respect to the outstanding
Notes, neither the Company nor any Guarantor need comply with and shall have any
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section
6.1(iii), but, except as specified above, the remainder of this Indenture and
such Notes shall be unaffected thereby. In addition, upon the Company's exercise
under Section 8.1 hereof of the option applicable to this Section 8.3, and
subject to Section 8.4, Sections 6.1(vi) through 6.1(viii) hereof shall not
constitute Events of Default with respect to the Notes.

SECTION 8.4.   CONDITIONS TO LEGAL OR COVENANT DEFEASANCE

          The following shall be the conditions to the application of either
Section 8.2 or 8.3 hereof to the outstanding Notes:

                                       83


          (a)  (i)  The Company shall irrevocably have deposited or caused to be
deposited with the Trustee, in trust, for the benefit of the Holders of the
Notes, U.S. legal tender, U.S. Government Obligations, or a combination thereof,
in such amounts as will be sufficient, in the opinion of a nationally recognized
firm of independent public accountants, to pay the principal of, premium, if
any, and interest (and Liquidated Damages, if any) on such outstanding Notes on
the stated date for payment thereof or on the redemption date of such principal
or installment of principal of, premium, if any, or interest (and Liquidated
Damages, if any) on such Notes, and the Holders of Notes must have a valid,
perfected, exclusive security interest in such trust, (ii) in the case of Legal
Defeasance, the Company shall have delivered to the Trustee an opinion of
counsel in the United States reasonably acceptable to the Trustee confirming
that (A) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (B) since the date of this Indenture, there
has been a change in the applicable federal income tax law, in either case to
the effect that, and based thereon such opinion of counsel shall confirm that,
the Holders of such 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; (iii) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States reasonably
acceptable to such Trustee confirming that the Holders of such 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; (iv) no Default or Event
of Default shall have occurred and be continuing on the date of such deposit or
insofar as Events of Default from bankruptcy or insolvency events are concerned,
at any time in the period ending on the 91st day after the date of deposit; (v)
such Legal Defeasance or Covenant Defeasance will not result in a breach or
violation of, or constitute a default under this Indenture or any other material
agreement or instrument to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries is bound; (vi) the
Company shall have delivered to the Trustee an Officers' Certificate stating
that the deposit was not made by the Company with the intent of preferring the
Holders of such Notes over the other creditors of the Company or with the intent
of defeating, hindering, delaying or defrauding the other creditors of the
Company or others; and (vii) the Company shall have delivered to the Trustee an
Officers' Certificate and an opinion of counsel, each stating that the
conditions precedent provided for in, in the case of the Officers' Certificate,
(i) through (vi) and, in the case of the opinion of counsel, clauses (i) (with
respect to the validity and perfection of the security interest), (ii), (iii)
and (v) of this paragraph, have been complied with and the Company shall have
delivered to the Trustee an Officers' Certificate, subject to such
qualifications and exceptions as the Trustee deems appropriate, to the effect
that, assuming no Holder of the Notes is an insider of the Company, the trust
funds will not be subject to the effect of any applicable federal bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally.

          If the funds deposited with the Trustee to effect Covenant Defeasance
are insufficient to pay the principal of, premium, if any, and interest (and
Liquidated Damages, if any) on the Notes when due, then the obligations of the
Company and the Guarantors under this Indenture, will be revived and no such
defeasance will be deemed to have occurred.

                                       84


SECTION 8.5.   DEPOSITED CASH AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD IN
               TRUST; OTHER MISCELLANEOUS PROVISIONS

          Subject to Section 8.6 hereof, all cash and U.S. Government
Obligations (including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this Section 8.5, the
"Paying Agent") pursuant to Section 8.4 hereof in respect of the outstanding
Notes shall be held in trust and applied by the Paying Agent, in accordance with
the provisions of such Notes and this Indenture, to the payment, either directly
or through any other Paying Agent as the Trustee may determine, to the Holders
of such Notes of all sums due and to become due thereon in respect of principal,
premium, if any, and interest (and Liquidated Damages, if any), but such money
need not be segregated from other funds except to the extent required by law.

          The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 8.4 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of outstanding Notes.

SECTION 8.6.   REPAYMENT TO THE COMPANY

          (a)  Anything in this Article VIII to the contrary notwithstanding,
the Trustee or the Paying Agent shall deliver or pay to the Company from time to
time upon the request of the Company any cash or U.S. Government Obligations
held by it as provided in Section 8.4 hereof which in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.4(a) hereof), are in excess of the amount thereof that
would then be required to be deposited to effect an equivalent Legal Defeasance
or Covenant Defeasance.

          (b)  Any cash and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee or any Paying Agent, or then held by the
Company, in trust for the payment of the principal of, premium, if any, or
interest (and Liquidated Damages, if any) on any Note and remaining unclaimed
for two years after such principal, and premium, if any, or interest (and
Liquidated Damages, if any) has become due and payable shall be paid to the
Company on its request (or if held by the Company, shall be discharged from such
trust); and the Holder of such Note shall thereafter look only to the Company
for payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in the New York
Times and The Wall Street Journal (national edition), notice that such money
remains unclaimed and that, after a date specified therein, which shall be not
less than 30 days nor more than 90 days from the date of such notification or
publication, any unclaimed balance of such money then remaining will be repaid
to the Company.

SECTION 8.7.   REINSTATEMENT

                                       85


          If the Trustee or Paying Agent is unable to apply any cash or U.S.
Government Obligations in accordance with Section 8.2 or 8.3 hereof, as the case
may be, of this Indenture by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's and the Guarantors' obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 8.2 or 8.3 hereof until such time as the Trustee or
Paying Agent is permitted to apply such money in accordance with Sections 8.2
and 8.3 hereof, as the case may be; provided, however, that, if the Company
makes any payment of principal of, premium, if any, or interest (and Liquidated
Damages, if any) on any Note following the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the cash or U.S. Government Obligations held by the
Trustee or Paying Agent.

                                  ARTICLE IX

                      AMENDMENTS, SUPPLEMENTS AND WAIVERS

SECTION 9.1.   SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS

          Without the consent of any Holder, the Company or any Guarantor, when
authorized by Board Resolutions, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:

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

               (2)  to add to the covenants of the Company or the Guarantors for
     the benefit of the Holders, or to surrender any right or power herein
     conferred upon the Company or the Guarantors or make any other change that
     does not materially adversely affect the rights of any Holder;

               (3)  to provide for collateral for or additional Guarantors of
     the Notes;

               (4)  to evidence the succession of another Person to the Company,
     and the assumption by any such successor of the obligations of the Company,
     herein and in the Notes in accordance with Article V;

               (5)  to comply with the TIA;

               (6)  to evidence the succession of another corporation to any
     Guarantor and assumption by any such successor of the Guarantee of such
     Guarantor (as set forth in Section 11.4) in accordance with Article XI;

                                       86


               (7)  to evidence the release of any Guarantor in accordance with
     Article XI;

               (8)  to evidence and provide for the acceptance of appointment
     hereunder by a successor Trustee with respect to the Notes; or

               (9)  to provide for the issuance and authorization of the
     Exchange Notes.

SECTION 9.2.   AMENDMENTS, SUPPLEMENTAL INDENTURES AND WAIVERS WITH CONSENT OF
               HOLDERS

          Subject to Section 6.8 hereof, with the consent of the Holders of at
least a majority in aggregate principal amount of the Notes then outstanding
(including consents obtained in connection with a tender offer or exchange offer
for such Notes), by written act of said Holders delivered to the Company and the
Trustee, the Company and the Guarantors, when authorized by Board Resolutions,
and the Trustee may amend or supplement this Indenture or enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders under
this Indenture or the Notes. Subject to Section 6.8, the Holder or Holders of
not less than a majority in aggregate principal amount of then outstanding Notes
may waive compliance by the Company or any Guarantor with any provision of this
Indenture or the Notes. Notwithstanding any of the above, however, no such
amendment, supplemental indenture or waiver shall, without the consent of the
Holder of each outstanding Note affected thereby:

               (1)  change the Stated Maturity on any Note, or reduce the
     principal amount thereof or the rate (or extend the time for payment) of
     interest thereon or any premium payable upon the redemption thereof at the
     Company's option, or change the place of payment where, or the coin or
     currency in which, any Note or any premium or the interest thereon is
     payable, or impair the right to institute suit for the enforcement of any
     such principal, interest or premium payment thereon on or after the
     Maturity Date (or, in the case of redemption at the Company's option, on or
     after the Redemption Date), or reduce the Change of Control Purchase Price
     or the Asset Sale Offer Price after the corresponding Asset Sale or Change
     of Control has occurred or alter the provisions (including the defined
     terms used therein) of Article III of this Indenture or Section 5 of the
     Notes regarding the right of the Company to redeem the Notes as a right, or
     at the Company's option or the provisions (including the deferred terms
     used therein) of Article X in a manner adverse to the Holders; or

               (2)  reduce the percentage in principal amount of the outstanding
     Notes, the consent of whose Holders is required for any such amendment,
     supplemental indenture or wavier provided for in this Indenture; or

                                       87


               (3)  modify any of the waiver provisions, except to increase any
     required percentage or to provide that certain other provisions of this
     Indenture cannot be modified or waived without the consent of the Holder of
     each outstanding Note affected thereby.

          It shall not be necessary for the consent of the Holders under this
Section 9.2 to approve the particular form of any proposed amendment, supplement
or waiver, but it shall be sufficient if such consent approves the substance
thereof.

          After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture or waiver.

          After an amendment, supplement or waiver under this Section 9.2 or
under Section 9.4 hereof becomes effective, it shall bind each Holder.

          In connection with any amendment, supplement or waiver under this
Article IX, the Company may, but shall not be obligated to, offer to any Holder
who consents to such amendment, supplement or waiver, or to all Holders,
consideration for such Holder's consent to such amendment, supplement or waiver.

SECTION 9.3.   COMPLIANCE WITH TIA

          Every amendment, waiver or supplement of this Indenture or the Notes
shall comply with the TIA as then in effect.

SECTION 9.4.   REVOCATION AND EFFECT OF CONSENTS

          Until an amendment, waiver or supplement becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder's Note, even if notation of the consent is not made on any
Note. However, any such Holder or subsequent Holder may revoke the consent as to
his Note or portion of his Note by written notice to the Company or the Person
designated by the Company as the Person to whom consents should be sent if such
revocation is received by the Company or such Person before the date on which
the Trustee receives an Officers' Certificate certifying that the Holders of the
requisite principal amount of Notes have consented (and not theretofore revoked
such consent) to the amendment, supplement or waiver.

          The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be the date so fixed by the
Company notwithstanding the provisions of the TIA. If a record date is fixed,
then notwithstanding the last sentence of the immediately preceding paragraph,
those Persons who were Holders at such record date, and only those Persons (or
their duly designated

                                       88


proxies), shall be entitled to revoke any consent previously given, whether or
not such Persons continue to be Holders after such record date.

          After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(1) through (3) of Section 9.2 hereof, in which case, the amendment, supplement
or waiver shall bind only each Holder of a Note who has consented to it and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note; provided, that any such waiver shall not
impair or affect the right of any Holder to receive payment of principal and
premium of and interest (and Liquidated Damages, if any) on a Note, on or after
the respective dates set for such amounts to become due and payable expressed in
such Note, or to bring suit for the enforcement of any such payment on or after
such respective dates.

SECTION 9.5.   NOTATION ON OR EXCHANGE OF NOTES

          If an amendment, supplement or waiver changes the terms of a Note, the
Trustee may require the Holder of the Note to deliver it to the Trustee or
require the Holder to put an appropriate notation on the Note. The Trustee may
place an appropriate notation on the Note about the changed terms and return it
to the Holder. Alternatively, if the Company or the Trustee so determines, the
Company in exchange for the Note shall issue and the Trustee shall authenticate
a new Note that reflects the changed terms. Any failure to make the appropriate
notation or to issue a new Note shall not affect the validity of such amendment,
supplement or waiver.

SECTION 9.6.   TRUSTEE TO SIGN AMENDMENTS, ETC.

          The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article IX; provided, that the Trustee may, but
shall not be obligated to, execute any such amendment, supplement or waiver
which affects the Trustee's own rights, duties or immunities under this
Indenture. The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
any amendment, supplement or waiver authorized pursuant to this Article IX is
authorized or permitted by this Indenture and that such amendment is the legal,
valid and binding obligation of the Company and the Guarantors party thereto,
enforceable against them in accordance with its terms, subject to customary
exceptions, and complies with the provisions hereof (including Section 9.3).

                                   ARTICLE X

                          RIGHT TO REQUIRE REPURCHASE

SECTION 10.1.  REPURCHASE OF NOTES AT THE OPTION OF THE HOLDER UPON A CHANGE OF
               CONTROL.

                                       89


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

          Notwithstanding the foregoing, the Company will not be required to
make a Change of Control Offer upon a Change of Control if a third party makes
the Change of Control Offer in the manner, at the times and otherwise in
compliance with the requirements set forth herein applicable to a Change of
Control Offer made by the Company, including any requirements to repay in full
all Indebtedness under the Credit Agreement, any Senior Debt or Senior Debt of
any Guarantor or obtains the consents of such lenders to such Change of Control
Offer as set forth in the following paragraph of this Section, and purchases all
Notes validly tendered and not withdrawn under such Change of Control Offer.

          Notwithstanding anything in this Article X to the contrary, prior to
the commencement of a Change of Control Offer, but in any event within 30 days
following any Change of Control, the Company shall:

               (1)  (A) repay in full, and terminate all commitments under, all
     Indebtedness under the Credit Agreement and all other Senior Debt the terms
     of which require repayment upon a Change of Control or (B) offer to repay
     in full, and terminate all commitments under, all Indebtedness under the
     Credit Agreement and all such other Senior Debt and repay the Indebtedness
     owed to each lender that has accepted such offer in full, or

               (2)  obtain the requisite consents under the Credit Agreement and
     all such other Senior Debt to permit the repurchase of the Notes as
     provided herein.

     The Company's failure to comply with the preceding sentence shall
constitute an Event of Default described in Section 6.1(iii), but without giving
effect to the stated exceptions in such clause.

          (b)  In the event that, pursuant to this Section 10.1, the Company
shall be required to commence a Change of Control Offer, the Company shall
follow the procedures set forth in this Section 10.1 as follows:

               (1)  the Change of Control Offer shall commence within 30 days
     following the occurrence of a Change of Control;

                                       90


               (2)  the Change of Control Offer shall remain open for 20
     Business Days (the "Change of Control Offer Period") or such other period
     as may be required by applicable law;

               (3)  upon the expiration of the Change of Control Offer Period,
     the Company promptly shall purchase all of the tendered Notes at the Change
     of Control Purchase Price;

               (4)  if the Change of Control Purchase Date is on or after an
     interest payment Record Date and on or before the associated Interest
     Payment Date, any accrued and unpaid interest (and Liquidated Damages, if
     any) due on such Interest Payment Date will be paid to the Person in whose
     name a Note is registered at the close of business on such Record Date on
     the corresponding Interest Payment Date;

               (5)  the Company shall provide the Trustee and the Paying Agent
     with written notice of the Change of Control Offer at least three Business
     Days before the commencement of any Change of Control Offer; and

               (6)  on or before the commencement of any Change of Control
     Offer, the Company or the Trustee (upon the request and at the expense of
     the Company) shall send, by first-class mail, a notice to each of the
     Securityholders, which (to the extent consistent with this Indenture) shall
     govern the terms of the Change of Control Offer and shall state:

                    (A)  that the Change of Control Offer is being
          made pursuant to this Section 10.1 and that all Notes, or
          portions thereof, tendered will be accepted for payment;

                    (B)  the Change of Control Purchase Price
          (including the amount of accrued but unpaid interest (and
          Liquidated Damages, if any)) and the Change of Control
          Purchase Date;

                    (C)  that any Note, or portion thereof, not
          tendered or accepted for payment will continue to accrue
          interest (and Liquidated Damages, if any);

                    (D)  that, unless the Company defaults in
          depositing cash with the Paying Agent in accordance with
          the penultimate paragraph of this Section 10.1, or such
          payment is prevented for any reason, any Note, or portion
          thereof, accepted for payment pursuant to the Change of
          Control Offer shall cease to accrue interest (and
          Liquidated Damages, if any) after the Change of Control
          Purchase Date;

                                       91


                    (E)  that Holders electing to have a Note, or
          portion thereof, purchased pursuant to a Change of
          Control Offer will be required to surrender the Note,
          with the form entitled "Option of Holder to Elect
          Purchase" on the reverse of the Note completed, to the
          Paying Agent (which may not for purposes of this Section
          10.1, notwithstanding anything in this Indenture to the
          contrary, be the Company or any Affiliate of the Company)
          at the address specified in the notice prior to the
          expiration of the Change of Control Offer;

                    (F)  that Holders will be entitled to withdraw
          their election, in whole or in part, if the Paying Agent
          receives, prior to the expiration of the Change of Control
          Offer, a facsimile transmission or letter setting forth the
          name of the Holder, the principal amount of the Notes the
          Holder is withdrawing and a statement containing a facsimile
          signature and stating that such Holder is withdrawing his
          election to have such principal amount of Notes purchased;

                    (G)  that Holders whose Notes are purchased only in
          part will be issued new Notes equal in principal amount to
          the unpurchased portion of the Notes surrendered; and

                    (H)  a brief description of the events resulting in
          such Change of Control.

          On or before the Change of Control Purchase Date, the Company shall,
to the extent lawful:

               (1)  accept for payment Notes or portions thereof properly
     tendered and not validly withdrawn pursuant to the Change of Control Offer,

               (2)  deposit with the Paying Agent an amount in cash sufficient
     to pay the Change of Control Purchase Price (together with accrued and
     unpaid interest and Liquidated Damages, if any), of all Notes so tendered,
     and

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

The Paying Agent promptly shall pay the Holders of Notes so accepted an amount
equal to the Change of Control Purchase Price (together with accrued and unpaid
interest and Liquidated Damages, if any), and the Trustee promptly will
authenticate and deliver to such Holders a new Note equal in principal amount to
any unpurchased portion of the Note surrendered. Any Notes not so accepted will
be delivered promptly by the Company to the Holder thereof. The Company publicly
will announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Purchase Date.

                                       92


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

                                  ARTICLE XI

                                   GUARANTEE

SECTION 11.1.  GUARANTEE

          (a)  Each of the Guarantors shall, jointly and severally, irrevocably
and unconditionally guarantee (the "Guarantee") to each Holder of a Note
authenticated and delivered by the Trustee and to the Trustee and its successors
and assigns, irrespective of the validity and enforceability against the Company
and any other Guarantors of this Indenture, the Notes or the obligations of the
Company under this Indenture or the Notes, that: (x) the principal of and
premium (if any), and interest (and Liquidated Damages, if any) on the Notes
will be paid on a senior subordinated basis in full when due, subject to any
expressly stated applicable grace period, whether at the Maturity Date or
Interest Payment Date, by acceleration, call for redemption, upon a Change of
Control Offer, an Asset Sale Offer or otherwise; (y) all other obligations of
the Company to the Holders or the Trustee under this Indenture or the Notes
(including fees, expenses or other) will be promptly paid in full or performed,
all in accordance with the terms of this Indenture and the Notes; and (z) in
case of any extension of time of payment or renewal of any Notes or any of such
other obligations, they will be paid in full when due or performed in accordance
with the terms of the extension or renewal, whether at maturity, by
acceleration, call for redemption, upon a Change of Control Offer, an Asset Sale
Offer or otherwise. Failing payment when due of any amount so guaranteed for
whatever reason, each Guarantor shall be obligated to pay the same before
failure so to pay becomes an Event of Default.

          If the Company or a Guarantor defaults in the payment of the principal
of, premium, if any, or interest (or Liquidated Damages, if any) on, the Notes
when and as the same shall become due, whether upon maturity, acceleration, call
for redemption, upon a Change of Control Offer, upon an Asset Sale Offer or
otherwise, without the necessity of action by the Trustee or any Holder, each
Guarantor shall be required, jointly and severally, to promptly make such
payment in full.

          The Company shall cause each Subsidiary that is formed or acquired
after the date hereof and each subsidiary that becomes a Subsidiary after the
date hereof, in each case other than Foreign Subsidiaries and Non-Guarantor
Subsidiaries, concurrently upon becoming a Subsidiary, to become a Guarantor
hereunder and execute and deliver to the Trustee a supplemental indenture as
provided pursuant to the terms of this Indenture.

                                       93


          Notwithstanding anything herein to the contrary, if any of the
Company's Subsidiaries that is not a Guarantor guarantees any of the Company's
other Indebtedness or any other Indebtedness of any of its Subsidiaries, or the
Company or any of its Subsidiaries, individually or collectively, pledges,
directly or indirectly, more than 65% of the Voting Equity Interests of such
Subsidiary to a lender (other than pledges of Equity Interests of Non-Guarantor
Subsidiaries pursuant to the Credit Agreement), then such Subsidiary must become
a Guarantor in accordance with the terms hereof.

          (b)  Each Guarantor hereby agrees to the fullest extent permitted by
applicable law, that its obligations with regard to this Guarantee shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Notes or this Indenture, the absence of any action to enforce the same, any
delays in obtaining or realizing upon or failures to obtain or realize upon
collateral, the recovery of any judgment against the Company, any action to
enforce the same or any other circumstances that might otherwise constitute a
legal or equitable discharge or defense of a Guarantor. Each Guarantor hereby
waives to the fullest extent permitted by applicable law diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company or right to require the prior disposition of the assets of the Company
to meet its obligations, protest, notice and all demands whatsoever and
covenants that this Guarantee will not be discharged except by complete
performance of the obligations contained in the Notes and this Indenture.

          (c)  If any Holder or the Trustee is required by any court or
otherwise to return to either the Company or any Guarantor, or any Custodian or
similar official acting in relation to either the Company or such Guarantor, any
amount paid by either the Company or such Guarantor to the Trustee or such
Holder, this Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect. Each Guarantor agrees that it will not be
entitled to any right of subrogation in relation to the Holders in respect of
any obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby. Each Guarantor further agrees that, as between such
Guarantor, on the one hand, and the Holders and the Trustee, on the other hand,
(i) the maturity of the obligations guaranteed hereby may be accelerated as
provided in Section 6.2 hereof for the purposes of this Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration as to the Company of the obligations guaranteed hereby, and (ii) in
the event of any declaration of acceleration of those obligations as provided in
Section 6.2 hereof, those obligations (whether or not due and payable) will
forthwith become due and payable by each of the Guarantors for the purpose of
this Guarantee.

          (d)  It is the intention of each Guarantor and the Company that the
obligations of each Guarantor hereunder shall be in, but not in excess of, the
maximum amount permitted by applicable law. Accordingly, if the obligations in
respect of the Guarantee would be annulled, avoided or subordinated to the
creditors of any Guarantor by a court of competent jurisdiction in a proceeding
actually pending before such court as a result of a determination both that such
Guarantee was made by such Guarantor without fair consideration and, immediately
after giving effect thereto, such Guarantor was insolvent or unable to pay its
debts as they mature or left with an unreasonably small capital, then the
obligations of such Guarantor under such Guarantee shall be reduced by such

                                       94


court if and to the extent such reduction would result in the avoidance of such
annulment, avoidance or subordination; provided, however, that any reduction
pursuant to this paragraph shall be made in the smallest amount as is strictly
necessary to reach such result. For purposes of this paragraph, "fair
consideration", "insolvency", "unable to pay its debts as they mature",
"unreasonably small capital" and the effective times of reductions, if any,
required by this paragraph shall be determined in accordance with applicable
law.

SECTION 11.2.  EXECUTION AND DELIVERY OF GUARANTEE

          Each Guarantor shall, by virtue of such Guarantor's execution and
delivery of an indenture supplement pursuant to Section 11.1 hereof, be deemed
to have signed on each Note issued hereunder the notation of guarantee set forth
on the form of the Notes attached hereto as Exhibit A to the same extent as if
the signature of such Guarantor appeared on such Note.

          The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the guarantee set forth in
Section 11.1 on behalf of each Guarantor. The notation of a guarantee set forth
on any Note shall be null and void and of no further effect with respect to the
guarantee of any Guarantor which, pursuant to Section 11.4, is released from
such Guarantee.

SECTION 11.3.  CERTAIN BANKRUPTCY EVENTS

          Each Guarantor hereby covenants and agrees, to the fullest extent that
it may do so under applicable law, that in the event of the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Company, such
Guarantor shall not file (or join in any filing of), or otherwise seek to
participate in the filing of, any motion or request seeking to stay or to
prohibit (even temporarily) execution on the Guarantee and hereby waives and
agrees not to take the benefit of any such stay of execution, whether under
Section 362 or 105 of the United States Bankruptcy Code or otherwise.

SECTION 11.4.  LIMITATION ON MERGER OF SUBSIDIARIES AND RELEASE OF GUARANTORS

          No Guarantor shall consolidate or merge with or into (whether or not
such Guarantor is the surviving Person) another Person unless, subject to the
provisions of the following paragraph and the other provisions of this
Indenture, (1) the Person formed by or surviving any such consolidation or
merger (if other than such Guarantor) assumes all the obligations of such
Guarantor pursuant to a supplemental indenture in form reasonably satisfactory
to the Trustee, pursuant to which such Person shall guarantee, on a senior
subordinated basis, all of such Guarantor's obligations under such Guarantor's
Guarantee on the terms set forth herein; and (2) immediately before and
immediately after giving effect to such transaction on a pro forma basis, no
Default or Event of Default shall have occurred or be continuing. The provisions
of this Section 11.4 shall not apply to the merger of any Guarantors with and
into each other or with or into the Company.

                                       95


          Upon the sale or disposition (whether by merger, stock purchase, Asset
Sale or otherwise) of a Guarantor (as an entity) to an entity which is not, and
is not required to become, a Guarantor, or the designation of a Subsidiary to
become an Unrestricted Subsidiary, or upon a Guarantor becoming a Non-Guarantor
Subsidiary which transaction is otherwise in compliance with this Indenture
(including, without limitation, the provisions of Section 4.14), such Guarantor
will be deemed released from its obligations under its Guarantee of the Notes
and such Guarantee will terminate; provided, however, that any such termination
shall occur only to the extent that all obligations of such Guarantor under all
of its guarantees of, and under all of its pledges of assets or other security
interests that secure, any of the Company's Indebtedness or any Indebtedness of
any other of the Company's Subsidiaries shall also terminate upon such release,
sale or transfer and none of such Guarantor's Equity Interests are pledged for
the benefit of any holder of any of the Company's Indebtedness or any
Indebtedness of any of the Company's Subsidiaries (other than pledges of Equity
Interests of Non-Guarantor Subsidiaries pursuant to the Credit Agreement).

          Upon delivery by the Company to the Trustee of an Officers'
Certificate and an Opinion of Counsel to the effect that such sale or other
disposition was made in accordance with the applicable provisions of this
Indenture, the Trustee shall execute any documents reasonably required to
evidence the release of any Guarantor from its obligations under the Guarantee.

SECTION 11.5.  SUBORDINATION OF GUARANTEES

          The obligations of each Guarantor under its Guarantee pursuant to this
Article XI are subordinated in right of payment to the prior payment in full in
cash of all Senior Debt of such Guarantor on the same basis as the Notes are
subordinated to Senior Debt of the Company. For the purposes of the foregoing
sentence, the Trustee and the Holders shall have the right to receive and/or
retain payments by any of the Guarantors only at such times as they may receive
and/or retain payments in respect of Notes pursuant to this Indenture, including
Article XII hereof. In the event that the Trustee receives any Guarantor payment
at a time when such payment is prohibited by the foregoing sentence, such
Guarantor payment shall be held for the benefit of, and paid over and delivered
to, the holders of the Senior Debt of such Guarantor remaining unpaid, to the
extent necessary to pay in full all such Senior Debt. In the event that a Holder
receives any Guarantor payment at a time when such payment is prohibited by the
foregoing sentence, such Guarantor payment shall be held for the benefit of, and
paid over and delivered to, the holders of the Senior Debt of such Guarantor
remaining unpaid, to the extent necessary to pay in full all such Senior Debt.

          Each Holder of a Note by its acceptance thereof (a) agrees to and
shall be bound by the provisions of this Section 11.5, (b) authorizes and
directs the Trustee on the Holder's behalf to take such action as may be
necessary and appropriate to effectuate the subordination so provided, and (c)
appoints the Trustee as the Holder's attorney-in-fact for any and all such
purposes.

                                       96


                                  ARTICLE XII

                                 SUBORDINATION

SECTION 12.1.  NOTES SUBORDINATED TO SENIOR DEBT


          The Company and the Guarantors and each Holder, by its acceptance of
Notes, agree that (a) the payment of the principal of and interest (and
Liquidated Damages, if any) on the Notes and (b) any other payment in respect of
the Notes, including on account of the acquisition or redemption of the Notes by
the Company and the Guarantors (including, without limitation, pursuant to
Section 4.14 and Article X) is subordinated, to the extent and in the manner
provided in this Article XII, to the prior payment in full in cash or Cash
Equivalents of all Senior Debt of the Company and the Guarantors and that these
subordination provisions are for the benefit of the holders of Senior Debt.

          This Article XII shall constitute a continuing offer to all Persons
who, in reliance upon such provisions, become holders of, or continue to hold,
Senior Debt, and such provisions are made for the benefit of the holders of
Senior Debt and such holders are made obligees hereunder and any one or more of
them may enforce such provisions.

SECTION 12.2.  NO PAYMENT ON NOTES IN CERTAIN CIRCUMSTANCES

          (a)  No payment (by set-off or otherwise) shall be made by or on
behalf of the Company or a Guarantor, as applicable, on account of the principal
of, premium, if any, or interest (or Liquidated Damages) on the Notes, or on
account of the redemption provisions of the Notes (including any repurchases of
Notes), for cash or property (other than Junior Securities), (i) upon the
maturity of any Senior Debt of the Company or such Guarantor, as applicable, by
lapse of time, acceleration (unless waived) or otherwise, unless and until all
principal of, premium, if any, and the interest on, and all other amounts owning
in respect of, such Senior Debt are first paid in full in cash or Cash
Equivalents (or such payment is duly provided for) or otherwise to the extent
holders accept satisfaction of amounts due by settlement in other than cash or
Cash Equivalents, or (ii) in the event of default in the payment of any
principal of, premium, if any, or interest on Senior Debt of the Company or such
Guarantor, as applicable, when it becomes due and payable, whether at maturity,
or at a date fixed for prepayment or by declaration or otherwise (a "Payment
Default"), unless and until such Payment Default has been cured or waived or
otherwise has ceased to exist.

          (b)  Upon (i) the happening of an event of default other than a
Payment Default that permits the holders of any Designated Senior Debt to
declare such Designated Senior Debt to be due and payable and (ii) written
notice of such event of default given to the Company and the Trustee by the
holders of such Designated Senior Debt or their representative (a "Payment
Notice"), then, unless and until such event of default has been cured or waived
or otherwise has ceased to exist, no payment (by set-off or otherwise) may be
made by or on behalf of the Company or any Guarantor which is an obligor under
such Designated Senior Debt on account of the principal of, premium, if any, or
interest (or Liquidated Damages, if any) on the Notes, (including any

                                       97


repurchases of any of the Notes), or on account of the redemption provisions of
the Notes, in any such case, other than payments made with Junior Securities.
Notwithstanding the foregoing, unless the Designated Senior Debt in respect of
which such event of default exists has been declared due and payable in its
entirety within 179 days after the Payment Notice is delivered as set forth
above (the "Payment Blockage Period") (and such declaration has not been
rescinded or waived), at the end of the Payment Blockage Period, the Company and
the Guarantors shall be required, to pay all sums not previously paid to the
Holders of the Notes during the Payment Blockage Period due to the foregoing
prohibitions and to resume all other payments as and when due on the Notes.

          Any number of Payment Notices may be given; provided, however, that
(i) not more than one Payment Notice shall be given within a period of any 360
consecutive days, and (ii) no non-payment default that existed upon the date of
such Payment Notice or the commencement of such Payment Blockage Period (whether
or not such event of default is on the same issue of Designated Senior Debt)
shall be made the basis for the commencement of any other Payment Blockage
Period (for purposes of this provision, any subsequent action, or any subsequent
breach of any financial covenant for a period commencing after the expiration of
such Payment Blockage Period that, in either case, would give rise to a new
event of default, even though it is an event that would also have been a
separate breach pursuant to any provision under which a prior event of default
previously existed, shall constitute a new event of default).

          (c)  In furtherance of the provisions of Section 12.1, in the event
that, notwithstanding the foregoing provisions of this Section 12.2 or Section
12.3, any payment or distribution of assets of the Company or any Guarantor
(other than Junior Securities) shall be received by the Trustee or the Holders
at a time when such payment or distribution is prohibited by the foregoing
provisions of this Section 12.2, such payment or distribution shall be held for
the benefit of the holders of such Senior Debt, and shall be paid or delivered
by the Trustee or such Holders, as the case may be, to the holders of such
Senior Debt remaining unpaid or unprovided for or to their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any of such Senior Debt may have been issued,
ratably according to the aggregate principal amounts remaining unpaid on account
of such Senior Debt held or represented by each, for application to the payment
of all such Senior Debt remaining unpaid, to the extent necessary to pay or to
provide for the payment of all such Senior Debt in full in cash or Cash
Equivalents, or otherwise to the extent holders accept satisfaction of amounts
due by settlement in other than cash or Cash Equivalents after giving effect to
any concurrent payment or distribution to the holders of such Senior Debt.

SECTION 12.3.  NOTES SUBORDINATED TO PRIOR PAYMENT OF ALL SENIOR DEBT ON
               DISSOLUTION, LIQUIDATION OR REORGANIZATION

          Upon any distribution of assets of the Company or any Guarantor upon
any dissolution, winding up, total or partial liquidation or reorganization of
the Company or a Guarantor, whether voluntary or involuntary, in bankruptcy,
insolvency, receivership or a similar proceeding or upon assignment for the
benefit of creditors or any marshalling of assets or liabilities:

                                       98


          (a)  the holders of all Senior Debt of the Company or such Guarantor,
as applicable, will first be entitled to receive payment in full in cash or Cash
Equivalents (or have such payment duly provided for) or otherwise to the extent
such holders accept satisfaction of amounts due by settlement in other than cash
or Cash Equivalents before the Holders are entitled to receive any payment on
account of the principal of, premium, if any, and interest (or Liquidated
Damages, if any) on the Notes (other than Junior Securities); and


          (b)  any payment or distribution of assets of the Company or such
Guarantor of any kind or character from any source, whether in cash, property or
securities (other than Junior Securities) to which the Holders or the Trustee on
behalf of the Holders would be entitled (by set-off or otherwise), except for
the subordination provisions contained in this Indenture, will be paid by the
liquidating trustee or agent or other Person making such a payment or
distribution directly to the holders of such Senior Debt or their representative
to the extent necessary to make payment in full (or have such payment duly
provided for) on all such Senior Debt remaining unpaid, after giving effect to
any concurrent payment or distribution to the holders of such Senior Debt.

SECTION 12.4.  SECURITYHOLDERS TO BE SUBROGATED TO RIGHTS OF HOLDERS OF SENIOR
               DEBT

          Subject to the payment in full in cash or Cash Equivalents of all
Senior Debt of the Company or any Guarantor as provided herein, the Holders of
Notes shall be subrogated to the rights of the holders of such Senior Debt to
receive payments or distributions of assets of the Company applicable to the
Senior Debt until all amounts owing on the Notes shall be paid in full, and for
the purpose of such subrogation no such payments or distributions to the holders
of such Senior Debt by or on behalf of the Company or any Guarantor, or by or on
behalf of the Holders by virtue of this Article XII, which otherwise would have
been made to the Holders shall, as between the Company or any Guarantor and the
Holders, be deemed to be payment by the Company or any Guarantor or on account
of such Senior Debt, it being understood that the provisions of this Article XII
are and are intended solely for the purpose of defining the relative rights of
the Holders, on the one hand, and the holders of such Senior Debt, on the other
hand.

SECTION 12.5.  OBLIGATIONS OF THE COMPANY AND THE GUARANTORS UNCONDITIONAL

          Nothing contained in this Article XII or elsewhere in this Indenture
or in the Notes is intended to or shall impair, as between the Company and any
Guarantors and the Holders, the obligation of each such Person, which is
absolute and unconditional, to pay to the Holders the principal of, premium, if
any, and interest (and Liquidated Damages, if any) on the Notes as and when the
same shall become due and payable in accordance with their terms, or is intended
to or shall affect the relative rights of the Holders and creditors of the
Company and the Guarantors other than the holders of the Senior Debt, nor shall
anything herein or therein prevent the Trustee or any Holder from exercising all
remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article XII, of the holders
of Senior Debt in respect of cash, property or securities of the Company and the
Guarantors received upon the exercise of any

                                       99


such remedy. Notwithstanding anything to the contrary in this Article XII or
elsewhere in this Indenture or in the Notes, upon any distribution of assets of
the Company and the Guarantors referred to in this Article XII, the Trustee,
subject to the provisions of Sections 7.1 and 7.2, and the Holders shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, or a certificate of the liquidating
Trustee or agent or other Person making any distribution to the Trustee or to
the Holders for the purpose of ascertaining the Persons entitled to participate
in such distribution, the holders of the Senior Debt and other Indebtedness of
the Company or any Guarantor, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article XII so long as such court has been apprised of the provisions
of, or the order, decree or certificate makes reference to, the provisions of
this Article XII.

          Nothing in this Article XII shall apply to the claims of, or payments
to, the Trustee under or pursuant to Section 7.7.

SECTION 12.6.  TRUSTEE ENTITLED TO ASSUME PAYMENTS NOT PROHIBITED IN ABSENCE OF
               NOTICE.

          The Trustee shall not at any time be charged with knowledge of the
existence of any facts which would prohibit the making of any payment to or by
the Trustee unless and until a Trust Officer of the Trustee or any Paying Agent
shall have received, no later than one Business Day prior to such payment
written notice thereof from the Company or from one or more holders of Senior
Debt or from any representative therefor and, prior to the receipt of any such
written notice, the Trustee, subject to the provisions of Sections 7.1 and 7.2,
shall be entitled in all respects conclusively to assume that no such fact
exists.

SECTION 12.7.  APPLICATION BY TRUSTEE OF ASSETS DEPOSITED WITH IT

          Amounts deposited in trust with the Trustee pursuant to and in
accordance with Article VIII shall be for the sole benefit of Securityholders
and, to the extent the making of such deposit by the Company shall (i) not be in
contravention of any term or provision of the Credit Agreement and (ii) be
allocated for the payment of the Notes, shall not be subject to the
subordination provisions of this Article XII. Otherwise, any deposit of assets
with the Trustee or the Agent (whether or not in trust) for the payment of
principal of or interest on any Notes shall be subject to the provisions of
Sections 12.1, 12.2, 12.3 and 12.4; provided, that, if prior to one Business Day
preceding the date on which by the terms of this Indenture any such assets may
become distributable for any purpose (including without limitation, the payment
of either principal of or interest on any Note) the Trustee or such Paying Agent
shall not have received with respect to such assets the written notice provided
for in Section 12.6, then the Trustee or such Paying Agent shall have full power
and authority to receive such assets and to apply the same to the purpose for
which they were received, and shall not be affected by any notice to the
contrary which may be received by it on or after such date.

                                      100


SECTION 12.8.  SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF THE
               COMPANY, THE GUARANTORS OR HOLDERS OF SENIOR DEBT

          No right of any present or future holders of any Senior Debt to
enforce the subordination provisions contained in this Article XII shall at any
time in any way be prejudiced or impaired by any act or failure to act on the
part of the Company or any Guarantor or by any act or failure to act, in good
faith, by any such holder, or by any noncompliance by the Company or any
Guarantor with the terms of this Indenture, regardless of any knowledge thereof
which any such holder may have or be otherwise charged with. The holders of
Senior Debt may extend, renew, modify or amend the terms of the Senior Debt or
any security therefor and release, sell or exchange such security and otherwise
deal freely with the Company and the Guarantors, all without affecting the
liabilities and obligations of the parties to this Indenture or the Holders. The
subordination provisions contained in this Indenture are for the benefit of the
holders from time to time of Senior Debt and may not be rescinded, cancelled,
amended or modified in any way other than any amendment or modification that
would not adversely affect the rights of any holder of Senior Debt or any
amendment or modification that is consented to by each holder of Senior Debt
that would be adversely affected thereby. The subordination provisions hereof
shall continue to be effective or be reinstated, as the case may be, if at any
time any payment of any of the Senior Debt is rescinded or must otherwise be
returned by any holder of the Senior Debt upon the insolvency, bankruptcy, or
reorganization of the Company, any Guarantor, or otherwise, all as though such
payment has not been made.

SECTION 12.9.  SECURITYHOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE SUBORDINATION OF
               NOTES.

          Each Holder of the Notes by his acceptance thereof authorizes and
expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provisions contained in
this Article XII and to protect the rights of the Holders pursuant to this
Indenture, and appoints the Trustee his attorney-in-fact for such purpose,
including, in the event of any dissolution, winding up, liquidation or
reorganization of the Company or any Guarantor (whether in bankruptcy,
insolvency or receivership proceedings or upon an assignment for the benefit of
creditors or any other marshalling of assets and liabilities of the Company or
any Guarantor), the immediate filing of a claim for the unpaid balance of his
Notes in the form required in said proceedings and cause said claim to be
approved. In the event of any liquidation or reorganization of the Company or
any Guarantor in bankruptcy, insolvency, receivership or similar proceeding, if
the Holders of the Notes (or the Trustee on their behalf) have not filed any
claim, proof of claim, or other instrument of similar character necessary to
enforce the obligations of the Company or any Guarantor in respect of the Notes
at least thirty (30) days before the expiration of the time to file the same,
then in such event, but only in such event, the holders of the Senior Debt or a
representative on their behalf may, as an attorney-in-fact for such Holders,
file any claim, proof of claim, or other instrument of similar character on
behalf of such Holders. Nothing herein contained shall be deemed to authorize
the Trustee or the holders of Senior Debt or their representative to authorize
or consent to or accept or adopt on behalf of any Securityholder any plan

                                      101


of reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee or the holders of
Senior Debt or their representative to vote in respect of the claim of any
Securityholder in any such proceeding.

SECTION 12.10. RIGHT OF TRUSTEE TO HOLD SENIOR DEBT

          The Trustee shall be entitled to all of the rights set forth in this
Article XII in respect of any Senior Debt at any time held by it to the same
extent as any other holder of Senior Debt, and nothing in this Indenture shall
be construed to deprive the Trustee of any of its rights as such holder.

SECTION 12.11. ARTICLE XII NOT TO PREVENT EVENTS OF DEFAULT

          The failure to make a payment on account of principal of, premium, if
any, or interest (or Liquidated Damages, if any) on the Notes by reason of any
provision of this Article XII shall not be construed as preventing the
occurrence of a Default or an Event of Default under Section 6.1 or in any way
limit the rights of the Trustee or any Holder to pursue any other rights or
remedies with respect to the Notes.

SECTION 12.12. NO FIDUCIARY DUTY OF TRUSTEE TO HOLDERS OF SENIOR DEBT

          The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders (other than
for its willful misconduct or negligence) if it shall in good faith mistakenly
pay over or distribute to the Holders of Notes or the Company, any Guarantor or
any other Person, cash, property or securities to which any holders of Senior
Debt shall be entitled by virtue of this Article XII or otherwise. Nothing in
this Section 12.12 shall affect the obligation of any other such Person to hold
such payment for the benefit of, and to pay such payment over to, the holders of
Senior Debt or their representative. In the event of any conflict between the
fiduciary duty of the Trustee to the Holders of Notes and to the holders of
Senior Debt, the Trustee is expressly authorized to resolve such conflict in
favor of the Holders.

                                  ARTICLE XIII

                                  MISCELLANEOUS

SECTION 13.1.  TIA CONTROLS

          If any provision of this Indenture limits, qualifies, or conflicts
with the duties imposed by operation of the TIA, the imposed duties, upon
qualification of this Indenture under the TIA, shall control.

SECTION 13.2.  NOTICES

                                      102


          Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
by telecopier, recognized overnight courier or registered or certified mail,
postage prepaid, return receipt requested, and if to the Company or any
Guarantor or the Trustee, addressed as follows:


          if to the Company or any Guarantor:

               DaVita Inc.
               21250 Hawthorne Boulevard
               Suite 800
               Torrance, California  90503
               Attention: Chief Financial Officer
               Telecopy:  (310) 792-0020

          with a copy to:

               Riordan & McKinzie
               300 South Grand Avenue
               Suite 2900
               Los Angeles, California  90071
               Attention: Roger Lustberg, Esq.
               Telecopy:  (213) 229-8550

          if to the Trustee:

               U.S. Trust Company of Texas, National Association
               2001 Ross Avenue, Suite 2700
               Dallas, Texas 75201
               Attention: John Stohlman, Corporate Trust Administration
               Telecopy:  (214) 754-1301

          with a copy to:

               United States Trust Company of New York
               114 West 47th Street
               New York, New York 10036-1000
               Attention: Patricia Gallagher, Corporate Trust Administration
               Telecopy:  (212) 852-1626

          with a copy to:

               Winston & Strawn
               200 Park Avenue
               New York, New York 10166

                                      103


               Attention: Jeffrey H. Elkin
               Telecopy:  (212) 294-4700

          Any party by notice to each other party may designate additional or
different addresses as shall be furnished in writing by such party. Any notice
or communication to any party shall be deemed to have been given or made as of
the date so delivered, if personally delivered; when receipt is acknowledged, if
telecopied; the next Business Day after timely delivery to the courier, if sent
by a recognized overnight courier guaranteeing next day delivery; and five
Business Days after mailing if sent by registered or certified mail, postage
prepaid (except that a notice of change of address shall not be deemed to have
been given until actually received by the addressee and notice to the Trustee
shall not be deemed to have been given until actually received by the Trustee).

          Any notice or communication mailed to a Securityholder shall be mailed
to him by first class mail or other equivalent means at his address as it
appears on the registration books of the Registrar and shall be sufficiently
given to him if so mailed within the time prescribed.

          Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.

SECTION 13.3.  COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS

          Securityholders may communicate pursuant to TIA ss.312(b) with other
Securityholders with respect to their rights under this Indenture or the Notes.
The Company, the Trustee, the Registrar and any other Person shall have the
protection of TIA ss.312(c).

SECTION 13.4.  CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT

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

               (1)  an Officers' Certificate (in form and substance reasonably
     satisfactory to the Trustee) stating that, in the opinion of the signers,
     all conditions precedent, if any, provided for in this Indenture relating
     to the proposed action have been met; and

               (2)  an Opinion of Counsel (in form and substance reasonably
     satisfactory to the Trustee) stating that, in the opinion of such counsel,
     all such conditions precedent have been met.

SECTION 13.5.  STATEMENTS REQUIRED IN CERTIFICATE OR OPINION

          Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:

                                      104


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

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

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

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

SECTION 13.6.  RULES BY TRUSTEE, PAYING AGENT, REGISTRAR

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

SECTION 13.7.  LEGAL HOLIDAYS

          A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in New York, New York are authorized or obligated by law or
executive order to close. If a payment date is a Legal Holiday at such place,
payment may be made at such place on the next succeeding day that is not a Legal
Holiday, and no interest (or Liquidated Damages, if any) shall accrue for the
intervening period.

SECTION 13.8.  GOVERNING LAW

          THIS INDENTURE, THE GUARANTEES AND THE NOTES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, INCLUDING, WITHOUT
LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW
AND RULE 327(B) OF THE NEW YORK CIVIL PRACTICE LAWS AND RULES. EACH OF THE
COMPANY AND THE GUARANTORS HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK
OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK
IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
INDENTURE AND THE NOTES, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF
ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID
COURTS.

                                      105


EACH OF THE COMPANY AND THE GUARANTORS IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF THE TRUSTEE OR ANY SECURITYHOLDER TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE COMPANY AND THE GUARANTORS IN ANY OTHER
JURISDICTION.

SECTION 13.9.  NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS

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

SECTION 13.10. NO RECOURSE AGAINST OTHERS

          No direct or indirect stockholder, partner, member, employee, manager,
officer or director, as such, past, present or future, of the Company or any
Guarantor, or any successor entity, shall have any personal liability in respect
of the obligations of the Company or the Guarantors under this Indenture or the
Notes solely by reason of his or its status as such stockholder, partner,
member, employee, manager, officer or director; provided, that this Section
13.10 shall in no way limit the obligation of any Guarantor pursuant to any
Guarantee of the Notes. Each Securityholder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.

SECTION 13.11. SUCCESSORS

          All agreements of the Company and the Guarantors in this Indenture and
the Notes shall bind its successor. All agreements of the Trustee in this
Indenture shall bind its successor.

SECTION 13.12. DUPLICATE ORIGINALS

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

SECTION 13.13. SEVERABILITY

          In case any one or more of the provisions in this Indenture or in the
Notes or in the Guarantees shall be held invalid, illegal or unenforceable, in
any respect for any reason, the validity, legality and enforceability of any
such provision in every other respect and of the remaining

                                      106


provisions shall not in any way be affected or impaired thereby, it being
intended that all of the provisions hereof shall be enforceable to the full
extent permitted by law.

SECTION 13.14. TABLE OF CONTENTS, HEADINGS, ETC.

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

SECTION 13.15. QUALIFICATION OF INDENTURE

          The Company shall qualify this Indenture under the TIA in accordance
with the terms and conditions of the Registration Rights Agreement and shall pay
all costs and expenses (including attorneys' fees for the Company and the
Trustee) incurred in connection therewith, including, but not limited to, costs
and expenses of qualification of this Indenture and the Notes and printing this
Indenture and the Notes. The Trustee shall be entitled to receive from the
Company any such Officers' Certificates, Opinions of Counsel or other
documentation as it may reasonably request in connection with any such
qualification of this Indenture under the TIA.

SECTION 13.16. REGISTRATION RIGHTS

          Certain Holders of the Notes may be entitled to certain registration
rights with respect to such Notes pursuant to, and subject to the terms of, the
Registration Rights Agreement.

SECTION 13.17. BENEFITS OF INDENTURE

          Nothing in this Indenture or in the Notes, express or implied, shall
give to any Person, other than the parties hereto, the holders of Senior Debt
(subject to Section 11.5 and Article XII) and the Holders of the Notes, any
benefit or any legal or equitable right, remedy or claim under this Indenture or
the Notes.

                                      107


                                   SIGNATURES

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



                           DAVITA INC.


                           By:_____________________________________
                              Steven Udicious
                              Vice President, General Counsel and Secretary


                                      S-1


                              GUARANTORS
                              ----------

                              CARROLL COUNTY DIALYSIS FACILITY, INC.

                              CONTINENTAL DIALYSIS CENTER, INC.

                              CONTINENTAL DIALYSIS CENTER OF
                              SPRINGFIELD-FAIRFAX, INC.

                              DIALYSIS SPECIALISTS OF DALLAS, INC.

                              EAST END DIALYSIS CENTER, INC.

                              ELBERTON DIALYSIS FACILITY, INC.

                              FLAMINGO PARK KIDNEY CENTER, INC.

                              LINCOLN PARK DIALYSIS SERVICES, INC.

                              MASON-DIXON DIALYSIS FACILITIES, INC.

                              OPEN ACCESS SONOGRAPHY, INC.

                              PENINSULA DIALYSIS CENTER, INC.

                              RENAL TREATMENT CENTERS, INC.

                              RENAL TREATMENT CENTERS-CALIFORNIA, INC.

                              RENAL TREATMENT CENTERS-HAWAII, INC.

                              RENAL TREATMENT CENTERS-ILLINOIS, INC.

                              RENAL TREATMENT CENTERS-MID-ATLANTIC, INC.

                              RENAL TREATMENT CENTERS-NORTHEAST, INC.

                              RENAL TREATMENT CENTERS-SOUTHEAST, INC.

                              RENAL TREATMENT CENTERS-WEST, INC.
                              RTC-TEXAS ACQUISITION, INC.

                                      S-2


                              RTC TN, INC.

                              TOTAL ACUTE KIDNEY CARE, INC.

                              TOTAL RENAL CARE, INC.

                              TOTAL RENAL CARE OF COLORADO, INC.

                              TOTAL RENAL LABORATORIES, INC.

                              TOTAL RENAL RESEARCH, INC.

                              TOTAL RENAL SUPPORT SERVICES, INC.

                              TRC OF NEW YORK, INC.

                              TRI-CITY DIALYSIS CENTER, INC.

                              By:___________________________________
                                    Steven Udicious
                                    Vice President, General Counsel and
                                    Secretary of each of the above


                              TRC WEST, INC.

                              By:___________________________________
                                    David Manheim
                                    Vice President and Secretary

                              RTC HOLDINGS, INC.

                              By:___________________________________
                                    Steven J. Udicious
                                    President

                                      S-3


                              BEVERLY HILLS DIALYSIS PARTNERSHIP

                                 By:  TOTAL RENAL CARE, INC.
                                 Its: General Partner

                                    By:_________________________________
                                          Steven Udicious
                                          Vice President, General Counsel and
                                          Secretary

                              CRESCENT CITY DIALYSIS PARTNERSHIP

                                 By:  TOTAL RENAL CARE, INC.
                                 Its: General Partner

                                    By:_________________________________
                                          Steven Udicious
                                          Vice President, General Counsel and
                                          Secretary

                              HOUSTON KIDNEY CENTER/TOTAL RENAL CARE
                              INTEGRATED SERVICE NETWORK LIMITED PARTNERSHIP

                                 By:  TOTAL RENAL CARE, INC.
                                 Its: General Partner

                                    By:_________________________________
                                          Steven Udicious
                                          Vice President, General Counsel and
                                          Secretary

                                      S-4


                              KENNER REGIONAL DIALYSIS PARTNERSHIP

                                By:  TOTAL RENAL CARE, INC.
                                Its: General Partner

                                   By:__________________________________
                                         Steven Udicious
                                         Vice President, General Counsel and
                                         Secretary

                              SUNRISE DIALYSIS PARTNERSHIP

                                By:  TOTAL RENAL CARE, INC.
                                Its: General Partner

                                   By:__________________________________
                                         Steven Udicious
                                         Vice President, General Counsel and
                                         Secretary

                              TOTAL RENAL CARE/PERALTA RENAL CENTER
                              PARTNERSHIP

                                By:  TOTAL RENAL CARE, INC.
                                Its: General Partner

                                   By __________________________________
                                         Steven Udicious
                                         Vice President, General Counsel and
                                         Secretary

                                      S-5


                              TOTAL RENAL CARE/PIEDMONT DIALYSIS PARTNERSHIP

                                By:  TOTAL RENAL CARE, INC.
                                Its: General Partner

                                   By:__________________________________
                                         Steven Udicious
                                         Vice President, General Counsel and
                                         Secretary

                              TOTAL RENAL CARE TEXAS LIMITED PARTNERSHIP

                                By:  TOTAL RENAL CARE, INC.
                                Its: General Partner

                                   By:__________________________________
                                         Steven Udicious
                                         Vice President, General Counsel and
                                         Secretary

                              TRC-INDIANA, LLC

                                By:  TOTAL RENAL CARE, INC.
                                Its: Manager

                                   By:__________________________________
                                         Steven Udicious
                                         Vice President, General Counsel and
                                         Secretary

                              TOTAL RENAL CARE OF UTAH, L.L.C.

                                By:  TOTAL RENAL CARE, INC.


                                   By:__________________________________
                                         Steven Udicious
                                         Vice President, General Counsel and
                                         Secretary

                                      S-6


                              U.S. TRUST COMPANY OF TEXAS, NATIONAL ASSOCIATION
                                as Trustee


                                   By:_____________________________________
                                     Name:
                                     Title:  Authorized Officer

                                      S-7


                                                                       EXHIBIT A

                                [FORM OF NOTE]

                                  DAVITA INC.

           9 1/4% [SERIES A] [SERIES B]/1/ SENIOR SUBORDINATED NOTE
                                   DUE 2011

                                                           CUSIP No.: __________
No.                                                            $________________


          DaVita Inc., a Delaware corporation (hereinafter called the "Company",
which term includes any successors under the Indenture hereinafter referred to),
for value received, hereby promises to pay to __________, or registered assigns,
the principal sum of __________ Dollars, on April 15, 2011.

          Interest Payment Dates: April 15 and October 15; commencing October
15, 2001.

          Record Dates: April 1 and October 1.

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








_____________________________
 /1/ Series A should be replaced with Series B in the Exchange Notes.


                                      A-1


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

                                 DAVITA INC.
                                 a Delaware corporation

                                 By: -------------------------------------------
                                     Name:  Richard K. Whitney
                                     Title: Chief Financial Officer



                                 By: -------------------------------------------
                                     Name:  Steven J. Udicious
                                     Title: Vice President, General Counsel and
                                            Secretary

               [FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]

     This is one of the Notes described in the within-mentioned Indenture.

                                 U.S. TRUST COMPANY OF TEXAS, NATIONAL
                                 ASSOCIATION, as Trustee


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

Dated: April 11, 2001


                                      A-2


                                (Back of Note)

      9 1/4% [Series A] [Series B]/2/ Senior Subordinated Notes due 2011

[THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.6 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED
IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.6(a) OF THE INDENTURE, (III) THIS
GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION
2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A
SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.]/3/

[UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]/4/

[THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR DEFINITIVE NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED

___________________________

/2/Series A should be replaced with Series B in the Exchange Notes.

/3/To be included only on Global Notes deposited with DTC as Depositary.

/4/To be included only on Global Notes deposited with DTC as Depositary.



                                      A-3


HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S
TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE CASH PAYMENTS OF INTEREST
DURING THE PERIOD WHICH SUCH HOLDER HOLDS THIS NOTE. NOTHING IN THIS LEGEND
SHALL BE DEEMED TO PREVENT INTEREST FROM ACCRUING ON THIS NOTE.]/5/

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

THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS NOTE
MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) IN THE UNITED
STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) OUTSIDE THE UNITED STATES
IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED
BY RULE 144 THEREUNDER (IF AVAILABLE), (4) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER
THE SECURITIES ACT THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
TRANSFER OF THIS NOTE AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE
PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE
TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, OR
(5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN
EACH OF CASES (1) THROUGH (5) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE
RESTRICTIONS REFERRED TO IN (A) ABOVE.]/6/



______________________

/5/To be included only on Reg S Temporary Global Notes.
/6/To be included only on Transfer Restricted Notes.


                                      A-4


          Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.

          1.   Interest. DaVita Inc., a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Note at 9 1/4% per
annum from April 11, 2001 until maturity and shall pay the Liquidated Damages,
if any, payable pursuant to Section 5 of the Registration Rights Agreement
referred to below. The Company will pay interest and Liquidated Damages, if any,
semi-annually in arrears on April 15 and October 15 of each year, or if any such
day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"). Interest on the Notes will accrue from the most recent
date to which interest has been paid or provided for or, if no interest has been
paid, from the Issue Date; provided, that if there is no existing Default in the
payment of interest, and if this Note is authenticated between a Record Date
(defined below) referred to on the face hereof and the next succeeding Interest
Payment Date, interest shall accrue from such next succeeding Interest Payment
Date; provided, further, that the first Interest Payment Date shall be October
15, 2001. The Company shall pay interest on overdue principal and premium, if
any, from time to time on demand at the rate then in effect; it shall pay
interest on overdue installments of interest and Liquidated Damages, if any,
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.

          2.   Method of Payment. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages, if any, to the Persons who
are registered Holders of Notes at the close of business on the April 1 or
October 1 next preceding the Interest Payment Date (each a "Record Date"), even
if such Notes are cancelled after such Record Date and on or before such
Interest Payment Date, except as provided in Section 2.12 of the Indenture (as
defined below) with respect to defaulted interest. The Notes will be payable as
to principal, premium, interest and Liquidated Damages, if any, at the office or
agency of the Company maintained in the Borough of Manhattan, the City and State
of New York for such purpose, or, at the option of the Company, payment of
interest and Liquidated Damages, if any, may be made by check mailed to the
Holders at their addresses set forth in the register of Holders, and provided,
that payment by wire transfer of immediately available funds to an account
within the United States will be required with respect to principal of and
interest, premium and Liquidated Damages, if any, on all Global Notes. Such
payment shall be in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts.

          3.   Paying Agent and Registrar. Initially, U.S. Trust Company of
Texas, National Association, the Trustee under the Indenture, will act as Paying
Agent and Registrar. The Company may change any Paying Agent or Registrar
without notice to any Holder. The Company or any of its Subsidiaries may act in
any such capacity.

          4.   Indenture. The Company issued the Notes under an Indenture dated
as of April 11, 2001 ("Indenture") among the Company, the Guarantors party
thereto and the



                                      A-5


Trustee. The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code ss.ss. 77aaa-77bbbb). The Notes are subject to all such
terms, and Holders are referred to the Indenture and such Act for a statement of
such terms.

               5.   Optional Redemption.

               (a)  Except as set forth in clause (b) of this Section 5, the
Company shall not have the option to redeem the Notes pursuant to this Section 5
prior to April 15, 2006. The Notes will be redeemable for cash at the option of
the Company, in whole or in part, at any time on or after April 15, 2006, upon
not less than 30 days nor more than 60 days prior notice mailed by first class
mail to each Holder at its last registered address, at the following redemption
prices (expressed as percentages of the principal amount) if redeemed during the
12-month period commencing April 15, of the years indicated below, in each case
(subject to the right of Holders of record on a Record Date to receive the
corresponding interest due (and the corresponding Liquidated Damages, if any) on
the corresponding Interest Payment Date that is on or prior to such Redemption
Date) together with accrued and unpaid interest and Liquidated Damages, if any,
thereon to the Redemption Date:

          Year                                             Percentage
          ----                                             ----------
          2006............................................  104.625%
          2007............................................  103.083%
          2008............................................  101.542%
          2009 and thereafter.............................  100.000%

               (b)  Notwithstanding the provisions of clause (a) of this Section
5, at any time on or prior to April 15, 2004, upon any Public Equity Offering,
up to 35% of the aggregate principal amount of the Notes issued under the
Indenture may be redeemed at the option of the Company within 90 days of such
Public Equity Offering, on not less than 30 days, but not more than 60 days,
prior notice to each Holder of the Notes to be redeemed, with cash from the Net
Cash Proceeds of such Public Equity Offering, at a redemption price equal to
109.25% of the principal amount thereof (subject to the right of Holders of
record on a Record Date to receive the corresponding interest (and the
corresponding Liquidated Damages, if any) due on the Interest Payment Date that
is on or prior to such Redemption Date) together with accrued and unpaid
interest and Liquidated Damages, if any, thereon to the Redemption Date;
provided, that immediately following such redemption not less than 65% of the
aggregate principal amount of the Notes originally issued pursuant to the
Indenture remain outstanding.

               (c)  Notice of redemption will be mailed by first class mail at
least 30 days but not more than 60 days prior to the Redemption Date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in integral
multiples of $1,000, unless all of the Notes held by a


                                      A-6


Holder are to be redeemed. On and after the Redemption Date interest (and
Liquidated Damages, if any) ceases to accrue on Notes or portions thereof called
for redemption unless the Company defaults in such payments due on the
Redemption Date.

          6.   Mandatory Redemption. The Company shall not be required to make
mandatory redemption payments with respect to the Notes. The Notes shall not
have the benefit of any sinking fund.

          7.   Offers to Purchase.

          (a)  Change of Control. In the event that a Change of Control has
occurred, each Holder of Notes will have the right, at such Holder's option,
pursuant to an offer (subject only to conditions required by applicable law, if
any) by the Company (the "Change of Control Offer"), to require the Company to
repurchase all or any part of such Holder's Notes (provided, that the principal
amount of such Notes must be $1,000 or an integral multiple thereof) on a date
(the "Change of Control Purchase Date") that is no later than 60 days after the
occurrence of such Change of Control, at a cash price equal to 101% of the
principal amount thereof (the "Change of Control Purchase Price"), together with
accrued and unpaid interest and Liquidated Damages, if any, to the Change of
Control Purchase Date. The Change of Control Offer shall be made within 30 days
following a Change of Control and shall remain open for 20 Business Days
following its commencement (the "Change of Control Offer Period"). Upon
expiration of the Change of Control Offer Period, the Company promptly shall
purchase all Notes properly tendered in response to the Change of Control Offer.

          Prior to the commencement of a Change of Control Offer, but in any
event within 30 days following any Change of Control, the Company shall (i)(a)
repay in full, and terminate all commitments under, all Indebtedness under the
Credit Agreement and all other Senior Debt, the terms of which require repayment
upon a Change of Control or (b) offer to repay in full, and terminate all
commitments under, all Indebtedness under the Credit Agreement and all such
other Senior Debt and repay the Indebtedness owed to each lender that has
accepted such offer in full or (ii) obtain the requisite consents under the
Credit Agreement and all such other Senior Debt to permit the repurchase of the
Notes as provided herein. The Company's failure to comply with the preceding
sentence shall constitute an Event of Default described in Section 6.1(iii), but
without giving effect to the stated exceptions in such clause.

          On or before the Change of Control Purchase Date, the Company shall,
to the extent lawful, (i) accept for payment Notes or portions thereof properly
tendered and not validly withdrawn pursuant to the Change of Control Offer, (ii)
deposit with the Paying Agent an amount in cash sufficient to pay the Change of
Control Purchase Price (together with accrued and unpaid interest and Liquidated
Damages, if any), of all Notes so tendered and (iii) deliver to the Trustee the
Notes so accepted together with an Officers' Certificate listing the Notes or
portions thereof being purchased by the Company. The Paying Agent



                                      A-7


promptly shall pay the Holders of Notes so accepted an amount equal to the
Change of Control Purchase Price (together with accrued and unpaid interest and
Liquidated Damages, if any), and the Trustee promptly will authenticate and
deliver to such Holders a new Note equal in principal amount to any unpurchased
portion of the Note surrendered. Any Notes not so accepted will be delivered
promptly by the Company to the Holder thereof. The Company publicly will
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Purchase Date.

          (b)  Asset Sale. The Company and the Guarantors shall not, and neither
the Company nor the Guarantors shall permit any of their respective Subsidiaries
to, in one or a series of related transactions, convey, sell, lease, transfer,
assign or otherwise dispose of, directly or indirectly, any of their property,
business or assets, including by merger or consolidation (in the case of a
Guarantor or a Subsidiary of the Company), and including any sale or other
transfer or issuance of any Equity Interests of any Subsidiary or Unrestricted
Subsidiary of the Company, whether by the Company or one of its Subsidiaries or
Unrestricted Subsidiaries or through the issuance, sale or transfer of Equity
Interests by a Subsidiary or Unrestricted Subsidiary of the Company, and
including any sale and leaseback transaction (any of the foregoing, an "Asset
Sale"), unless (l)(a) the Net Cash Proceeds therefrom (the "Asset Sale Offer
Amount") are applied within 365 days after the date of such Asset Sale, to the
extent not applied in accordance with paragraph (b) below, to the (i) optional
redemption of the Notes in accordance with the terms of the Indenture and other
Indebtedness of the Company ranking on a parity with the Notes and with similar
provisions requiring the Company to redeem such Indebtedness with the proceeds
from such Asset Sale, pro rata in proportion to the respective principal amounts
(or accreted values in the case of Indebtedness issued with an original issue
discount) of the Notes and such other Indebtedness then outstanding or (ii)
repurchase of the Notes and such other Indebtedness ranking on a parity with the
Notes and with similar provisions requiring the Company to make an offer to
purchase such Indebtedness with the proceeds from such Asset Sale pursuant to a
cash offer (subject only to conditions required by applicable law, if any) (pro
rata in proportion to the respective principal amounts (or accreted values in
the case of Indebtedness issued with an original issue discount) of the Notes
and such other Indebtedness then outstanding) (the "Asset Sale Offer") at a
purchase price of 100% of principal amount (or accreted value in the case of
Indebtedness issued with an original issue discount) (the "Asset Sale Offer
Price") together with accrued and unpaid interest and Liquidated Damages, if
any, to the date of payment, made within 335 days of such Asset Sale or (b)
within 365 days following such Asset Sale, the Asset Sale Offer Amount is (i)
invested in assets and property (other than notes, bonds, obligations and
securities, except in connection with the acquisition of a Wholly Owned
Subsidiary that immediately becomes a Guarantor in a Related Business) which
will constitute or be a part of a Related Business of the Company or such
Subsidiary (if it continues to be a Subsidiary) immediately following such
transaction or (ii) used to retire Senior Debt and to permanently reduce the
amount of such Senior Debt outstanding on the Issue Date or permitted pursuant
to paragraphs (b) and (c) of Section 4.11 of the Indenture (including that in
the case of a revolver or similar arrangement that makes credit available, such
commitment is so permanently reduced by



                                      A-8


such amount); provided, however, that with respect to any Asset Sale occurring
during 2001, the Asset Sale Offer Amount received therefrom may be applied as
provided in (a) or (b) above at any time prior to December 31, 2002, and any
Asset Sale Offer made in accordance with (a)(ii) above may be made at any time
prior to December 1, 2002, (2) at least 75% of the total consideration for such
Asset Sale or series of related Asset Sales consists of cash or Cash
Equivalents, provided, that up to one-third of such 75% may consist of notes or
other obligations received by the Company or such Subsidiary from such
transferee that are converted by the Company or such Subsidiary into cash (to
the extent of the cash received) within 365 days after receipt, which shall
constitute Net Cash Proceeds attributable to the original Asset Sale for which
such notes or other obligations were received, and provided further that any
Indebtedness of the Company or any Subsidiary (as shown on the Company's or such
Subsidiary's most recent balance sheet), other than Subordinated Indebtedness,
that is assumed by the transferee of any such assets shall constitute cash for
purposes hereof, so long as the Company and all of its Subsidiaries are fully
and unconditionally released therefrom, and (3) the Company or such Subsidiary,
as applicable, receives fair market value for such Asset Sale, such
determination to be made in good faith by the Board of Directors of the Company
for Asset Sales exceeding $25,000,000. Pending the final application of any Net
Cash Proceeds, the Company may temporarily reduce revolving credit borrowings or
otherwise invest the Net Cash Proceeds in any manner that is not prohibited by
the Indenture.

          An acquisition of Notes pursuant to an Asset Sale Offer may be
deferred until the accumulated Net Cash Proceeds from Asset Sales not applied to
the uses and in the time periods set forth in 1(a)(i) or 1(b) above (the "Excess
Proceeds") exceeds $10,000,000 and that each Asset Sale Offer shall remain open
for at least 20 Business Days following its commencement (the "Asset Sale Offer
Period"). Upon expiration of the Asset Sale Offer Period, the Company shall
apply the Asset Sale Offer Amount plus an amount equal to accrued and unpaid
interest and Liquidated Damages, if any, to the purchase of all Indebtedness
properly tendered in accordance with the provisions hereof (on a pro rata basis
if the Asset Sale Offer Amount is insufficient to purchase all Indebtedness so
tendered) at the Asset Sale Offer Price (together with accrued interest and
Liquidated Damages, if any). To the extent that the aggregate amount of Notes
and such other pari passu Indebtedness tendered pursuant to an Asset Sale Offer
is less than the Asset Sale Offer Amount, the Company may use any remaining Net
Cash Proceeds for general corporate purposes as otherwise permitted by the
Indenture and following the consummation of each Asset Sale Offer the Excess
Proceeds amount shall be reset to zero.

          8.   Denominations, Transfer, Exchange. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Company and the Registrar need not exchange
or register the transfer of any Note or portion of a Note selected for
redemption, except for the unredeemed portion of any Note being redeemed in
part.


                                      A-9


Also, they need not exchange or register the transfer of any Notes for a period
of 15 days before a selection of Notes to be redeemed or during the period
between a Record Date and the corresponding Interest Payment Date.


          9.   Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.

          10.  Amendment, Supplement and Waiver. Subject to certain exceptions,
the Indenture, the Notes or the Guarantees may be amended or supplemented with
the consent of the Holders of at least a majority in aggregate principal amount
of the then outstanding Notes, and any existing Default or compliance with any
provision of the Indenture, the Notes or the Guarantees may be waived with the
consent of the Holders of at least a majority in aggregate principal amount of
the then outstanding Notes. Without the consent of any Holder of a Note, the
Indenture, the Notes or the Guarantees may be amended or supplemented as set
forth in Section 9.1 of the Indenture to (a) cure any ambiguity, defect or
inconsistency, (b) add to the covenants of the Company or the Guarantors for the
benefit of the Holders, or surrender any right or power conferred upon the
Company or the Guarantors by the Indenture or herein or make any other change
that does not materially adversely affect the rights of any Holder; (c) provide
for collateral for or additional Guarantors of the Notes; (d) evidence the
succession of another Person to the Company, and the assumption by any such
successor of the obligations of the Company, herein and in the Indenture in
accordance with the terms of the Indenture; (e) comply with the TIA; (f)
evidence the succession of another corporation to any Guarantor and assumption
by any such successor of the Guarantee of such Guarantor pursuant to the
Indenture; (g) evidence the release of any Guarantor; (h) evidence and provide
for the acceptance of appointment of a successor Trustee with respect to the
Notes; (i) or provide for the issuance and authorization of the Exchange Notes.

          11.  Defaults and Remedies. The Indenture provides that each of the
following constitutes an Event of Default:

          (i)   the Company's failure to pay any installment of interest (or
Liquidated Damages, if any) on the Notes as and when the same becomes due and
payable and the continuance of any such failure for 30 days,

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

          (iii) the Company's failure or the failure by any of the Company's
Subsidiaries to observe or perform any other covenant or agreement contained in
the Notes or the Indenture and, except for the provisions under Section 4.3 and
Article V of the


                                     A-10


Indenture the continuance of such failure for a period of 30 days after written
notice is given to the Company by the Trustee or to the Company and the Trustee
by the Holders of at least 25% in aggregate principal amount of the Notes
outstanding,

          (iv)   a decree, judgment, or order by a court of competent
jurisdiction shall have been entered adjudicating the Company or any of its
Significant Subsidiaries as bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization of the Company or any of its Significant
Subsidiaries under any bankruptcy or similar law, and such decree or order shall
have continued undischarged and unstayed for a period of 60 days; or a decree,
judgment or order of a court of competent jurisdiction appointing a receiver,
liquidator, trustee, or assignee in bankruptcy or insolvency for the Company,
any of its Significant Subsidiaries, or any substantial part of the property of
any such Person, or for the winding up or liquidation of the affairs of any such
Person, shall have been entered, and such decree, judgment, or order shall have
remained in force undischarged and unstayed for a period of 60 days;

          (v)    the Company or any of its Significant Subsidiaries shall
institute proceedings to be adjudicated a voluntary bankrupt, or shall consent
to the filing of a bankruptcy proceeding against it, or shall file a petition or
answer or consent seeking reorganization under any bankruptcy or similar law or
similar statute, or shall consent to the filing of any such petition, or shall
consent to the appointment of a custodian, receiver, liquidator, trustee, or
assignee in bankruptcy or insolvency of it or any substantial part of its assets
or property, or shall make a general assignment for the benefit of creditors, or
shall admit in writing its inability to pay its debts generally as they become
due, fail generally to pay its debts as they become due, or take any corporate
action in furtherance of any of the foregoing;

          (vi)   a default in the Company's Indebtedness or the Indebtedness of
any of its Subsidiaries with an aggregate amount outstanding in excess of
$10,000,000 (a) resulting from the failure to pay principal at the stated
maturity of such Indebtedness or (b) as a result of which the maturity of such
Indebtedness has been accelerated prior to its stated maturity,

          (vii)  final unsatisfied judgments not covered by insurance
aggregating in excess of $5,000,000, at any one time rendered against the
Company or any of its Subsidiaries and not stayed, bonded or discharged within
60 days, and

          (viii) any Guarantee of a Guarantor ceases to be in full force and
effect or becomes unenforceable or invalid or is declared null and void or any
Guarantor denies or disaffirms its obligations under its Guarantee, in any case,
other than in accordance with the terms of the Guarantee and the Indenture.

          12.    Subordination. The Notes and the Guarantees are subordinated in
right of payment, to the extent and in the manner provided in Article XII and
Section 11.5 of the Indenture, to the prior payment in full of all Senior Debt.
The Company and the



                                     A-11


Guarantors agree, and each Holder by accepting a Note consents and agrees, to
the subordination provided in the Indenture and authorizes the Trustee to give
it effect.


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

          14.  No Recourse Against Others. No direct or indirect stockholder,
partner, member, employee, manager, officer or director, as such, past, present
or future, of the Company or any Guarantor, or any successor entity, shall have
any personal liability in respect of the obligations of the Company or the
Guarantors under the Notes or the Indenture solely by reason of his or its
status as such stockholder, partner, member, employee, manager, officer or
director; provided, that this Section 14 shall in no way limit the obligation of
any Guarantor pursuant to any Guarantee of the Notes. Each Securityholder by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for the issuance of the Notes.

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

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

          17.  Additional Rights of Holders of Transfer Restricted Notes./7/ In
addition to the rights provided to Holders of Notes under the Indenture, Holders
of Transfer Restricted Notes shall have all the rights set forth in the
Registration Rights Agreement dated as of the date of the Indenture, among the
Company, the Guarantors and the Initial Purchasers (the "Registration Rights
Agreement").

          18.  CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes, and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon, and any such redemption shall not
be affected by any defect in or omission of such numbers.



__________________________

/7/To be included only on Transfer Restricted Notes.



                                     A-12


          19.  Notation of Guarantee. As more fully set forth in the Indenture,
each of the Guarantors from time to time, in accordance with the provisions of
the Indenture, shall irrevocably and unconditionally and jointly and severally
guarantee, in accordance with Article XI of the Indenture, to each Holder of a
Note authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, that: (a) the principal of, and premium, if any,
Liquidated Damages, if any, and interest on the Notes will be paid on a senior
subordinated basis in full when due, whether at the Maturity Date or Interest
Payment Date, by acceleration, call for redemption, upon a Change of Control
Offer, upon an Asset Sale Offer or otherwise; (b) all other obligations of the
Company to the Holders or the Trustee under the Indenture or under the Notes
(including fees, expenses or other) will be promptly paid in full or performed,
all in accordance with the terms of the Indenture and the Notes; and (c) in case
of any extension of time of payment or renewal of any Notes or any of such other
obligations, the same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at maturity, by
acceleration, call for redemption, upon a Change of Control Offer, upon an Asset
Sale Offer or otherwise. The obligations of each Guarantor under its Guarantee
are subordinated in right of payment to the prior payment in full of all
obligations in respect of Senior Debt of such Guarantor as set forth in Section
11.5 and Article XII of the Indenture and shall cease to apply, and shall be
null and void, with respect to any Guarantor who, pursuant to Article XI of the
Indenture, is released from its Guarantee or whose Guarantee otherwise ceases to
be applicable pursuant to the terms of the Indenture.

          When a successor assumes all the obligations of its predecessor under
the Notes and the Indenture, the predecessor will be released from those
obligations.

          20.  Governing Law. THE INDENTURE AND THE NOTES SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING,
WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW AND RULE 327(B) OF THE NEW YORK CIVIL PRACTICE LAWS AND RULES.

          The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:

                           DaVita Inc.
                           21250 Hawthorne Boulevard
                           Suite 800
                           Torrance, California  90503
                           Attention:  General Counsel
                           Telephone No.:  (310) 792-2600



                                     A-13


                                Assignment Form

To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to

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

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

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

and irrevocably appoint ________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
________________________________________________________________________________

Date:__________________________


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

Signature Guarantee*

________________________________________________________________________________


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

                                     A-14


                       Option of Holder to Elect Purchase

         If you want to elect to have this Note purchased by the Company
pursuant to Section 4.14 or 10.1 of the Indenture, check the box below:

               [_] Section 4.14                  [_] Section 10.1

         If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.14 or Section 10.1 of the Indenture, state the
amount you elect to have purchased (in denominations of $1,000 only, except if
you have elected to have all of your Notes purchased): $___________

Date:_________________          Your Signature: _________________________
                                (Sign exactly as your name appears on the Note)


                                         Tax Identification No.:______________
Signature Guarantee*

________________________________________________________________________________


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

                                     A-15


           SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE/8/

         The following exchanges of a part of this Global Note for an interest
in another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note, have
been made:



                                                                     Principal Amount of           Signature of
                    Amount of decrease in   Amount of increase in      this Global Note        authorized officer of
                     Principal Amount of    Principal Amount of      following such decrease    Trustee or Note
Date of Exchange      this Global Note       this Global Note             (or increase)            Custodian
- ----------------      ----------------       ----------------             -------------            ---------
                                                                                       



______________________________

          /8/This should be included only if the Note is issues in global form

                                     A-16


                                   GUARANTEE

          The Guarantors listed below (hereinafter referred to as the
"Guarantors," which term includes any successors or assigns under the Indenture,
dated the date hereof, among the Guarantors, the Company (defined below) and
U.S. Trust Company of Texas, National Association, as trustee (the "Indenture")
and any additional Guarantors), jointly and severally, irrevocably and
unconditionally guarantee, in accordance with Article XI of the Indenture: (i)
the due and punctual payment on a senior subordinated basis of the principal of,
premium, if any, and interest and Liquidated Damages, if any, on the 9 1/4%
Senior Subordinated Notes due 2011 (the "Notes") of DaVita Inc., a Delaware
corporation (the "Company"), when due, subject to any expressly stated
applicable grace period, whether at the Maturity Date, or Interest Payment Date,
by acceleration, call for redemption, upon a Change of Control Offer, upon an
Asset Sale Offer or otherwise; (ii) the due and punctual payment or performance
of all other obligations of the Company, to the Holders or the Trustee all in
accordance with the terms set forth in Article XI of the Indenture; (iii) in
case of any extension of time of payment or renewal of any Notes or any of such
other obligations, that the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
maturity, by acceleration, call for redemption, upon a Change of Control Offer,
upon an Asset Sale Offer or otherwise; and (iv) the payment of any and all costs
and expenses (including attorneys' fees) incurred by the Trustee in enforcing
any rights under this Guarantee.

          The obligations of each Guarantor to the Holders and to the Trustee
pursuant to this Guarantee and the Indenture are expressly set forth in Article
XI of the Indenture and reference is hereby made to such Indenture for the
precise terms of this Guarantee.

          The obligations of each Guarantor to the Holders and to the Trustee
pursuant to this Guarantee and the Indenture are expressly subordinated to
Senior Debt of the Guarantor as set forth in Section 11.5 and Article XII of the
Indenture and reference is hereby made to such Section for the precise terms of
such subordination.

          No direct or indirect stockholder, partner, member, employee, manager,
officer or director, as such, past, present or future, of any of the Guarantors,
or any successor entity, shall have any personal liability in respect of the
obligations of any of the Guarantors under the Guarantees or the Indenture
solely by reason of his or its status as such stockholder, partner, member,
employee, manager, officer or director; provided, that this provision shall in
no way limit the obligation of any Guarantor pursuant to this Guarantee.

                                     A-17



          This is a continuing Guarantee and shall remain in full force and
effect and shall be binding upon each Guarantor and its successors and assigns
until full and final payment of all of the Company's obligations under the Notes
and Indenture or until released or legally defeased in accordance with the
Indenture and shall inure to the benefit of the successors and assigns of the
Trustee and the Holders, and, in the event of any transfer or assignment of
rights by any Holder or the Trustee, the rights and privileges herein conferred
upon that party shall automatically extend to and be vested in such transferee
or assignee, all subject to the terms and conditions hereof. This is a Guarantee
of payment and not of collectibility.

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

          The obligations of each Guarantor under its Guarantee shall be limited
to the extent necessary to insure that it does not constitute a fraudulent
conveyance under applicable law.

          THE TERMS OF ARTICLES XI AND XII OF THE INDENTURE ARE INCORPORATED
HEREIN BY REFERENCE.

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

                                     A-18


          IN WITNESS WHEREOF, each of the Guarantors has caused this instrument
to be duly executed.

Dated:  April 11, 2001

                                    GUARANTORS
                                    ----------

                                    CARROLL COUNTY DIALYSIS FACILITY, INC.

                                    CONTINENTAL DIALYSIS CENTER, INC.

                                    CONTINENTAL DIALYSIS CENTER OF
                                    SPRINGFIELD-FAIRFAX, INC.

                                    DIALYSIS SPECIALISTS OF DALLAS, INC.

                                    EAST END DIALYSIS CENTER, INC.

                                    ELBERTON DIALYSIS FACILITY, INC.

                                    FLAMINGO PARK KIDNEY CENTER, INC.

                                    LINCOLN PARK DIALYSIS SERVICES, INC.

                                    MASON-DIXON DIALYSIS FACILITIES, INC.

                                    OPEN ACCESS SONOGRAPHY, INC.

                                    PENINSULA DIALYSIS CENTER, INC.

                                    RENAL TREATMENT CENTERS, INC.

                                    RENAL TREATMENT CENTERS-CALIFORNIA, INC.

                                    RENAL TREATMENT CENTERS-HAWAII, INC.

                                    RENAL TREATMENT CENTERS-ILLINOIS, INC.

                                    RENAL TREATMENT CENTERS-MID-ATLANTIC, INC.

                                     A-19


                                    RENAL TREATMENT CENTERS-NORTHEAST, INC.

                                    RENAL TREATMENT CENTERS-SOUTHEAST, INC.

                                    RENAL TREATMENT CENTERS-WEST, INC.

                                    RTC-TEXAS ACQUISITION, INC.

                                    RTC TN, INC.

                                    TOTAL ACUTE KIDNEY CARE, INC.

                                    TOTAL RENAL CARE, INC.

                                    TOTAL RENAL CARE OF COLORADO, INC.

                                    TOTAL RENAL LABORATORIES, INC.

                                    TOTAL RENAL RESEARCH, INC.

                                    TOTAL RENAL SUPPORT SERVICES, INC.

                                    TRC OF NEW YORK, INC.

                                    TRI-CITY DIALYSIS CENTER, INC.

                                        By:_____________________________________
                                             Steven Udicious
                                             Vice President, General Counsel and
                                             Secretary of each of the above


                                        TRC WEST, INC.

                                        By:_____________________________________
                                             David Manheim
                                             Vice President and Secretary

                                     A-20


                                        RTC HOLDINGS, INC.

                                        By:_____________________________________
                                             Steven J. Udicious
                                             President

                                        BEVERLY HILLS DIALYSIS PARTNERSHIP

                                          By:  TOTAL RENAL CARE, INC.
                                          Its: General Partner

                                           By:__________________________________
                                                Steven Udicious
                                                Vice President, General Counsel
                                                and Secretary


                                        CRESCENT CITY DIALYSIS PARTNERSHIP

                                          By:  TOTAL RENAL CARE, INC.
                                          Its: General Partner

                                           By:__________________________________
                                                Steven Udicious
                                                Vice President, General Counsel
                                                and Secretary

                                     A-21


                                        HOUSTON KIDNEY CENTER/TOTAL RENAL CARE
                                        INTEGRATED SERVICE NETWORK LIMITED PART-
                                        NERSHIP

                                          By:  TOTAL RENAL CARE, INC.
                                          Its: General Partner


                                           By:__________________________________
                                                Steven Udicious
                                                Vice President, General Counsel
                                                and Secretary

                                        KENNER REGIONAL DIALYSIS PARTNERSHIP

                                          By:  TOTAL RENAL CARE, INC.
                                          Its: General Partner


                                           By:__________________________________
                                                Steven Udicious
                                                Vice President, General Counsel
                                                and Secretary

                                        SUNRISE DIALYSIS PARTNERSHIP

                                          By:  TOTAL RENAL CARE, INC.
                                          Its: General Partner


                                           By:__________________________________
                                                Steven Udicious
                                                Vice President, General Counsel
                                                and Secretary

                                     A-22


                                        TOTAL RENAL CARE/PERALTA RENAL CENTER
                                        PARTNERSHIP

                                          By:  TOTAL RENAL CARE, INC.
                                          Its: General Partner

                                           By:__________________________________
                                                Steven Udicious
                                                Vice President, General Counsel
                                                and Secretary

                                        TOTAL RENAL CARE/PIEDMONT DIALYSIS
                                        PARTNERSHIP

                                          By:  TOTAL RENAL CARE, INC.
                                          Its: General Partner

                                           By:__________________________________
                                                Steven Udicious
                                                Vice President, General Counsel
                                                and Secretary

                                        TOTAL RENAL CARE TEXAS LIMITED
                                        PARTNERSHIP

                                          By:  TOTAL RENAL CARE, INC.
                                          Its: General Partner

                                           By:__________________________________
                                                Steven Udicious
                                                Vice President, General Counsel
                                                and Secretary

                                     A-23


                                        TRC-INDIANA, LLC

                                          By:  TOTAL RENAL CARE, INC.
                                          Its: Manager

                                           By:__________________________________
                                                Steven Udicious
                                                Vice President, General Counsel
                                                and Secretary

                                        TOTAL RENAL CARE OF UTAH, L.L.C.

                                          By: TOTAL RENAL CARE, INC.

                                           By:__________________________________
                                                Steven Udicious
                                                Vice President, General Counsel
                                                and Secretary

                                     A-24


                                   EXHIBIT B
                        FORM OF CERTIFICATE OF TRANSFER

DaVita Inc.
21250 Hawthorne Boulevard
Torrance, California  90503
Attention: General Counsel

U.S. Trust Company of Texas, National Association
2001 Ross Avenue, Suite 2700
Dallas, Texas 75201
Attention:  Corporate Trust Administration

         Re: 9 1/4% Senior Subordinated Notes due 2011

Ladies and Gentlemen:

     Reference is hereby made to the Indenture, dated as of April 11, 2001
(the "Indenture"), among DaVita Inc., as issuer (the "Company"), the Guarantors
party thereto and U.S. Trust Company of Texas, National Association, as trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture. ______________, (the "Transferor") owns and proposes to
transfer the Note[s] or interest[s] in such Note[s] specified in Annex A hereto,
in the principal amount of $___________ in such Note[s] or interest[s] (the
"Transfer"), to __________ (the "Transferee"), as further specified in Annex A
hereto. In connection with the Transfer, the Transferor hereby certifies that:

[CHECK ALL THAT APPLY]

1.       [_]        Check if Transferee will take delivery of a beneficial
interest in the 144A Global Note or a Definitive Note Pursuant to Rule 144A. The
Transfer is being effected pursuant to and in accordance with Rule 144A under
the United States Securities Act of 1933, as amended (the "Securities Act"),
and, accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any

                                      B-1


applicable blue sky securities laws of any State of the United States. Upon
consummation of the proposed Transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Definitive Note will be
subject to the restrictions on transfer enumerated in the Private Placement
Legend printed on the 144A Global Note and/or the Definitive Note and in the
Indenture and the Securities Act.

2.        [_]       Check if Transferee will take delivery of a beneficial
interest in the Regulation S Global Note or a Definitive Note pursuant to
Regulation S. The Transfer is being effected pursuant to and in accordance with
Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor
hereby further certifies that (i) the Transfer is not being made to a person in
the United States and (x) at the time the buy order was originated, the
Transferee was outside the United States or such Transferor and any Person
acting on its behalf reasonably believed and believes that the Transferee was
outside the United States or (y) the transaction was executed in, on or through
the facilities of a designated offshore securities market and neither such
Transferor nor any Person acting on its behalf knows that the transaction was
prearranged with a buyer in the United States, (ii) no directed selling efforts
have been made in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S under the Securities Act, (iii) the transaction is not
part of a plan or scheme to evade the registration requirements of the
Securities Act and (iv) if the proposed Transfer is being made prior to the
expiration of the Distribution Compliance Period, the Transfer is not being made
to a U.S. Person or for the account or benefit of a U.S. Person (other than an
Initial Purchaser) and the interest transferred will be held immediately
thereafter through Euroclear or Clearstream. Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Regulation S
Global Note and/or the Definitive Note and in the Indenture and the Securities
Act.

3.        [_]       Check and complete if Transferee will take delivery of a
beneficial interest in a Definitive Note pursuant to any provision of the
Securities Act other than Rule 144A or Regulation S. The Transfer is being
effected in compliance with the transfer restrictions applicable to beneficial
interests in Restricted Global Notes and Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act and any applicable blue
sky securities laws of any State of the United States, and accordingly the
Transferor hereby further certifies that (check one):

          (a)       [_]       Such Transfer is being effected pursuant to and in
          accordance with Rule 144 under the Securities Act; or

                                      B-2


          (b)       [_]       Such Transfer is being effected to the Company or
          a subsidiary thereof; or

          (c)       [_]       Such Transfer is being effected pursuant to an
          effective registration statement under the Securities Act and in
          compliance with the prospectus delivery requirements of the Securities
          Act; or

          (d)       [_]       such Transfer is being effected to an
          Institutional Accredited and pursuant to an exemption from the
          registration requirements of the Securities Act other than Rule 144A,
          Rule 144 or Rule 904, and the Transferor hereby further certifies
          that it has not engaged in any general solicitation within the
          meaning of Regulation D under the Securities Act and the Transfer
          complies with the transfer restrictions applicable to beneficial
          interests in a Restricted Global Note or Restricted Definitive Note
          and the requirements of the exemption claimed, which certification is
          supported by (1) a certificate executed by the Transferee in a form
          of Exhibit D to the Indenture and (2) if such Transfer is in respect
          of a principal amount of Notes at the time of transfer of less than
          $250,000, an Opinion of Counsel provided by the Transferor or the
          Transferee (a copy of which the Transferor has attached to this
          certification and provided to the Company, which has confirmed its
          acceptability), to the effect that such Transfer is in compliance
          with the Securities Act. Upon consummation of the proposed Transfer
          in accordance with the terms of the Indenture, the Definitive Note
          will be subject to the restrictions on transfer enumerated in the
          Private Placement Legend printed on the Definitive Notes and in the
          Indenture and the Securities Act.

4.        [_]       Check if Transferee will take delivery of a beneficial
interest in an Unrestricted Global Note or of an Unrestricted Definitive Note.

          (a)       [_]       Check if Transfer is Pursuant to Rule 144. (i) The
   Transfer is being effected pursuant to and in accordance with Rule 144 under
   the Securities Act and in compliance with the transfer restrictions contained
   in the Indenture and any applicable blue sky securities laws of any State of
   the United States and (ii) the restrictions on transfer contained in the
   Indenture and the Private Placement Legend are not required in order to
   maintain compliance with the Securities Act. Upon consummation of the
   proposed Transfer in accordance with the terms of the Indenture, the
   transferred beneficial interest or Definitive Note will no longer be subject
   to the restrictions on transfer enumerated in the Private Placement Legend
   printed on the Restricted Global Notes, on Restricted Definitive Notes and in
   the Indenture and the Securities Act.

                                      B-3


          (b)       [_]       Check if Transfer is Pursuant to Regulation S. (i)
   The Transfer is being effected pursuant to and in accordance with Rule 903 or
   Rule 904 under the Securities Act and in compliance with the transfer
   restrictions contained in the Indenture and any applicable blue sky
   securities laws of any State of the United States and (ii) the restrictions
   on transfer contained in the Indenture and the Private Placement Legend are
   not required in order to maintain compliance with the Securities Act. Upon
   consummation of the proposed Transfer in accordance with the terms of the
   Indenture, the transferred beneficial interest or Definitive Note will no
   longer be subject to the restrictions on transfer enumerated in the Private
   Placement Legend printed on the Restricted Global Notes, on Restricted
   Definitive Notes and in the Indenture and the Securities Act.

          (c)       [_]       Check if Transfer is Pursuant to Other Exemption.
   (i) The Transfer is being effected pursuant to and in compliance with an
   exemption from the registration requirements of the Securities Act other than
   Rule 144, Rule 903 or Rule 904 and in compliance with the transfer
   restrictions contained in the Indenture and any applicable blue sky
   securities laws of any State of the United States and (ii) the restrictions
   on transfer contained in the Indenture and the Private Placement Legend are
   not required in order to maintain compliance with the Securities Act. Upon
   consummation of the proposed Transfer in accordance with the terms of the
   Indenture, the transferred beneficial interest or Definitive Note will not be
   subject to the restrictions on transfer enumerated in the Private Placement
   Legend printed on the Restricted Global Notes or Restricted Definitive Notes
   and in the Indenture.
                                      B-4


This certificate and the statements contained herein are made for your benefit
and the benefit of the Company.

_______________________________             Dated: ____________________________
[Insert Name of Transferor]


By: ____________________________
  Name:
  Title:

                                      B-5


                      ANNEX A TO CERTIFICATE OF TRANSFER

1.       The Transferor owns and proposes to transfer the following:

[CHECK ONE OF (a) OR (b)]

         (a)  [_]     a beneficial interest in the:

              (i)     [_]  144A Global Note (CUSIP  _______), or

              (ii)    [_]  Regulation S Global Note (CUSIP  _______), or

         (b)  [_]     a Restricted Definitive Note.

2.       After the Transfer the Transferee will hold:

[CHECK ONE]

         (a)  [_]     a beneficial interest in the:

              (i)     [_]  144A Global Note (CUSIP  _______), or

              (ii)    [_]  Regulation S Global Note (CUSIP  _______), or

              (iii)   [_]  Unrestricted Global Note (CUSIP  _______); or

         (b)  [_]     a Restricted Definitive Note; or

         (c)  [_]     an Unrestricted Definitive Note,

in accordance with the terms of the Indenture.

                                      B-6


                                   EXHIBIT C
                        FORM OF CERTIFICATE OF EXCHANGE


DaVita Inc.
21250 Hawthorne Boulevard
Torrance, California  90503
Attention: General Counsel

U.S. Trust Company of Texas, National Association
2001 Ross Avenue, Suite 2700
Dallas, Texas 75201
Attention:  Corporate Trust Administration

         Re: 9 1/4% Senior Subordinated Notes due 2011

Ladies and Gentlemen:

               Reference is hereby made to the Indenture, dated as of April 11,
2001 (the "Indenture"), between DaVita Inc., as issuer (the "Company"), the
Guarantors party thereto and U.S. Trust Company of Texas, National Association,
as trustee. Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.

               ____________, (the "Owner") owns and proposes to exchange the
Note[s] or interest[s] in such Note[s] specified herein, in the principal amount
of $____________ in such Note[s] or interest[s] (the "Exchange"). In connection
with the Exchange, the Owner hereby certifies that:

               1. Exchange of Restricted Definitive Notes or Beneficial
Interests in a Restricted Global Note for Unrestricted Definitive Notes or
Beneficial Interests in an Unrestricted Global Note.

                  (a)         [_]       Check if Exchange is from beneficial
interest in a Restricted Global Note to beneficial interest in an Unrestricted
Global Note. In connection with the Exchange of the Owner's beneficial interest
in a Restricted Global Note for a beneficial interest in an Unrestricted Global
Note in an equal principal amount, the Owner hereby certifies (i) the beneficial
interest is being acquired for the Owner's own

                                      C-1


account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to the Global Notes and pursuant to
and in accordance with the United States Securities Act of 1933, as amended (the
"Securities Act"), (iii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest in an
Unrestricted Global Note is being acquired in compliance with any applicable
blue sky securities laws of any State of the United States.

                  (b)         [_]       Check if Exchange is from beneficial
interest in a Restricted Global Note to Unrestricted Definitive Note. In
connection with the Exchange of the Owner's beneficial interest in a Restricted
Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i)
the Definitive Note is being acquired for the Owner's own account without
transfer, (ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to the Restricted Global Notes and pursuant to and in
accordance with the Securities Act, (iii) the restrictions on transfer contained
in the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the Definitive Note is
being acquired in compliance with any applicable blue sky securities laws of any
State of the United States.

                  (c)         [_]       Check if Exchange is from Restricted
Definitive Note to beneficial interest in an Unrestricted Global Note. In
connection with the Owner's Exchange of a Restricted Definitive Note for a
beneficial interest in an Unrestricted Global Note, the Owner hereby certifies
(i) the beneficial interest is being acquired for the Owner's own account
without transfer, (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to Restricted Definitive Notes and pursuant to
and in accordance with the Securities Act, (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the beneficial
interest is being acquired in compliance with any applicable blue sky securities
laws of any State of the United States.

                  (d)         [_]       Check if Exchange is from Restricted
Definitive Note to Unrestricted Definitive Note. In connection with the Owner's
Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note,
the Owner hereby certifies (i) the Unrestricted Definitive Note is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions

                                      C-2


applicable to Restricted Definitive Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the Unrestricted Definitive Note is
being acquired in compliance with any applicable blue sky securities laws of any
State of the United States.

     2.   Exchange of Restricted Definitive Notes or Beneficial Interests in
Restricted Global Notes for Restricted Definitive Notes or Beneficial Interests
in Restricted Global Notes.

                  (a)    [_]   Check if Exchange is from beneficial interest in
a Restricted Global Note to Restricted Definitive Note. In connection with the
Exchange of the Owner's beneficial interest in a Restricted Global Note for a
Restricted Definitive Note with an equal principal amount, the Owner hereby
certifies that the Restricted Definitive Note is being acquired for the Owner's
own account without transfer. Upon consummation of the proposed Exchange in
accordance with the terms of the Indenture, the Restricted Definitive Note
issued will continue to be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the Restricted Definitive Note and in
the Indenture and the Securities Act.

                  (b)    [_]   Check if Exchange is from Restricted Definitive
Note to beneficial interest in a Restricted Global Note. In connection with the
Exchange of the Owner's Restricted Definitive Note for a beneficial interest in
the: [CHECK ONE] 144A Global Note or Regulation S Global Note with an equal
principal amount, the Owner hereby certifies (i) the beneficial interest is
being acquired for the Owner's own account without transfer and (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, and in compliance with any applicable blue sky securities
laws of any State of the United States. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the beneficial interest
issued will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the relevant Restricted Global Note and in the
Indenture and the Securities Act.

                                      C-3


This certificate and the statements contained herein are made for your benefit
and the benefit of the Company.



- --------------------------
[Insert Name of Owner]



By:_______________________
 Name:
 Title:


Dated:________________

                                      C-4


                                   EXHIBIT D
                      FORM OF CERTIFICATE FROM ACQUIRING
                       INSTITUTIONAL ACCREDITED INVESTOR


DaVita Inc.
21250 Hawthorne Boulevard
Torrance, California  90503
Attention: General Counsel

U.S. Trust Company of Texas, National Association
2001 Ross Avenue, Suite 2700
Dallas, Texas 75201
Attention:  Corporate Trust Administration

         Re: 9 1/4% Senior Subordinated Notes due 2011

Ladies and Gentlemen:

               Reference is hereby made to the Indenture, dated as of April 11,
2001 (the "Indenture"), between DaVita Inc., as issuer (the "Company"), the
Guarantors party thereto and U.S. Trust Company of Texas, National Association,
as trustee. Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.

               In connection with our proposed purchase of $____________
aggregate principal amount of: (a) a beneficial interest in a Global Note, or
(b) a Definitive Note, we confirm that:

               1.   We understand that any subsequent transfer of the Notes or
any interest therein is subject to certain restrictions and conditions set forth
in the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").

               2.   We understand that the offer and sale of the Notes have not
been registered under the Securities Act, and that the Notes and any interest
therein may not be

                                      D-1


offered or sold except as permitted in the following sentence. We agree, on our
own behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we should sell the Notes or any interest therein, we will do so
only (1) in the United States to a person whom the seller reasonably believes is
a "qualified institutional buyer" (as defined in Rule 144A under the Securities
Act) in a transaction meeting the requirements of Rule 144A, (2) outside the
United States in an offshore transaction in accordance with Rule 904 under the
Securities Act, (3) pursuant to an exemption from registration under the
Securities Act provided by Rule 144 thereunder (if available) or (4) pursuant to
an effective registration statement under the Securities Act, in each of cases
(1) through (4) in accordance with any applicable securities laws of any state
of the United States, and we further agree to notify any purchaser of the Notes
from us of the resale restrictions referred to above.

               3.   We understand that, on any proposed resale of the Notes or
beneficial interest therein, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Notes purchased by us
will bear a legend to the foregoing effect. We further understand that any
subsequent transfer by us of the Notes or beneficial interest therein acquired
by us must be effected through one of the Initial Purchasers.

               4.   We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Notes, and
we and any accounts for which we are acting are each able to bear the economic
risk of our or its investment.

               5.   We are acquiring the Notes or beneficial interest therein
purchased by us for our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of which we exercise sole
investment discretion.

                                      D-2


               You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.

_______________________________             Dated: __________________, ____
[Insert Name of Accredited Investor]



By:_______________________________
Name:
Title:

                                      D-3

EX-4.12

                                                                    Exhibit 4.12


                         REGISTRATION RIGHTS AGREEMENT


                          Dated as of  April 11, 2001
                                  by and among

                                  DAVITA INC.,


                          THE GUARANTORS NAMED HEREIN,

                                      and

                      THE INITIAL PURCHASERS NAMED HEREIN

________________________________________________________________________________


          This Registration Rights Agreement (this "Agreement") is made and
                                                    ---------
entered into as of April 11, 2001, by and among DaVita Inc., a Delaware
corporation (the "Company"), each of the Guarantors named on the signature page
                  -------
hereto (each, a "Guarantor" and, collectively, the "Guarantors"), and each of
                 ---------                          ----------
the initial purchasers party to the Purchase Agreement described below (each, an
"Initial Purchaser" and, collectively, the "Initial Purchasers"), each of whom
 -----------------                          ------------------
has agreed to purchase the Company's 9 1/4% Series A Senior Subordinated Notes
due 2011 (the "Series A Notes") pursuant to the Purchase Agreement.
               --------------

          This Agreement is made pursuant to the Purchase Agreement, dated April
6, 2001 (the "Purchase Agreement"), by and among the Company, the Guarantors and
              ------------------
the Initial Purchasers.  In order to induce the Initial Purchasers to purchase
the Series A Notes, the Company has agreed to provide the registration rights
set forth in this Agreement.  The execution and delivery of this Agreement is a
condition to the obligations of the Initial Purchasers set forth in Section 2 of
the Purchase Agreement.  Capitalized terms used herein and not otherwise defined
shall have the meaning assigned to them the Indenture, dated April 11, 2001
between the Company, the Guarantors and U.S. Trust Company of Texas, National
Association, as Trustee, relating to the Series A Notes and the Series B Notes
(the "Indenture").
      ---------

          The parties hereby agree as follows:

SECTION 1.  DEFINITIONS

          As used in this Agreement, the following capitalized terms shall have
the following meanings:

          Act:  The Securities Act of 1933, as amended.
          ---

          Affiliate:  As defined in Rule 144 of the Act.
          ---------

          Broker-Dealer:  Any broker or dealer registered under the Exchange
          -------------
Act.

          Certificated Securities:  Definitive Notes, as defined in the
          -----------------------
Indenture.

          Closing Date:  The date hereof.
          ------------

          Commission:  The Securities and Exchange Commission.
          ----------

                                       1


          Consummate:  An Exchange Offer shall be deemed "Consummated" for
          ----------
purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Series B Notes to be issued in the Exchange Offer, (b) the
maintenance of such Exchange Offer Registration Statement continuously effective
and the keeping of the Exchange Offer open for a period not less than the period
required pursuant to Section 3(b) hereof and (c) the delivery by the Company to
the Registrar under the Indenture of Series B Notes in the same aggregate
principal amount as the aggregate principal amount of Series A Notes tendered by
Holders thereof pursuant to the Exchange Offer.

          Consummation Deadline:  As defined in Section 3(b) hereof.
          ---------------------

          Effectiveness Deadline:  As defined in Section 3(a) and 4(a) hereof.
          ----------------------

          Exchange Act:  The Securities Exchange Act of 1934, as amended.
          ------------

          Exchange Offer:  The exchange and issuance by the Company of a
          --------------
principal amount of Series B Notes (which shall be registered pursuant to the
Exchange Offer Registration Statement) equal to the outstanding principal amount
of Series A Notes that are tendered by such Holders in connection with such
exchange and issuance.

          Exchange Offer Registration Statement:  The Registration Statement
          -------------------------------------
relating to the Exchange Offer, including the related Prospectus.

          Exempt Resales:  The transactions in which the Initial Purchasers
          --------------
propose to sell the Series A Notes to certain "qualified institutional buyers,"
as such term is defined in Rule 144A under the Act, and pursuant to Regulation S
under the Act.

          Filing Deadline:  As defined in Sections 3(a) and 4(a) hereof.
          ---------------

          Holders:  As defined in Section 2 hereof.
          -------

          Prospectus:  The prospectus included in a Registration Statement at
          ----------
the time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.

          Recommencement Date: As defined in Section 6(d) hereof.
          -------------------

                                       2


          Registration Default:  As defined in Section 5 hereof.
          --------------------

          Registration Statement:  Any registration statement of the Company and
          ----------------------
the Guarantors relating to (a) an offering of Series B Notes pursuant to an
Exchange Offer or (b) the registration for resale of Transfer Restricted
Securities pursuant to the Shelf Registration Statement, in each case, (i) that
is filed pursuant to the provisions of this Agreement and (ii) including the
Prospectus included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.

          Regulation S: Regulation S promulgated under the Act.
          ------------

          Rule 144: Rule 144 promulgated under the Act.
          --------

          Series B Notes:  The Company's 9 1/4% Series B Senior Subordinated
          --------------
Notes due 2011 to be issued pursuant to the Indenture: (i) in the Exchange Offer
or (ii) as contemplated by Section 4 hereof.

          Shelf Registration Statement:  As defined in Section 4 hereof.
          ----------------------------

          Suspension Notice:  As defined in Section 6(d) hereof.
          -----------------

          TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbb b)
          ---
as in effect on the date of the Indenture.

          Transfer Restricted Securities: Each Series A Note, until the earliest
          ------------------------------
to occur of (a) the date on which such Series A Note is exchanged in the
Exchange Offer for a Series B Note which is entitled to be resold to the public
by the Holder thereof without complying with the prospectus delivery
requirements of the Act, (b) the date on which such Series A Note has been
disposed of in accordance with a Shelf Registration Statement (and the
purchasers thereof have been issued Series B Notes), or (c) the date on which
such Series A Note is distributed to the public pursuant to Rule 144 under the
Act (and purchasers thereof have been issued Series B Notes) and each Series B
Note until the date on which such Series B Note is disposed of by a Broker-
Dealer pursuant to the "Plan of Distribution" contemplated by the Exchange Offer
Registration Statement (including the delivery of the Prospectus contained
therein).

                                       3


SECTION 2.  HOLDERS

          A Person is deemed to be a holder of Transfer Restricted Securities
(each, a "Holder") whenever such Person owns Transfer Restricted Securities.
          ------

SECTION 3.  REGISTERED EXCHANGE OFFER

          (a)  Unless the Exchange Offer shall not be permitted by applicable
federal law (after the procedures set forth in Section 6(a)(i) below have been
complied with), the Company and the Guarantors shall (i) cause the Exchange
Offer Registration Statement to be filed with the Commission as soon as
practicable after the Closing Date, but in no event later than 90 days after the
Closing Date (such 90th day being the "Filing Deadline"), (ii) use its best
                                       ---------------
efforts to cause such Exchange Offer Registration Statement to become effective
at the earliest possible time, but in no event later than 180 days after the
Closing Date (such 180th day being the "Effectiveness Deadline"), (iii) in
                                        ----------------------
connection with the foregoing, (A) file all pre-effective amendments to such
Exchange Offer Registration Statement as may be necessary in order to cause it
to become effective, (B) file, if applicable, a post-effective amendment to such
Exchange Offer Registration Statement pursuant to Rule 430A under the Act and
(C) cause all necessary filings, if any, in connection with the registration and
qualification of the Series B Notes to be made under the Blue Sky laws of such
jurisdictions as are necessary to permit Consummation of the Exchange Offer, and
(iv) upon the effectiveness of such Exchange Offer Registration Statement,
commence and Consummate the Exchange Offer.  The Exchange Offer shall be on the
appropriate form permitting (i) registration of the Series B Notes to be offered
in exchange for the Series A Notes that are Transfer Restricted Securities and
(ii) resales of Series B Notes by Broker-Dealers that tendered into the Exchange
Offer Series A Notes that such Broker-Dealer acquired for its own account as a
result of market making activities or other trading activities (other than
Series A Notes acquired directly from the Company or any of its Affiliates) as
contemplated by Section 3(c) below.

          (b)  The Company and the Guarantors shall use their respective best
efforts to cause the Exchange Offer Registration Statement to be effective
continuously, and shall keep the Exchange Offer open for a period of not less
than the minimum period required under applicable federal and state securities
laws to Consummate the Exchange Offer; provided, however, that in no event shall
such period be less than 20 Business Days.  The Company and the Guarantors shall
cause the Exchange Offer to comply with all applicable federal and state
securities laws.  No securities other than the Series B Notes shall be included
in the Exchange Offer Registration Statement.  The Company and the Guarantors
shall use their respective

                                       4


best efforts to cause the Exchange Offer to be Consummated on the earliest
practicable date after the Exchange Offer Registration Statement has become
effective, but in no event later than 30 business days thereafter (such 30/th/
day being the "Consummation Deadline").
               ---------------------

          (c)  The Company shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Broker-Dealer who holds Transfer Restricted Securities that
were acquired for the account of such Broker-Dealer as a result of market-making
activities or other trading activities (other than Series A Notes acquired
directly from the Company or any Affiliate of the Company), may exchange such
Transfer Restricted Securities pursuant to the Exchange Offer.  Such "Plan of
Distribution" section shall also contain all other information with respect to
such sales by such Broker-Dealers that the Commission may require in order to
permit such sales pursuant thereto, but such "Plan of Distribution" shall not
name any such Broker-Dealer or disclose the amount of Transfer Restricted
Securities held by any such Broker-Dealer, except to the extent required by the
Commission as a result of a change in policy, rules or regulations after the
date of this Agreement.  See the Shearman & Sterling no-action letter (available
July 2, 1993).

          Because such Broker-Dealer may be deemed to be an "underwriter" within
the meaning of the Act and must, therefore, deliver a prospectus meeting the
requirements of the Act in connection with its initial sale of any Series B
Notes received by such Broker-Dealer in the Exchange Offer, the Company and
Guarantors shall permit the use of the Prospectus contained in the Exchange
Offer Registration Statement by such Broker-Dealer to satisfy such prospectus
delivery requirement.  To the extent necessary to ensure that the prospectus
contained in the Exchange Offer Registration Statement is available for sales of
Series B Notes by Broker-Dealers, the Company and the Guarantors agree to use
their respective best efforts to keep the Exchange Offer Registration Statement
continuously effective, supplemented, amended and current as required by and
subject to the provisions of Section 6(a) and (c) hereof and in conformity with
the requirements of this Agreement, the Act and the policies, rules and
regulations of the Commission as announced from time to time, for a period of
one year from the Consummation Deadline or such shorter period as will terminate
when all Transfer Restricted Securities covered by such Registration Statement
have been sold pursuant thereto.  The Company and the Guarantors shall provide
sufficient copies of the latest version of such Prospectus to such Broker-
Dealers, promptly upon request, and in no event later than one day after such
request, at any time during such period.

                                       5


SECTION 4.  SHELF REGISTRATION

          (a)  Shelf Registration.  If (i) the Exchange Offer is not permitted
               ------------------
by applicable law (after the Company and the Guarantors have complied with the
procedures set forth in Section 6(a)(i) below) or (ii) if any Holder of Transfer
Restricted Securities shall notify the Company within 20 Business Days following
the Consummation Deadline that (A) such Holder was prohibited by law or
Commission policy from participating in the Exchange Offer or (B) such Holder
may not resell the Series B Notes acquired by it in the Exchange Offer to the
public without delivering a prospectus and the Prospectus contained in the
Exchange Offer Registration Statement is not appropriate or available for such
resales by such Holder or (C) such Holder is a Broker-Dealer and holds Series A
Notes acquired directly from the Company or any of its Affiliates, then the
Company and the Guarantors shall:

          (x)  cause to be filed, on or prior to 30 days after the earlier of
(i) the date on which the Company determines that the Exchange Offer
Registration Statement cannot be filed as a result of clause (a)(i) above and
(ii) the date on which the Company receives the notice specified in clause
(a)(ii) above, (such earlier date, the "Filing Deadline"), a shelf registration
                                        ---------------
statement pursuant to Rule 415 under the Act (which may be an amendment to the
Exchange Offer Registration Statement (the "Shelf Registration Statement")),
                                            ----------------------------
relating to all Transfer Restricted Securities, and

          (y)  shall use their respective best efforts to cause such Shelf
Registration Statement to become effective on or prior to 60 days after the
Filing Deadline for the Shelf Registration Statement (such 60th day the
"Effectiveness Deadline").
 ----------------------

          If, after the Company has filed an Exchange Offer Registration
Statement that satisfies the requirements of Section 3(a) above, the Company is
required to file and make effective a Shelf Registration Statement solely
because the Exchange Offer is not permitted under applicable federal law (i.e.,
clause (a)(i) above), then the filing of the Exchange Offer Registration
Statement shall be deemed to satisfy the requirements of clause (x) above;
provided that, in such event, the Company shall remain obligated to meet the
Effectiveness Deadline set forth in clause (y).

          To the extent necessary to ensure that the Shelf Registration
Statement is available for sales of Transfer Restricted Securities by the
Holders thereof entitled to the benefit of this Section 4(a) and the other
securities required to be registered therein pursuant to Section 6(b)(ii)
hereof, the Company and the Guarantors shall use their respective best efforts
to keep any Shelf Registration Statement required by this Section 4(a)
continuously effective, supplemented, amended and

                                       6


current as required by and subject to the provisions of Sections 6(b) and (c)
hereof and in conformity with the requirements of this Agreement, the Act and
the policies, rules and regulations of the Commission as announced from time to
time, for a period of at least two years (as extended pursuant to Section
6(c)(i)) following the Closing Date, or such shorter period as will terminate on
the earlier of the date on which (1) all Transfer Restricted Securities covered
by such Shelf Registration Statement have been sold pursuant thereto or (2)
there cease to be outstanding any Transfer Restricted Securities.

          (b)  Provision by Holders of Certain Information in Connection with
               --------------------------------------------------------------
the Shelf Registration Statement.  No Holder of Transfer Restricted Securities
- --------------------------------
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 days after receipt of a request therefor, the
information specified in Item 507 or 508 of Regulation S-K, as applicable, of
the Act for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein.  No Holder of Transfer
Restricted Securities shall be entitled to liquidated damages pursuant to
Section 5 hereof unless and until such Holder shall have provided all such
information.  Each selling Holder agrees to promptly furnish additional
information required to be disclosed in order to make the information previously
furnished to the Company by such Holder not materially misleading.

SECTION 5.  LIQUIDATED DAMAGES

          If (i) any Registration Statement required by this Agreement is not
filed with the Commission on or prior to the applicable Filing Deadline, (ii)
any such Registration Statement has not been declared effective by the
Commission on or prior to the applicable Effectiveness Deadline, (iii) the
Exchange Offer has not been Consummated on or prior to the Consummation Deadline
or (iv) any Registration Statement required by this Agreement is filed and
declared effective but shall thereafter cease to be effective or fail to be
usable for its intended purpose without being succeeded within two days by a
post-effective amendment to such Registration Statement that cures such failure
and that is itself declared effective within five days of filing such post-
effective amendment to such Registration Statement (each such event referred to
in clauses (i) through (iv), a "Registration Default"), then the Company and the
                                --------------------
Guarantors hereby jointly and severally agree to pay to each Holder of Transfer
Restricted Securities affected thereby liquidated damages in an amount equal to
$.05 per week per $1,000 in principal amount of Transfer Restricted Securities
held by such Holder for each week or portion thereof that the Registration
Default continues for the first 90-day period immediately following the
occurrence of

                                       7


such Registration Default. The amount of the liquidated damages shall increase
by an additional $.05 per week per $1,000 in principal amount of Transfer
Restricted Securities with respect to each subsequent 90-day period until all
Registration Defaults have been cured, up to a maximum amount of liquidated
damages of $.25 per week per $1,000 in principal amount of Transfer Restricted
Securities; provided that the Company and the Guarantors shall in no event be
required to pay liquidated damages for more than one Registration Default at any
given time. Notwithstanding anything to the contrary set forth herein, (1) upon
filing of the Exchange Offer Registration Statement (and/or, if applicable, the
Shelf Registration Statement), in the case of (i) above, (2) upon the
effectiveness of the Exchange Offer Registration Statement (and/or, if
applicable, the Shelf Registration Statement), in the case of (ii) above, (3)
upon Consummation of the Exchange Offer, in the case of (iii) above, or (4) upon
the filing of a post-effective amendment to the Registration Statement or an
additional Registration Statement that causes the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement) to again be
declared effective or made usable in the case of (iv) above, the liquidated
damages payable with respect to the Transfer Restricted Securities as a result
of such clause (i), (ii), (iii) or (iv), as applicable, shall cease.

          All accrued liquidated damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of interest in the Indenture, on
each Interest Payment Date, as more fully set forth in the Indenture and the
Notes.  Notwithstanding the fact that any securities for which liquidated
damages are due cease to be Transfer Restricted Securities, all obligations of
the Company and the Guarantors to pay liquidated damages with respect to
securities shall survive until such time as such obligations with respect to
such securities shall have been satisfied in full.  Following the cure of all
Registration Defaults relating to any Transfer Restricted Securities, the
accrual of Liquidated Damages with respect to such Transfer Restricted
Securities will cease.  Each obligation to pay Liquidated Damages shall be
deemed to commence accruing on the date of the applicable Registration Default
and to cease accruing when all Registration Defaults have been cured.  In no
event shall the Company pay Liquidated Damages in excess of the applicable
maximum weekly amount set forth above regardless of whether one or multiple
Registration Defaults exist.

SECTION 6.  REGISTRATION PROCEDURES

          (a)  Exchange Offer Registration Statement.  In connection with the
               -------------------------------------
Exchange Offer, the Company and the Guarantors shall (x) comply with all
applicable provisions of Section 6(c) below, (y) use their respective best
efforts to effect such exchange and to permit the resale of Series B Notes by
Broker-Dealers

                                       8


that tendered in the Exchange Offer Series A Notes that such Broker-Dealer
acquired for its own account as a result of its market making activities or
other trading activities (other than Series A Notes acquired directly from the
Company or any of its Affiliates) being sold in accordance with the intended
method or methods of distribution thereof, and (z) comply with all of the
following provisions:

               (i)   If, following the date hereof there has been announced a
change in Commission policy with respect to exchange offers such as the Exchange
Offer, that in the reasonable opinion of counsel to the Company raises a
substantial question as to whether the Exchange Offer is permitted by applicable
federal law, the Company and the Guarantors hereby agree to seek a no-action
letter or other favorable decision from the Commission allowing the Company and
the Guarantors to Consummate an Exchange Offer for such Transfer Restricted
Securities. The Company and the Guarantors hereby agree to pursue the issuance
of such a decision to the Commission staff level. In connection with the
foregoing, the Company and the Guarantors hereby agree to take all such other
actions as may be requested by the Commission or otherwise required in
connection with the issuance of such decision, including without limitation (A)
participating in telephonic conferences with the Commission, (B) delivering to
the Commission staff an analysis prepared by counsel to the Company setting
forth the legal bases, if any, upon which such counsel has concluded that such
an Exchange Offer should be permitted and (C) diligently pursuing a resolution
(which need not be favorable) by the Commission staff.

               (ii)  As a condition to its participation in the Exchange Offer,
each Holder of Transfer Restricted Securities (including, without limitation,
any Holder who is a Broker Dealer) shall furnish, upon the request of the
Company, prior to the Consummation of the Exchange Offer, a written
representation to the Company and the Guarantors (which may be contained in the
letter of transmittal contemplated by the Exchange Offer Registration Statement)
to the effect that (A) it is not an Affiliate of the Company, (B) it is not
engaged in, and does not intend to engage in, and has no arrangement or
understanding with any person to participate in, a distribution of the Series B
Notes to be issued in the Exchange Offer and (C) it is acquiring the Series B
Notes in its ordinary course of business. As a condition to its participation in
the Exchange Offer each Holder using the Exchange Offer to participate in a
distribution of the Series B Notes shall acknowledge and agree that, if the
resales are of Series B Notes obtained by such Holder in exchange for Series A
Notes acquired directly from the Company or an Affiliate thereof, it (1) could
not, under Commission policy as in effect on the date of this Agreement, rely on
the position of the Commission enunciated in Morgan Stanley and Co., Inc.
                                             ----------------------------
(available June 5, 1991) and Exxon Capital Holdings Corporation (available May
                             ----------------------------------
13, 1988), as interpreted in the Commission's letter to Shearman & Sterling
                                                        -------------------
dated July 2, 1993,


                                       9


and similar no-action letters (including, if applicable, any no-action letter
obtained pursuant to clause (i) above), and (2) must comply with the
registration and prospectus delivery requirements of the Act in connection with
a secondary resale transaction and that such a secondary resale transaction must
be covered by an effective registration statement containing the selling
security holder information required by Item 507 or 508, as applicable, of
Regulation S-K.

               (iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company and the Guarantors shall provide a supplemental letter to
the Commission (A) stating that the Company and the Guarantors are registering
the Exchange Offer in reliance on the position of the Commission enunciated in
Exxon Capital Holdings Corporation (available May 13, 1988), Morgan Stanley and
- ----------------------------------                           ------------------
Co., Inc. (available June 5, 1991) as interpreted in the Commission's letter to
- ---------
Shearman & Sterling dated July 2, 1993, and, if applicable, any no-action letter
- -------------------
obtained pursuant to clause (i) above, (B) including a representation that
neither the Company nor any Guarantor has entered into any arrangement or
understanding with any Person to distribute the Series B Notes to be received in
the Exchange Offer and that, to the best of the Company's and each Guarantor's
information and belief, each Holder participating in the Exchange Offer is
acquiring the Series B Notes in its ordinary course of business and has no
arrangement or understanding with any Person to participate in the distribution
of the Series B Notes received in the Exchange Offer and (C) any other
undertaking or representation required by the Commission as set forth in any no-
action letter obtained pursuant to clause (i) above, if applicable.

          (b)  Shelf Registration Statement.   In connection with the Shelf
               ----------------------------
Registration Statement, the Company and the Guarantors shall:

          (i)  comply with all the provisions of Section 6(c) below and use
their respective best efforts to effect such registration to permit the sale of
the Transfer Restricted Securities being sold in accordance with the intended
method or methods of distribution thereof (as indicated in the information
furnished to the Company pursuant to Section 4(b) hereof), and pursuant thereto
the Company and the Guarantors will prepare and file with the Commission a
Registration Statement relating to the registration on any appropriate form
under the Act, which form shall be available for the sale of the Transfer
Restricted Securities in accordance with the intended method or methods of
distribution thereof within the time periods and otherwise in accordance with
the provisions hereof.

          (ii) issue, upon the request of any Holder or purchaser of Series A
Notes covered by any Shelf Registration Statement contemplated by this
Agreement, Series B Notes having an aggregate principal amount equal to the
aggregate principal

                                       10


     amount of Series A Notes sold pursuant to the Shelf Registration Statement
     and surrendered to the Company for cancellation; the Company shall register
     Series B Notes on the Shelf Registration Statement for this purpose and
     issue the Series B Notes to the purchaser(s) of securities subject to the
     Shelf Registration Statement in the names as such purchaser(s) shall
     designate.

          (c)  General Provisions. In connection with any Registration
               ------------------
     Statement and any related Prospectus required by this Agreement, the
     Company and the Guarantors shall:

               (i)    use their respective best efforts to keep such
     Registration Statement continuously effective and provide all requisite
     financial statements for the period specified in Section 3 or 4 of this
     Agreement, as applicable. Upon the occurrence of any event that would cause
     any such Registration Statement or the Prospectus contained therein (A) to
     contain an untrue statement of material fact or omit to state any material
     fact necessary to make the statements therein not misleading or (B) not to
     be effective and usable for resale of Transfer Restricted Securities during
     the period required by this Agreement, the Company and the Guarantors shall
     file promptly an appropriate amendment to such Registration Statement
     curing such defect, and, if Commission review is required, use their
     respective best efforts to cause such amendment to be declared effective as
     soon as practicable.

               (ii)   prepare and file with the Commission such amendments and
     post-effective amendments to the applicable Registration Statement as may
     be necessary to keep such Registration Statement effective for the
     applicable period set forth in Section 3 or 4 hereof, as the case may be;
     cause the Prospectus to be supplemented by any required Prospectus
     supplement, and as so supplemented to be filed pursuant to Rule 424 under
     the Act, and to comply fully with Rules 424, 430A and 462, as applicable,
     under the Act in a timely manner; and comply with the provisions of the Act
     with respect to the disposition of all securities covered by such
     Registration Statement during the applicable period in accordance with the
     intended method or methods of distribution by the sellers thereof set forth
     in such Registration Statement or supplement to the Prospectus;

               (iii)  advise each Holder promptly and, if requested by such
     Holder, confirm such advice in writing, (A) when the Prospectus or any
     Prospectus supplement or post-effective amendment has been filed, and, with
     respect to any applicable Registration Statement or any post-effective
     amendment thereto, when the same has become effective, (B) of any request
     by the Commission for amendments to the Registration Statement or
     amendments or supplements to the Prospectus or for additional information
     relating thereto, (C) of the issuance by the Commission of any

                                       11


     stop order suspending the effectiveness of the Registration Statement under
     the Act or of the suspension by any state securities commission of the
     qualification of the Transfer Restricted Securities for offering or sale in
     any jurisdiction, or the initiation of any proceeding for any of the
     preceding purposes, (D) of the existence of any fact or the happening of
     any event that makes any statement of a material fact made in the
     Registration Statement, the Prospectus, any amendment or supplement thereto
     or any document incorporated by reference therein untrue, or that requires
     the making of any additions to or changes in the Registration Statement in
     order to make the statements therein not misleading, or that requires the
     making of any additions to or changes in the Prospectus in order to make
     the statements therein, in the light of the circumstances under which they
     were made, not misleading. If at any time the Commission shall issue any
     stop order suspending the effectiveness of the Registration Statement, or
     any state securities commission or other regulatory authority shall issue
     an order suspending the qualification or exemption from qualification of
     the Transfer Restricted Securities under state securities or Blue Sky laws,
     the Company and the Guarantors shall use their respective best efforts to
     obtain the withdrawal or lifting of such order at the earliest possible
     time;

                    (iv)   subject to Section 6(c)(i), if any fact or event
     contemplated by Section 6(c)(iii)(D) above shall exist or have occurred,
     prepare a supplement or post-effective amendment to the Registration
     Statement or related Prospectus or any document incorporated therein by
     reference or file any other required document so that, as thereafter
     delivered to the purchasers of Transfer Restricted Securities, the
     Prospectus will not contain an untrue statement of a material fact or omit
     to state any material fact necessary to make the statements therein, in the
     light of the circumstances under which they were made, not misleading;

                    (v)    furnish to each Holder in connection with such
     exchange or sale, if any, before filing with the Commission, copies of any
     Registration Statement or any Prospectus included therein or any amendments
     or supplements to any such Registration Statement or Prospectus (including
     all documents incorporated by reference after the initial filing of such
     Registration Statement), which documents will be subject to the review and
     comment of such Holders in connection with such sale, if any, for a period
     of at least five Business Days prior to the initial filing of a
     Registration Statement and at least three Business Days prior to the filing
     of any amendment or supplement thereto, and the Company will not file any
     such Registration Statement or Prospectus or any amendment or supplement to
     any such Registration Statement or Prospectus (including all such documents
     incorporated by reference) to which such Holders shall reasonably object
     within five Business Days or three Business Days, as applicable, after the
     receipt thereof. A Holder shall be deemed to have reasonably objected to
     such filing if such Registration Statement,

                                       12


     amendment, Prospectus or supplement, as applicable, as proposed to be
     filed, contains an untrue statement of a material fact or omit to state any
     material fact necessary to make the statements therein not misleading or
     fails to comply with the applicable requirements of the Act;

                    (vi)   promptly prior to the filing of any document that is
     to be incorporated by reference into a Registration Statement or
     Prospectus, provide copies of such document to each Holder in connection
     with such exchange or sale, if any, make the Company's and the Guarantors'
     representatives available for discussion of such document and other
     customary due diligence matters, and include such information in such
     document prior to the filing thereof as such Holders may reasonably
     request;

                    (vii)  subject to reasonable confidentiality procedures,
     make available, at reasonable times, for inspection by each Holder and any
     attorney or accountant retained by such Holders, all financial and other
     records, pertinent corporate documents of the Company and the Guarantors
     and cause the Company's and the Guarantors' officers, directors and
     employees to supply all information reasonably requested by any such
     Holder, attorney or accountant in connection with such Registration
     Statement or any post-effective amendment thereto subsequent to the filing
     thereof and prior to its effectiveness;

                    (viii) if requested by any Holders in connection with such
     exchange or sale, promptly include in any Registration Statement or
     Prospectus, pursuant to a supplement or post-effective amendment if
     necessary, such information as such Holders may reasonably request to have
     included therein, including, without limitation, information relating to
     the "Plan of Distribution" of the Transfer Restricted Securities, and make
     all required filings of such Prospectus supplement or post-effective
     amendment as soon as practicable after the Company is notified of the
     matters to be included in such Prospectus supplement or post-effective
     amendment;

                    (ix)   furnish to each Holder in connection with such
     exchange or sale, without charge, at least one copy of the Registration
     Statement, as first filed with the Commission, and of each amendment
     thereto, including all documents incorporated by reference therein and all
     exhibits (including exhibits incorporated therein by reference);

                    (x)    deliver to each Holder, without charge, as many
     copies of the Prospectus (including each preliminary prospectus) and any
     amendment or supplement thereto as such Persons reasonably may request; the
     Company and the Guarantors hereby consent to the use (in accordance with
     law) of the Prospectus and

                                       13


     any amendment or supplement thereto by each selling Holder in connection
     with the offering and the sale of the Transfer Restricted Securities
     covered by the Prospectus or any amendment or supplement thereto;

                    (xi)   upon the request of any Holder, enter into such
     agreements (including underwriting agreements) and make such
     representations and warranties and take all such other actions in
     connection therewith in order to expedite or facilitate the disposition of
     the Transfer Restricted Securities pursuant to any applicable Registration
     Statement contemplated by this Agreement as may be reasonably requested by
     any Holder in connection with any sale or resale pursuant to any applicable
     Registration Statement. In such connection the Company and the Guarantors
     shall:

                    (A)    upon request of any Holder, furnish (or in the case
          of paragraphs (2) and (3), use its best efforts to cause to be
          furnished) to each Holder, upon Consummation of the Exchange Offer or
          upon the effectiveness of the Shelf Registration Statement, as the
          case may be:

                              (1) a certificate, dated such date, signed on
          behalf of the Company and each Guarantor by (x) the Chief Executive
          Officer, the President or any Vice President and (y) a principal
          financial or accounting officer of the Company and such Guarantor,
          confirming, as of the date thereof, the matters set forth in Sections
          6(y), 9(a) and 9(b) of the Purchase Agreement and such other similar
          matters as such Holders may reasonably request;

                              (2) an opinion, dated the date of Consummation of
          the Exchange Offer or the date of effectiveness of the Shelf
          Registration Statement, as the case may be, of counsel for the Company
          and the Guarantors covering matters similar to those set forth in
          paragraph (e) of Section 9 of the Purchase Agreement and such other
          matters as such Holder may reasonably request, and in any event
          including a statement to the effect that such counsel has participated
          in conferences with officers and other representatives of the Company
          and the Guarantors and representatives of the independent public
          accountants for the Company and the Guarantors and has considered the
          matters required to be stated therein and the statements contained
          therein, although such counsel has not independently verified the
          accuracy, completeness or fairness of such statements; and that such
          counsel advises that, on the basis of the foregoing, no facts came to
          such counsel's attention that caused such counsel to believe that the

                                       14


          applicable Registration Statement, at the time such Registration
          Statement or any post-effective amendment thereto became effective
          and, in the case of the Exchange Offer Registration Statement, as of
          the date of Consummation of the Exchange Offer, contained an untrue
          statement of a material fact or omitted to state a material fact
          required to be stated therein or necessary to make the statements
          therein not misleading, or that the Prospectus contained in such
          Registration Statement as of its date and, in the case of the opinion
          dated the date of Consummation of the Exchange Offer, as of the date
          of Consummation, contained an untrue statement of a material fact or
          omitted to state a material fact necessary in order to make the
          statements therein, in the light of the circumstances under which they
          were made, not misleading. Without limiting the foregoing, such
          counsel may state further that such counsel assumes no responsibility
          for, and has not independently verified, the accuracy, completeness or
          fairness of the financial statements, notes and schedules and other
          financial data included in any Registration Statement contemplated by
          this Agreement or the related Prospectus; and

                              (3) a customary comfort letter, dated the date of
          Consummation of the Exchange Offer, or as of the date of effectiveness
          of the Shelf Registration Statement, as the case may be, from the
          Company's independent accountants, in the customary form and covering
          matters of the type customarily covered in comfort letters to
          underwriters in connection with underwritten offerings, and affirming
          the matters set forth in the comfort letters delivered pursuant to
          Section 9(g) of the Purchase Agreement; and

                       (B) deliver such other documents and certificates as may
          be reasonably requested by the selling Holders to evidence compliance
          with the matters covered in clause (A) above and with any customary
          conditions contained in any agreement entered into by the Company and
          the Guarantors pursuant to this clause (xi);

                       (xii) prior to any public offering of Transfer Restricted
     Securities, cooperate with the selling Holders and their counsel in
     connection with the registration and qualification of the Transfer
     Restricted Securities under the securities or Blue Sky laws of such
     jurisdictions as the selling Holders may request and do any and all other
     acts or things necessary or advisable to enable the disposition in such
     jurisdictions of the Transfer Restricted Securities covered by the
     applicable Registration Statement; provided, however, that neither the
     Company nor

                                       15


     any Guarantor shall be required to register or qualify as a foreign
     corporation where it is not now so qualified or to take any action that
     would subject it to the service of process in suits or to taxation, other
     than as to matters and transactions relating to the Registration Statement,
     in any jurisdiction where it is not now so subject;

                       (xiii) in connection with any sale of Transfer Restricted
     Securities that will result in such securities no longer being Transfer
     Restricted Securities, cooperate with the Holders to facilitate the timely
     preparation and delivery of certificates representing Transfer Restricted
     Securities to be sold and not bearing any restrictive legends; and to
     register such Transfer Restricted Securities in such denominations and such
     names as the selling Holders may request at least two Business Days prior
     to such sale of Transfer Restricted Securities;

                       (xiv)  use their respective best efforts to cause the
     disposition of the Transfer Restricted Securities covered by the
     Registration Statement to be registered with or approved by such other
     governmental agencies or authorities as may be necessary to enable the
     seller or sellers thereof to consummate the disposition of such Transfer
     Restricted Securities, subject to the proviso contained in clause (xii)
     above;

                       (xv)   provide a CUSIP number for all Transfer Restricted
     Securities not later than the effective date of a Registration Statement
     covering such Transfer Restricted Securities and provide the Trustee under
     the Indenture with printed certificates for the Transfer Restricted
     Securities which are in a form eligible for deposit with the Depository
     Trust Company;

                       (xvi)  otherwise use their respective best efforts to
     comply with all applicable rules and regulations of the Commission, and
     make generally available to its security holders with regard to any
     applicable Registration Statement, as soon as practicable, a consolidated
     earnings statement meeting the requirements of Rule 158 (which need not be
     audited) covering a twelve-month period beginning after the effective date
     of the Registration Statement (as such term is defined in paragraph (c) of
     Rule 158 under the Act);

                       (xvii) cause the Indenture to be qualified under the TIA
     not later than the effective date of the first Registration Statement
     required by this Agreement and, in connection therewith, cooperate with the
     Trustee and the Holders to effect such changes to the Indenture as may be
     required for such Indenture to be so qualified in accordance with the terms
     of the TIA; and execute and use its best efforts to cause the Trustee to
     execute, all documents that may be required to effect such

                                       16


     changes and all other forms and documents required to be filed with the
     Commission to enable such Indenture to be so qualified in a timely manner;
     and

                       (xviii) provide promptly to each Holder, upon request,
     each document filed with the Commission pursuant to the requirements of
     Section 13 or Section 15(d) of the Exchange Act.

            (d)     Restrictions on Holders. Each Holder agrees by
                    -----------------------
     acquisition of a Transfer Restricted Security that, upon receipt of the
     notice referred to in Section 6(c)(iii)(C) or any notice from the Company
     of the existence of any fact of the kind described in Section 6(c)(iii)(D)
     hereof (in each case, a "Suspension Notice"), such Holder will forthwith
                              -----------------
     discontinue disposition of Transfer Restricted Securities pursuant to the
     applicable Registration Statement until (i) such Holder has received copies
     of the supplemented or amended Prospectus contemplated by Section 6(c)(iv)
     hereof, or (ii) such Holder is advised in writing by the Company that the
     use of the Prospectus may be resumed, and has received copies of any
     additional or supplemental filings that are incorporated by reference in
     the Prospectus (in each case, the "Recommencement Date"). Each Holder
                                        -------------------
     receiving a Suspension Notice hereby agrees that it will either (i) destroy
     any Prospectuses, other than permanent file copies, then in such Holder's
     possession which have been replaced by the Company with more recently dated
     Prospectuses or (ii) deliver to the Company (at the Company's expense) all
     copies, other than permanent file copies, then in such Holder's possession
     of the Prospectus covering such Transfer Restricted Securities that was
     current at the time of receipt of the Suspension Notice. The time period
     regarding the effectiveness of such Registration Statement set forth in
     Section 3 or 4 hereof, as applicable, shall be extended by a number of days
     equal to the number of days in the period from and including the date of
     delivery of the Suspension Notice to the date of delivery of the
     Recommencement Date.

     SECTION 7.  REGISTRATION EXPENSES

            (a)     All expenses incident to the Company's and the Guarantors'
     performance of or compliance with this Agreement will be borne by the
     Company, regardless of whether a Registration Statement becomes effective,
     including without limitation: (i) all registration and filing fees and
     expenses; (ii) all fees and expenses of compliance with federal securities
     and state Blue Sky or securities laws; (iii) all expenses of printing
     (including printing certificates for the Series B Notes to be issued in the
     Exchange Offer and printing of Prospectuses), messenger and delivery
     services and telephone; (iv) all fees and disbursements of counsel for the
     Company and the Guarantors, and, in accordance with Section 7(b) below, the
     Holders of Transfer Restricted Securities; (v) all application and filing
     fees in connection with

                                       17


     listing the Series B Notes on a national securities exchange or automated
     quotation system pursuant to the requirements hereof; and (vi) all fees and
     disbursements of independent certified public accountants of the Company
     and the Guarantors (including the expenses of any special audit and comfort
     letters required by or incident to such performance).

            The Company will, in any event, bear its and the Guarantors'
     internal expenses (including, without limitation, all salaries and expenses
     of its officers and employees performing legal or accounting duties), the
     expenses of any annual audit and the fees and expenses of any Person,
     including special experts, retained by the Company or the Guarantors.

            (b)     In connection with any Registration Statement required by
     this Agreement (including, without limitation, the Exchange Offer
     Registration Statement and the Shelf Registration Statement), the Company
     and the Guarantors will reimburse the Initial Purchasers and the Holders of
     Transfer Restricted Securities who are tendering Series A Notes into in the
     Exchange Offer and/or selling or reselling Series A Notes or Series B Notes
     pursuant to the "Plan of Distribution" contained in the Exchange Offer
     Registration Statement or the Shelf Registration Statement, as applicable,
     for the reasonable fees and disbursements of not more than one counsel, who
     shall be chosen by the Holders of a majority in principal amount of the
     Transfer Restricted Securities for whose benefit such Registration
     Statement is being prepared.

     SECTION 8.  INDEMNIFICATION

            (a)     The Company and the Guarantors agree, jointly and severally,
     to indemnify and hold harmless each Holder, its directors, officers and
     each Person, if any, who controls such Holder (within the meaning of
     Section 15 of the Act or Section 20 of the Exchange Act), from and against
     any and all losses, claims, damages, liabilities, judgments, (including
     without limitation, any legal or other expenses incurred in connection with
     investigating or defending any matter, including any action that could give
     rise to any such losses, claims, damages, liabilities or judgments) caused
     by any untrue statement or alleged untrue statement of a material fact
     contained in any Registration Statement, preliminary prospectus or
     Prospectus (or any amendment or supplement thereto) provided by the Company
     to any Holder or any prospective purchaser of Series B Notes or registered
     Series A Notes, or caused by any omission or alleged omission to state
     therein a material fact required to be stated therein or necessary to make
     the statements therein not misleading, except insofar as such losses,
     claims, damages, liabilities or judgments are caused by an untrue statement
     or omission or alleged untrue statement or omission that is based

                                       18


     upon information relating to any of the Holders furnished in writing to the
     Company by any of the Holders provided, however, that the Company shall not
     be liable under the indemnity agreement provided in this Section 8(a) to
     any indemnified party (as defined below) with respect to any preliminary
     prospectus to the extent that the Company shall sustain the burden of
     proving that any such loss, claim, damage, liability or judgment resulted
     from the fact that such indemnified party, in contravention of a
     requirement of applicable law, sold Transfer Restricted Securities to a
     person to whom such indemnified party failed to send or give, on or prior
     to the closing date of such sale, a copy of the Prospectus, as then amended
     or supplemented, if (i) the Company has previously furnished copies thereof
     (sufficiently in advance of such closing date to allow for distribution by
     the closing date) to such indemnified party, and the loss, claim, damage,
     liability or judgment of such indemnified party resulted from an untrue
     statement or omission or a material fact contained in or omitted from the
     preliminary prospectus that was corrected in the Prospectus as, if
     applicable, amended or supplemented prior to such closing date, and such
     Prospectus was required by law to be delivered at or prior to the written
     confirmation of sale to such person and (ii) such failure to give or send
     such Prospectus by such closing date to the party or parties asserting such
     loss, claim, damage, liability or judgment would have constituted a defense
     to the claim asserted by such person.

            (b)     Each Holder of Transfer Restricted Securities agrees,
     severally and not jointly, to indemnify and hold harmless the Company and
     the Guarantors, and their respective directors and officers, and each
     person, if any, who controls (within the meaning of Section 15 of the Act
     or Section 20 of the Exchange Act) the Company or the Guarantors, to the
     same extent as the foregoing indemnity from the Company and the Guarantors
     set forth in section (a) above, but only with reference to information
     relating to such Holder furnished in writing to the Company by such Holder
     expressly for use in any Registration Statement. In no event shall any
     Holder, its directors, officers or any Person who controls such Holder be
     liable or responsible for any amount in excess of the amount by which the
     total amount received by such Holder with respect to its sale of Transfer
     Restricted Securities pursuant to a Registration Statement exceeds (i) the
     amount paid by such Holder for such Transfer Restricted Securities and (ii)
     the amount of any damages that such Holder, its directors, officers or any
     Person who controls such Holder has otherwise been required to pay by
     reason of such untrue or alleged untrue statement or omission or alleged
     omission.

            (c)     In case any action shall be commenced involving any person
     in respect of which indemnity may be sought pursuant to Sec Section 8(a) or
     8(b) (the "indemnified party"), the indemnified party shall promptly notify
                -----------------
     the person against

                                       19


     whom such indemnity may be sought (the "indemnifying person") in writing
                                             -------------------
     and the indemnifying party shall assume the defense of such action,
     including the employment of counsel reasonably satisfactory to the
     indemnified party and the payment of all fees and expenses of such counsel,
     as incurred (except that in the case of any action in respect of which
     indemnity may be sought pursuant to both Sections 8(a) and 8(b), a Holder
     shall not be required to assume the defense of such action pursuant to this
     Section 8(c), but may employ separate counsel and participate in the
     defense thereof, but the fees and expenses of such counsel, except as
     provided below, shall be at the expense of the Holder). Any indemnified
     party shall have the right to employ separate counsel in any such action
     and participate in the defense thereof, but the fees and expenses of such
     counsel shall be at the expense of the indemnified party unless (i) the
     employment of such counsel shall have been specifically authorized in
     writing by the indemnifying party, (ii) the indemnifying party shall have
     failed to assume the defense of such action or employ counsel reasonably
     satisfactory to the indemnified party or (iii) the named parties to any
     such action (including any impleaded parties) include both the indemnified
     party and the indemnifying party, and the indemnified party shall have been
     advised by such counsel that there may be one or more legal defenses
     available to it which are different from or additional to those available
     to the indemnifying party (in which case the indemnifying party shall not
     have the right to assume the defense of such action on behalf of the
     indemnified party). In any such case, the indemnifying party shall not, in
     connection with any one action or separate but substantially similar or
     related actions in the same jurisdiction arising out of the same general
     allegations or circumstances, be liable for the fees and expenses of more
     than one separate firm of attorneys (in addition to any local counsel) for
     all indemnified parties and all such fees and expenses shall be reimbursed
     as they are incurred. Such firm shall be designated in writing by a
     majority of the Holders, in the case of the parties indemnified pursuant to
     Section 8(a), and by the Company and Guarantors, in the case of parties
     indemnified pursuant to Section 8(b). The indemnifying party shall
     indemnify and hold harmless the indemnified party from and against any and
     all losses, claims, damages, liabilities and judgments by reason of any
     settlement of any action (i) effected with its written consent or (ii)
     effected without its written consent if the settlement is entered into more
     than twenty business days after the indemnifying party shall have received
     a request from the indemnified party for reimbursement for the fees and
     expenses of counsel (in any case where such fees and expenses are at the
     expense of the indemnifying party) and, prior to the date of such
     settlement, the indemnifying party shall have failed to comply with such
     reimbursement request. No indemnifying party shall, without the prior
     written consent of the indemnified party, effect any settlement or
     compromise of, or consent to the entry of judgment with respect to, any
     pending or threatened action in respect of which the indemnified party is
     or could have been a party and indemnity or contribution may be or could
     have been sought

                                       20



hereunder by the indemnified party, unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability on claims that are or could have been the subject matter of such
action and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of the indemnified party.

          (d)  To the extent that the indemnification provided for in this
Section 8 is unavailable to an indemnified party in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or judgments (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company and
the Guarantors, on the one hand, and the Holders, on the other hand, from their
sale of Transfer Restricted Securities or (ii) if the allocation provided by
clause 8(d)(i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
8(d)(i) above but also the relative fault of the Company and the Guarantors, on
the one hand, and of the Holder, on the other hand, in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or judgments, as well as any other relevant equitable
considerations. The relative fault of the Company and the Guarantors, on the one
hand, and of the Holder, on the other hand, shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or such Guarantor, on the one hand, or by
the Holder, on the other hand, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and judgments referred to above shall be deemed to
include, subject to the limitations set forth in the second paragraph of Section
8(a), any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim.

          The Company, the Guarantors and each Holder agree that it would not be
just and equitable if contribution pursuant to this Section 8(d) were determined
by pro rata allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating

                                       21


or defending any matter, including any action that could have given rise to such
losses, claims, damages, liabilities or judgments. Notwithstanding the
provisions of this Section 8, no Holder, its directors, its officers or any
Person, if any, who controls such Holder shall be required to contribute, in the
aggregate, any amount in excess of the amount by which the total received by
such Holder with respect to the sale of Transfer Restricted Securities pursuant
to a Registration Statement exceeds (i) the amount paid by such Holder for such
Transfer Restricted Securities and (ii) the amount of any damages which such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Holders' obligations to contribute pursuant to this
Section 8(c) are several in proportion to the respective principal amount of
Transfer Restricted Securities held by each Holder hereunder and not joint.

SECTION 9. RULE 144A and RULE 144

          The Company and each Guarantor agrees with each Holder, for so long as
any Transfer Restricted Securities remain outstanding and during any period in
which the Company or such Guarantor (i) is not subject to Section 13 or 15(d) of
the Exchange Act, to make available, upon request of any Holder, to such Holder
or beneficial owner of Transfer Restricted Securities in connection with any
sale thereof and any prospective purchaser of such Transfer Restricted
Securities designated by such Holder or beneficial owner, the information
required by Rule 144A(d)(4) under the Act in order to permit resales of such
Transfer Restricted Securities pursuant to Rule 144A, and (ii) is subject to
Section 13 or 15 (d) of the Exchange Act, to make all filings required thereby
in a timely manner in order to permit resales of such Transfer Restricted
Securities pursuant to Rule 144.

SECTION 10.    MISCELLANEOUS

          (a) Remedies.  The Company and the Guarantors acknowledge and agree
              --------
that any failure by the Company and/or the Guarantors to comply with their
respective obligations under Sections 3 and 4 hereof may result in material
irreparable injury to the Initial Purchasers or the Holders  for which there is
no adequate remedy at law, that it will not be possible to measure damages for
such injuries precisely and that, in the event of any such failure, the Initial
Purchasers or any Holder may obtain such relief as may be required to
specifically enforce the Company's and the Guarantor's obligations under
Sections 3 and 4 hereof.  The Company and the Guarantors further agree to waive
the defense in any action for specific performance that a remedy at law would be
adequate.

                                       22


          (b) No Inconsistent Agreements.  Neither the Company nor any Guarantor
              --------------------------
will, on or after the date of this Agreement, enter into any agreement with
respect to its securities that is inconsistent with the rights granted to the
Holders in this Agreement or otherwise conflicts with the provisions hereof.
Neither the Company nor any Guarantor is currently a party to any agreement
granting any registration rights with respect to its securities to any Person.
The rights granted to the Holders hereunder do not in any way conflict with and
are not inconsistent with the rights granted to the holders of the Company's and
the Guarantors' securities under any agreement in effect on the date hereof.

          (c) Amendments and Waivers.  The provisions of this Agreement may not
              ----------------------
be amended, modified or supplemented, and waivers or consents to or departures
from the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 10(c)(i), the Company has obtained the written consent
of Holders of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, the Company has obtained the written
consent of Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities (excluding Transfer Restricted Securities held by the
Company or its Affiliates).  Notwithstanding the foregoing, a waiver or consent
to departure from the provisions hereof that relates exclusively to the rights
of Holders whose Transfer Restricted Securities are being tendered pursuant to
the Exchange Offer, and that does not affect directly or indirectly the rights
of other Holders whose Transfer Restricted Securities are not being tendered
pursuant to such Exchange Offer, may be given by the Holders of a majority of
the outstanding principal amount of Transfer Restricted Securities subject to
such Exchange Offer.

          (d) Third Party Beneficiary.  The Holders shall be third party
              -----------------------
beneficiaries to the agreements made hereunder between the Company and the
Guarantors, on the one hand, and the Initial Purchasers, on the other hand, and
shall have the right to enforce such agreements directly to the extent they may
deem such enforcement necessary or advisable to protect its rights or the rights
of Holders hereunder.

          (e) Notices.  All notices and other communications provided for or
              -------
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:

                                       23


              (i) if to a Holder, at the address set forth on the records of
the Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and

              (ii) if to the Company or the Guarantors:

                   21250 Hawthorne Boulevard
                   Suite 800
                   Torrance, CA 90503

                   Telecopier No.: (310) 792-2600
                   Attention: Steve Udicious, Esq., General Counsel

                   With a copy to:

                   Riordan & McKinzie
                   300 South Grand Avenue
                   Suite 2900
                   Los Angeles, CA 90071

                   Telecopier No.: (213) 229-8550
                   Attention:  Roger Lustberg, Esq.

          All such notices and communications shall be deemed to have been duly
given:  at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next business day, if timely delivered
to an air courier guaranteeing overnight delivery.

          Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.

          (f) Successors and Assigns.  This Agreement shall inure to the benefit
              ----------------------
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders; provided, that nothing herein shall be deemed to permit any
assignment, transfer or other disposition of Transfer Restricted Securities in
violation of the terms hereof or of the Purchase Agreement or the Indenture.  If
any transferee of any Holder shall acquire Transfer Restricted Securities in any
manner, whether by operation of law or otherwise, such Transfer Restricted
Securities shall be held

                                       24


subject to all of the terms of this Agreement, and by taking and holding such
Transfer Restricted Securities such Person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Agreement, including the restrictions on resale set forth in this Agreement and,
if applicable, the Purchase Agreement, and such Person shall be entitled to
receive the benefits hereof.

          (g) Counterparts.  This Agreement may be executed in any number of
              ------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

          (h) Headings.  The headings in this Agreement are for convenience of
              --------
reference only and shall not limit or otherwise affect the meaning hereof.

          (i) Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
              -------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING, WITHOUT
LIMITATION, SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

          (j) Severability.  In the event that any one or more of the
              ------------
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.

          (k) Entire Agreement.  This Agreement is intended by the parties as a
              ----------------
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein.  There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities.  This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.

                                       25


          IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.


                   DAVITA INC.


                   By:__________________
                       Steven Udicious
                       Vice President, General Counsel and Secretary

                                      S-1


                    GUARANTORS
                    ----------

                    CARROLL COUNTY DIALYSIS FACILITY, INC.

                    CONTINENTAL DIALYSIS CENTER, INC.

                    CONTINENTAL DIALYSIS CENTER OF SPRINGFIELD-FAIRFAX, INC.

                    DIALYSIS SPECIALISTS OF DALLAS, INC.

                    EAST END DIALYSIS CENTER, INC.

                    ELBERTON DIALYSIS FACILITY, INC.

                    FLAMINGO PARK KIDNEY CENTER, INC.

                    LINCOLN PARK DIALYSIS SERVICES,   INC.

                    MASON-DIXON DIALYSIS FACILITIES, INC.

                    OPEN ACCESS SONOGRAPHY, INC.

                    PENINSULA DIALYSIS CENTER, INC.

                    RENAL TREATMENT CENTERS, INC.

                    RENAL TREATMENT CENTERS-CALIFORNIA, INC.

                    RENAL TREATMENT CENTERS-HAWAII, INC.

                    RENAL TREATMENT CENTERS-ILLINOIS, INC.

                    RENAL TREATMENT CENTERS-MID-ATLANTIC, INC.

                    RENAL TREATMENT CENTERS-NORTHEAST, INC.

                                     S-2


                    RENAL TREATMENT CENTERS-SOUTHEAST, INC.

                    RENAL TREATMENT CENTERS-WEST, INC.

                    RTC-TEXAS ACQUISITION, INC.

                    RTC TN, INC.

                    TOTAL ACUTE KIDNEY CARE, INC.

                    TOTAL RENAL CARE, INC.

                    TOTAL RENAL CARE OF COLORADO, INC.

                    TOTAL RENAL LABORATORIES, INC.

                    TOTAL RENAL RESEARCH, INC.

                    TOTAL RENAL SUPPORT SERVICES, INC.

                    TRC OF NEW YORK, INC.

                    TRI-CITY DIALYSIS CENTER, INC.

                    By:_____________________________________
                         Steven Udicious
                         Vice President, General Counsel and Secretary of each
                         of the above


                    TRC WEST, INC.

                    By:__________________________________
                         David Manheim
                         Vice President and Secretary


                                      S-3


                    RTC HOLDINGS, INC.

                    By:__________________________________
                         Steven J. Udicious
                         President


                    BEVERLY HILLS DIALYSIS PARTNERSHIP

                         By:  TOTAL RENAL CARE, INC.
                         Its:      General Partner


                                    By:____________________________
                                         Steven Udicious
                                         Vice President, General Counsel and
                                         Secretary


                    CRESCENT CITY DIALYSIS PARTNERSHIP

                         By:  TOTAL RENAL CARE, INC.
                         Its:      General Partner


                                    By:____________________________
                                         Steven Udicious
                                         Vice President, General Counsel and
                                         Secretary

                                      S-4


                    HOUSTON KIDNEY CENTER/TOTAL RENAL
                    CARE INTEGRATED SERVICE
                    NETWORK LIMITED PARTNERSHIP

                         By:  TOTAL RENAL CARE, INC.
                         Its:    General Partner


                                    By:____________________________
                                         Steven Udicious
                                         Vice President, General Counsel and
                                         Secretary


                    KENNER REGIONAL DIALYSIS PARTNERSHIP

                         By:  TOTAL RENAL CARE, INC.
                         Its:    General Partner


                                    By:____________________________
                                         Steven Udicious
                                         Vice President, General Counsel and
                                         Secretary


                    SUNRISE DIALYSIS PARTNERSHIP

                         By:  TOTAL RENAL CARE, INC.
                         Its:      General Partner


                                    By:____________________________
                                         Steven Udicious
                                         Vice President, General Counsel and
                                         Secretary


                                      S-5


                    TOTAL RENAL CARE/PERALTA RENAL CENTER PARTNERSHIP

                         By:  TOTAL RENAL CARE, INC.
                         Its:      General Partner


                                    By ____________________________
                                         Steven Udicious
                                         Vice President, General Counsel and
                                         Secretary


                    TOTAL RENAL CARE/PIEDMONT DIALYSIS PARTNERSHIP

                         By:  TOTAL RENAL CARE, INC.
                         Its:      General Partner


                                    By:____________________________
                                         Steven Udicious
                                         Vice President, General Counsel and
                                         Secretary


                    TOTAL RENAL CARE TEXAS LIMITED PARTNERSHIP

                         By:  TOTAL RENAL CARE, INC.
                         Its:      General Partner

                                    By:____________________________
                                         Steven Udicious
                                         Vice President, General Counsel and
                                         Secretary

                                      S-6


                    TRC-INDIANA, LLC

                         By:  TOTAL RENAL CARE, INC.
                         Its:      Manager


                                    By:____________________________
                                         Steven Udicious
                                         Vice President, General Counsel and
                                         Secretary


                    TOTAL RENAL CARE OF UTAH, L.L.C.

                         By:  TOTAL RENAL CARE, INC.


                                    By:____________________________
                                         Steven Udicious
                                         Vice President, General Counsel and
                                         Secretary

                                      S-7


INITIAL PURCHASERS
- ------------------

CREDIT SUISSE FIRST BOSTON CORPORATION


By:__________________________________
Name:
Title:


BANC OF AMERICA SECURITIES LLC


By:__________________________________
Name:
Title:


SUNTRUST EQUITABLE SECURITIES CORPORATION


By:_________________________________
Name:
Title:


BNY CAPITAL MARKETS, INC.


By:_________________________________
Name:
Title:


SCOTIA CAPITAL (USA) INC.


By:_________________________________
Name:
Title:


                                      S-8

EX-5.1

                                                                     Exhibit 5.1


                                 April 11, 2001



Credit Suisse First Boston Corporation
Banc of America Securities LLC
SunTrust Equitable Securities Corporation
Scotia Capital (USA) Inc.
BNY Capital Markets, Inc.
c/o Credit Suisse First Boston Corporation
11 Madison Avenue
New York, New York 10172


Ladies and Gentlemen:

          We have acted as special counsel to DaVita Inc., a Delaware
corporation (the "Issuer"), and the subsidiary guarantors identified on Schedule
A attached hereto (the "Guarantors"), in connection with the Operative Documents
(as defined below), including that certain Purchase Agreement (the "Purchase
Agreement"), dated April 6, 2001, by and among the Issuer, the Guarantors and
the Initial Purchasers named therein (collectively, the "Purchasers"), relating
to the sale by the Issuer of $225,000,000 aggregate principal amount of the
Issuer's 9  1/4% Senior Subordinated Notes due 2011 (the "Notes"). This opinion
is delivered to you in compliance with Section 9(e) of the Purchase Agreement.
Capitalized terms used in this opinion which are not defined herein shall have
the meanings given to them in the Purchase Agreement.

          In connection with this opinion, we have examined executed originals,
counterparts or copies identified to our satisfaction as being true copies of
such certificates, records, documents or other instruments as we have deemed
necessary or appropriate to enable us to render the opinions expressed below.
These certificates, records, documents and other instruments included the
following:

          (a)  The Certificate of Incorporation of the Issuer, as amended to
date, and comparable organizational documents of the Guarantors;

          (b)  The Bylaws of the Issuer, as amended to date, and comparable
organizational documents of the Guarantors;


Credit Suisse First Boston Corporation
Banc of America Securities LLC
SunTrust Equitable Securities Corporation
Scotia Capital (USA) Inc.
BNY Capital Markets, Inc.
April 11, 2001
Page 2

          (c)  The records of certain proceedings and actions taken by the
Issuer and the Guarantors relating to the transactions contemplated by the
Purchase Agreement, which have been certified to us as constituting all of the
proceedings and actions relating thereto;

          (d)  The Purchase Agreement;

          (e)  The Indenture, the form of Series A Notes and the form of Series
B Notes attached to the Indenture and the form of Subsidiary Guarantees attached
to the Indenture; and

          (f)  The Registration Rights Agreement.

          The documents referenced in items (d) through (f) above are
collectively referred to herein as the "Operative Documents."

          We have been furnished with, and with your consent have relied upon,
certificates of officers of the Issuer and the Guarantors with respect to
certain factual matters.  In addition, we have obtained and relied upon such
certificates and assurances from public officials as we have deemed necessary.
In all of our examinations, we have assumed the authenticity of all documents
submitted to us as original or certified documents, the genuineness of all
signatures on original or certified documents, the conformity to original
documents of all documents submitted to us as copies thereof and the correctness
and accuracy of all facts not independently established by us set forth in all
certificates and reports identified in this opinion.

          We have investigated such questions of law for the purpose of
rendering this opinion as we have deemed necessary.  We are attorneys duly
admitted and qualified to practice only in the State of California, and we are
opining herein as to the effect on the subject transactions of only United
States federal law, the General Corporation Law of the State of Delaware and the
laws of the State of California.  We are not opining on, and assume no
responsibility as to the applicability to, or the effect on any of the matters
covered herein of,


Credit Suisse First Boston Corporation
Banc of America Securities LLC
SunTrust Equitable Securities Corporation
Scotia Capital (USA) Inc.
BNY Capital Markets, Inc.
April 11, 2001
Page 3

the laws of any other jurisdiction. We note that the Operative Documents are, by
their terms, governed by the laws of the State of New York. We are not admitted
in New York and we are not opining as to the laws of the State of New York. With
your consent, we are delivering the opinion set forth herein assuming that the
Operative Documents are governed by the laws of the State of California (without
reference to the choice of law principles thereunder). Without independent check
or verification, we are not aware of any exceptions to enforceability of the
Operative Documents under the laws governing the same that would be required to
be stated in our opinion if we were opining as to the laws governing such
documents but are not so stated in our opinion due to the fact that our opinion
is given with respect to California law. We are not expressing any opinion as to
the effect of compliance by the Purchasers with any state or federal laws or
regulations applicable to the transactions because of the nature of any of their
businesses. We express no opinion as to state securities or "blue sky" laws. In
addition, we are not expressing any opinion as to the effect of compliance with
applicable law by any party to the Operative Documents other than the Issuer and
the Guarantors.

          To the extent that the obligations of the Issuer or the Guarantors may
be dependent upon such matters, we have assumed for purposes of this opinion,
other than with respect to the Issuer and the Guarantors, that each party to the
agreements and contracts referred to herein is duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization; that
each such other party has the requisite corporate or other organizational power
and authority to perform its obligations under such agreements and contracts, as
applicable; and that such agreements and contracts have been duly authorized,
executed and delivered by, and each of them constitutes the legally valid and
binding obligation of, such other parties, as applicable, enforceable against
such other parties in accordance with their respective terms.

          On the basis of the foregoing, and in reliance thereon, and subject to
the limitations, qualifications and exceptions set forth below, we are of the
opinion that:

          (1)  The Issuer has been duly organized, is validly existing and is in
good standing under the laws of the State of Delaware and has the corporate
power and authority to


Credit Suisse First Boston Corporation
Banc of America Securities LLC
SunTrust Equitable Securities Corporation
Scotia Capital (USA) Inc.
BNY Capital Markets, Inc.
April 11, 2001
Page 4

carry on its business as described in the Offering Circular and to own, lease
and operate its properties;

          (2)  The Series A Notes have been duly authorized and, when executed
and authenticated in accordance with the provisions of the Indenture and
delivered to and paid for by the Purchasers in accordance with the terms of the
Purchase Agreement, will be entitled to the benefits of the Indenture and will
be valid and binding obligations of the Issuer, enforceable in accordance with
their terms.

          (3)  The Subsidiary Guarantees have been duly authorized and, when the
Series A Notes are executed and authenticated in accordance with the provisions
of the Indenture and delivered to and paid for by the Purchasers in accordance
with the terms of the Purchase Agreement, the Subsidiary Guarantees endorsed
thereon will be valid and binding obligations of the Guarantors, enforceable in
accordance with their terms.

          (4)  The Indenture has been duly authorized, executed and delivered by
the Issuer and each Guarantor and is a valid and binding agreement of the Issuer
and each Guarantor, enforceable against the Issuer and each Guarantor in
accordance with its terms.

          (5)  The Purchase Agreement has been duly authorized, executed and
delivered by the Issuer and the Guarantors.

          (6)  The Registration Rights Agreement has been duly authorized,
executed and delivered by the Issuer and the Guarantors and is a valid and
binding agreement of the Issuer and each Guarantor, enforceable against the
Issuer and each Guarantor in accordance with its terms.

          (7)  The Series B Notes have been duly authorized and, when executed
and authenticated in accordance with the provisions of the Indenture and
delivered in exchange for Series A Notes in accordance with the provisions of
the Indenture and the Exchange Offer, will be entitled to the benefits of the
Indenture and will be valid and binding obligations of the Issuer, enforceable
in accordance with their terms.


Credit Suisse First Boston Corporation
Banc of America Securities LLC
SunTrust Equitable Securities Corporation
Scotia Capital (USA) Inc.
BNY Capital Markets, Inc.
April 11, 2001
Page 5

          (8)  When the Series B Notes have been executed and authenticated in
accordance with the provisions of the Indenture and delivered in exchange for
Series A Notes in accordance with the provisions of the Indenture and Exchange
Offer, the Subsidiary Guarantees endorsed thereon will be valid and binding
obligations of the Guarantors, enforceable in accordance with their terms.

          (9)  The statements under the captions "Certain Relationships and
Related Transaction," "Description of Debt" "Description of Notes," and "Federal
Income Tax Consequences to Non-U.S. Holders" in the Offering Circular, insofar
as such statements constitute a summary of legal matters, documents or
proceedings referred to therein, fairly present in all material respects such
legal matters, documents or proceedings.

          (10) Provided the Notes are sold in the manner contemplated by the
Purchase Agreement, the execution, delivery and performance of the Purchase
Agreement and the other Operative Documents by the Issuer and each of the
Guarantors, compliance by the Issuer and each of the Guarantors with all the
provisions thereof and the consummation of the transactions contemplated thereby
will not (i) require any consent, approval, authorization or other order of any
California or federal court, regulatory body, administrative agency or other
governmental body (except  such as have been obtained or as may be required
under the securities or Blue Sky laws of the various states and, with respect to
the Registration Rights Agreement, the Securities Act and the Trust Indenture
Act) or (ii) conflict with or constitute a breach of any of the terms or
provisions of, or a default under, (A) the charter or by-laws or other
organizational documents of the Issuer or any of its subsidiaries or (B) the
Credit Facilities, after receipt of any required consents, which consents have
been obtained; the Indenture, dated as of June 12, 1996, between Renal Treatment
Centers, Inc. and PNC Bank, National Association, including the first and second
supplemental indentures thereto; the Guaranty, dated March 31, 1998, made by the
Issuer in favor of PNC Bank, National Association; or the Indenture, dated as of
November 18, 1998, between the Issuer  and United States Trust Company of New
York except, with respect to clause (ii)(B), for any breach or default which
would not, singly or in the aggregate, have a Material Adverse Effect; or (ii)
violate or conflict with those laws, rules and regulations which, in our
experience, are normally applicable to transactions of the type contemplated by
the Operative Documents.


Credit Suisse First Boston Corporation
Banc of America Securities LLC
SunTrust Equitable Securities Corporation
Scotia Capital (USA) Inc.
BNY Capital Markets, Inc.
April 11, 2001
Page 6

          (11) The Issuer is not and, upon the offering and sale of the Series A
Notes and the application of the net proceeds thereof as described in the
Offering Circular, will not be an "investment company" or a company "controlled"
by an "investment company" as such term is defined in the Investment Company Act
of 1940, as amended.

          (12) The Indenture complies as to form in all material respects with
the requirements of the Trust Indenture Act of 1939, as amended (the "TIA"), and
the rules and regulations of the Commission applicable to an indenture which is
qualified thereunder.  It is not necessary in connection the offer, sale and
delivery of the Series A Notes to the Purchasers in the manner contemplated by
the Purchase Agreement or in connection with the Exempt Resales to qualify the
Indenture under the TIA.

          (13) No registration under the Act is required for the sale of the
Series A Notes to the Purchasers as contemplated by the Purchase Agreement or
for the Exempt Resales assuming (i) each Purchaser is a QIB, (ii) the accuracy
of, and compliance with, the Purchasers' representations and agreements
contained in Section 7 of the Purchase Agreement and (iii) the accuracy of the
Issuer's and the Guarantors' representations contained in Sections 5(h), 6(dd),
(ee), (ff), (gg), (hh), (ii) and (jj) of the Purchase Agreement.

          Our opinions set forth in paragraphs (2), (3), (4), (6), (7) and (8)
above are subject to:

          (i)  the effect of any bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or similar laws affecting the enforcement of
creditors' rights generally (including, without limitation, the effect of
statutory or other laws regarding fraudulent transfers or preferential
transfers);

          (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability as
applied by the court before which any proceeding therefor may be brought
(regardless of whether such enforcement is considered in a proceeding at law or
in equity);


Credit Suisse First Boston Corporation
Banc of America Securities LLC
SunTrust Equitable Securities Corporation
Scotia Capital (USA) Inc.
BNY Capital Markets, Inc.
April 11, 2001
Page 7

          (iii)  limitations imposed under applicable law, court decisions or
public policy which limit the enforceability of indemnification or contribution
provisions;

          (iv)   the effect of California Civil Code 1670.5, which provides that
a court may refuse to enforce, or may limit the application of, a contract or
any clause thereof which the court finds as a matter of law to have been
unconscionable at the time it was made;

          (v)    the effect of California statutory provisions and case law that
provide that, in certain circumstances, a surety or guarantor may be exonerated
if the creditor materially alters the original obligation of the principal
without the consent of the guarantor, elects remedies for default which impair
the subrogation rights of the surety or guarantor against the principal or
otherwise takes any action without notifying the guarantor which materially
prejudices the surety or guarantor.  Union Bank v. Gradsky, 265 Cal. App. 2d 40
                                     ---------------------
(1968).  However, there is also authority to the effect that a surety or
guarantor may validly waive such rights if such waivers are expressly set forth
in the guaranty.  Krueger v. Bank of America, 145 Cal. App. 3d 204, 193 Cal.
                  --------------------------
Rptr. 322 (1983) and Section 2856 of the California Civil Code; but see Cathay
                                                                        ------
Bank v. Lee, 14 Cal App. 4th 1533, 18 Cal. Rptr. 2d 420 (1993), in which the
- -----------
court held that a waiver of a guarantor's rights must be sufficiently explicit.
Therefore, we express no opinion with respect to the effect of (a)(1) any
modification or amendment of the obligations of the Issuer or any Guarantor
which materially increases such obligations and correspondingly the Guarantors'
obligations in respect thereof; (2) any election of remedies by the Trustee
following the occurrence of an event of default with respect to the obligations
of the Issuer; or (3) any other action by the Trustee which materially
prejudices the Guarantors pursuant to the Operative Documents, if, in any such
instance, such modification, election or action occurs without notice to the
Guarantors and without granting to the Guarantors an opportunity to cure any
default by the Issuer; or (b) any purported waiver by any of the Guarantors that
does not comply with any requirements of explicitness and/or specificity imposed
by any court;

          (vi)   the effect, if any, of limitations arising from certain state
and federal court decisions involving statutes, public policy or principles of
equity and holding that (1) certain covenants and provisions of lending and
security agreements, including those


Credit Suisse First Boston Corporation
Banc of America Securities LLC
SunTrust Equitable Securities Corporation
Scotia Capital (USA) Inc.
BNY Capital Markets, Inc.
April 11, 2001
Page 8

allowing for acceleration of indebtedness due under debt instruments upon the
occurrence of certain events, impose restrictions or obligations on the borrower
and it cannot be demonstrated that the enforcement of such restrictions or
obligations upon the occurrence of such events is reasonably necessary for the
protection of the lender; and (2) under certain circumstances, purported waivers
of the benefits of statutory provisions or common law rights are unenforceable;

          (vii)   the validity or enforceability of any provision of the
Operative Documents to the extent such provision violates the law of the State
of California that provides that in a contract permitting one party thereto to
recover attorneys' fees, the prevailing party in any action to enforce any
provision of such contract shall be entitled to recover its reasonable
attorneys' fees;

          (viii)  the enforceability under certain circumstances of provisions
waiving unknown future rights and of provisions stating that rights or remedies
are not exclusive, that every right or remedy is cumulative and may be exercised
in addition to or with any other right or remedy, that election of some
particular remedy may be exercised without notice or that failure to exercise or
delay exercising rights or remedies does not operate as a waiver of such right
or remedy;

          (ix)    limitations on the rights or remedies available to any party
insofar as such party may take discretionary action that is arbitrary,
unreasonable or capricious, or is not taken in good faith or in a commercially
reasonable manner, whether or not such action is permitted under the Notes and
the related Subsidiary Guarantees; and

          (x)     the enforceability, under certain circumstances, of provisions
imposing a payment obligation with respect to the Issuer's registration
obligations may be limited by applicable law.

          We further advise you that in our capacity as special counsel for the
Issuer, we have participated in conferences with officers and other
representatives of the Issuer, representatives of the independent public
accountants for the Issuer and representatives of the


Credit Suisse First Boston Corporation
Banc of America Securities LLC
SunTrust Equitable Securities Corporation
Scotia Capital (USA) Inc.
BNY Capital Markets, Inc.
April 11, 2001
Page 9

Purchasers at which the contents of the Offering Circular and related matters
were discussed. Although we do not pass upon and do not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Offering Circular (except as indicated in paragraph (9) above)
and have made no independent check or verification thereof, on the basis of the
foregoing (relying as to materiality to the extent we deem appropriate upon the
statements of officers and other representatives of the Issuer), no facts have
come to our attention that have caused us to believe that the Offering Circular
(including the documents incorporated by reference, as amended) as of its date
and as of the date hereof contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading (it being understood that we express no opinion on the
financial statements or other financial and statistical (other than industry)
data included or incorporated by reference in the Offering Circular).

         Our opinion in paragraph (10) above as to the lack of required
consents or approvals of governmental authorities is based upon our review of
those statutes, rules and regulations which, in our experience, are normally
applicable to transactions of the type contemplated by the Purchase Agreement
and in addition does not cover federal or state antifraud statutes, rules or
regulations.

          This opinion is rendered to you solely for your benefit in connection
with the Operative Documents and the transactions associated therewith.  This
opinion may not be relied upon by you for any other purpose, or quoted,
circulated, referred or delivered to or relied upon by any other person for any
purpose, without our prior express written consent.

                              Very truly yours,
                               /s/ Riordan & McKinzie



                                  SCHEDULE A
                                  ----------

                                  Guarantors


Beverly Hills Dialysis Partnership
Carroll County Dialysis Facility, Inc.
Continental Dialysis Center, Inc.
Continental Dialysis Center of Springfield-Fairfax, Inc.
Crescent City Dialysis Partnership
Dialysis Specialists of Dallas, Inc.
East End Dialysis Center, Inc.
Elberton Dialysis Center, Inc.
Flamingo Park Kidney Center, Inc.
Houston Kidney Center/Total Renal Care Integrated Service Network LP
Kenner Regional Dialysis Partnership
Lincoln Park Dialysis Services, Inc.
Mason-Dixon Dialysis Facilities, Inc.
Open Access Sonography, Inc.
Peninsula Dialysis Center, Inc.
Renal Treatment Centers, Inc.
Renal Treatment Centers - California, Inc.
Renal Treatment Centers - Hawaii, Inc.
Renal Treatment Centers - Illinois, Inc.
Renal Treatment Centers - Mid-Atlantic, Inc.
Renal Treatment Centers - Northeast, Inc.
Renal Treatment Centers - Southeast, Inc.
Renal Treatment Centers - West, Inc.
RTC Holdings, Inc.
RTC - Texas Acquisition, Inc.
RTC TN, Inc.
Sunrise Dialysis Partnership
Total Acute Kidney Care, Inc.
Total Renal Care, Inc.
Total Renal Care of Colorado, Inc.
Total Renal Care/Peralta Renal Center Partnership
Total Renal Care/Piedmont Dialysis Center Partnership
Total Renal Care Texas Limited Partnership
Total Renal Care of Utah, L.L.C.
TRC of New York, Inc.
TRC West, Inc.
Total Renal Laboratories, Inc.
Total Renal Research, Inc.
Total Renal Support Services, Inc.
TRC - Indiana LLC
Tri-City Dialysis Center, Inc.

EX-10.19

                                                                   EXHIBIT 10.19

                                 $400,000,000

                               CREDIT AGREEMENT

                            Dated as of May 3, 2001

                                     Among

                                  DAVITA INC.

                                  as Borrower
                                  -- --------

                                      and

                 THE INITIAL LENDERS, INITIAL ISSUING BANK AND
                         SWING LINE BANK NAMED HEREIN

         as Initial Lenders, Initial Issuing Bank and Swing Line Bank
         -- ------- -------  ------- ------- ---- --- ----- ---- ----

                                      and

                             BANK OF AMERICA, N.A.,

                             as Administrative Agent
                             -- -------------- -----

                                       and

                         BANC OF AMERICA SECURITIES LLC

                                       and

                           CREDIT SUISSE FIRST BOSTON

                 as Joint Lead Arrangers and Joint Book Managers
                 -- ----- ---- --------- --- ----- ---- --------

                                       and

                           CREDIT SUISSE FIRST BOSTON

                              as Syndication Agent
                              -- ----------- -----

                                      and

        THE BANK OF NEW YORK, THE BANK OF NOVA SCOTIA and SUNTRUST BANK

                            as Documentation Agents
                            -- ------------- ------





                                TABLE OF CONTENTS



Section                                                                                  Page
- -------                                                                                  ----



                                   ARTICLE I

                       DEFINITIONS AND ACCOUNTING TERMS
                                                                                      
SECTION 1.01. Certain Defined Terms.....................................................   1
SECTION 1.02. Computation of Time Periods; Other Definitional Provisions................  29
SECTION 1.03. Accounting Terms..........................................................  29
SECTION 1.04. Currency Equivalents Generally............................................  29

                                   ARTICLE II

           AMOUNTS AND TERMS OF THE ADVANCES AND THE LETTERS OF CREDIT

SECTION 2.01. The Advances and the Letters of Credit....................................  30
SECTION 2.02. Making the Advances.......................................................  32
SECTION 2.03. Issuance of and Drawings and Reimbursement Under Letters of Credit........  35
SECTION 2.04. Repayment of Advances.....................................................  37
SECTION 2.05. Termination or Reduction of the Commitments...............................  40
SECTION 2.06. Prepayments...............................................................  41
SECTION 2.07. Interest..................................................................  44
SECTION 2.08. Fees......................................................................  45
SECTION 2.09. Conversion of Advances....................................................  45
SECTION 2.10. Increased Costs, Etc......................................................  47
SECTION 2.11. Evidence of Debt..........................................................  49
SECTION 2.12. Payments and Computations.................................................  49
SECTION 2.13. Taxes.....................................................................  52
SECTION 2.14. Sharing of Payments, Etc..................................................  55
SECTION 2.15. Use of Proceeds...........................................................  55
SECTION 2.16. Defaulting Lenders........................................................  55

                                  ARTICLE III


              CONDITIONS OF LENDING AND ISSUANCES OF LETTERS OF CREDIT

SECTION 3.01. Conditions Precedent to Initial Extension of Credit.......................  58
SECTION 3.02. Conditions Precedent to Each Borrowing and Issuance and Renewal...........  61
SECTION 3.03. Determinations Under Section 3.01.........................................  62

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

SECTION 4.01. Representations and Warranties of the Borrower............................  62





                                      ii



                                   ARTICLE V

                           COVENANTS OF THE BORROWER
                                                                                  
SECTION 5.01. Affirmative Covenants................................................  67
SECTION 5.02. Negative Covenants...................................................  70
SECTION 5.03. Reporting Requirements...............................................  80
SECTION 5.04. Financial Covenants..................................................  82

                                  ARTICLE VI

                               EVENTS OF DEFAULT

SECTION 6.01. Events of Default....................................................  84
SECTION 6.02. Actions in Respect of the Letters of Credit upon Default ............  87


                                  ARTICLE VII

                                  THE AGENTS

SECTION 7.01. Appointment, Powers and Immunity.....................................  88
SECTION 7.02. Reliance by Agent....................................................  89
SECTION 7.03. Defaults.............................................................  89
SECTION 7.04. BofA, BAS and Affiliates.............................................  89
SECTION 7.05. Indemnification......................................................  90
SECTION 7.06. Non-Reliance on Agent and Other Lender Parties.......................  91
SECTION 7.07. Resignation of Administrative Agent..................................  91
SECTION 7.08. Release of Collateral................................................  92
SECTION 7.09. Release of Guarantor.................................................  92

                                 ARTICLE VIII

                                 MISCELLANEOUS

SECTION 8.01. Amendments, Etc......................................................  92
SECTION 8.02. Notices, Etc.........................................................  94
SECTION 8.03. No Waiver; Remedies..................................................  94
SECTION 8.04. Costs and Expenses...................................................  94
SECTION 8.05. Right of Set-off.....................................................  96
SECTION 8.06. Binding Effect.......................................................  96
SECTION 8.07. Assignments and Participations.......................................  97
SECTION 8.08. Execution in Counterparts............................................ 101
SECTION 8.09. No Liability of the Issuing Bank..................................... 101
SECTION 8.10. Confidentiality...................................................... 101
SECTION 8.11. Execution in Counterparts............................................ 102
SECTION 8.12. Governing Law, Jurisdiction, Etc..................................... 102
SECTION 8.13. Designation as Designated Senior Debt................................ 102
SECTION 8.14. WAIVER OF JURY TRIAL................................................. 104




                         iii


SCHEDULES
- ---------

Schedule I         -     Commitments and Applicable Lending Offices

Schedule II        -     Existing Letters of Credit

Schedule 4.01(b)   -     Subsidiaries

Schedule 4.01(d)   -     Authorizations

Schedule 4.01(f)   -     Litigation

Schedule 4.01(o)   -     Environmental Laws

Schedule 4.01(p)   -     Open Years

Schedule 4.01(q)   -     Liens

Schedule 4.01(r)   -     Investments

Schedule 4.01(s)   -     Facilities

Schedule 5.02 (b)  -     Debt


EXHIBITS
- --------

Exhibit A-1       -      Form of Term A Note

Exhibit A-2       -      Form of Term B Note

Exhibit A-3       -      Form of Revolving Credit Note

Exhibit B-1       -      Form of Notice of Borrowing

Exhibit B-2       -      Form of Notice of Swing Line Borrowing

Exhibit B-3       -      Form of Notice of Conversion

Exhibit C         -      Form of Assignment and Acceptance

Exhibit D         -      Form of Security Agreement

Exhibit E         -      Form of Subsidiary Guaranty

Exhibit F         -      Form of Opinion of Borrower's General Counsel

Exhibit G         -      Form of Opinion of Riordan & McKinzie

Exhibit H         -      Entities that are not Subsidiaries




                               CREDIT AGREEMENT

               CREDIT AGREEMENT dated as of May 3, 2001 among DAVITA INC., a
Delaware corporation (the "Borrower"), the banks, financial institutions and
other institutional lenders listed on the signature pages hereof under the
caption "Initial Lenders" (the "Initial Lenders"), BANK OF AMERICA, N.A.
("BofA"), as the initial issuer of Letters of Credit (as hereinafter defined)
hereunder (the "Initial Issuing Bank"), and as the provider of the Swing Line
Facility (as hereinafter defined) hereunder (the "Swing Line Bank"), THE BANK OF
NEW YORK ("BONY"), as Issuing Bank (as hereinafter defined), BANC OF AMERICA
SECURITIES LLC ("BAS") and CREDIT SUISSE FIRST BOSTON ("CSFB"), as the joint
book managers and joint lead arrangers (the "Book Managers") for the Facilities
(as hereinafter defined), BofA as the administrative agent (together with any
successor thereto appointed pursuant to Article VII, the "Administrative Agent")
for the Lender Parties (as hereinafter defined), BONY, THE BANK OF NOVA SCOTIA
AND SUNTRUST BANK, as documentation agents (the "Documentation Agents") and
CSFB, as syndication agent (the "Syndication Agent").

                            PRELIMINARY STATEMENTS:

               The Borrower has requested that the Lender Parties provide credit
facilities in an aggregate amount of $400,000,000 as provided herein, and the
Lender Parties have agreed to provide such credit facilities on the terms and
conditions of this Agreement.

               NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties hereto hereby
agree as follows:

                                   ARTICLE I

                       DEFINITIONS AND ACCOUNTING TERMS

          SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
          -----------------------------------
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and the plural forms of the terms defined):

               "Administrative Agent" has the meaning specified in the recital
          of parties to this Agreement.

               "Administrative Agent's Account" means the account of the
          Administrative Agent maintained by the Administrative Agent at its
          office at 101 North Tryon Street, 15th Floor, NC1-001-15-04,
          Charlotte, North Carolina 28255, ABA No. 053-000-196, Account No.
          13662122506, Reference: DaVita Inc., Attention: Corporate Credit
          Services, or such other account maintained by the Administrative Agent
          and designated by the Administrative Agent from time to time as such
          in a written notice to the Borrower and each of the Lender Parties.

               "Advance" means a Term A Advance, a Term B Advance, a Revolving
          Credit Advance, a Swing Line Advance or a Letter of Credit Advance, as
          the context may require.

               "Affiliate" means, with respect to any Person, any other Person
          that, directly or indirectly, controls, is controlled by or is under
          common control with such Person or is a director or officer of such
          Person. For purposes of this definition, the term "control" (including
          the terms "controlling," "controlled by" and "under common control
          with") of a Person means the possession, direct or indirect, of the
          power to vote 10% or more of the Voting Interests in such


                                       2

          Person or to direct or cause the direction of the management and
          policies of such Person, whether through the ownership of Voting
          Interests, by contract or otherwise.

               "Agents" means, collectively, the Administrative Agent, the Book
          Managers, the Syndication Agent, the Documentation Agents and each co-
          agent or sub-agent appointed by the Administrative Agent from time to
          time pursuant to Section 7.01(b).

               "Agreement" means this Credit Agreement, as the same may be
          amended, restated, supplemented or otherwise modified from time to
          time.

               "Agreement Value" means, for each Hedge Agreement, on any date of
          determination, an amount reasonably determined by the Administrative
          Agent equal to: (a) in the case of a Hedge Agreement documented
          pursuant to the Master Agreement (Multicurrency-Cross Border)
          published by the International Swap and Derivatives Association, Inc.
          (the "Master Agreement"), the amount, if any, that would be payable by
          any Loan Party to its counterparty in respect of such Hedge Agreement,
          as if (i) such Hedge Agreement was being terminated early on such date
          of determination, (ii) such Loan Party was the sole "Affected Party",
          and (iii) the Administrative Agent was the sole party determining such
          payment amount (with the Administrative Agent making such
          determination pursuant to the provisions of that specific form of
          Master Agreement); or (b) in the case of a Hedge Agreement traded on
          an exchange, the mark-to-market value of such Hedge Agreement, which
          will be the unrealized gain or loss on such Hedge Agreement to the
          Loan Party to such Hedge Agreement reasonably determined by the
          Administrative Agent based on the settlement price of such Hedge
          Agreement on such date of determination, or (c) in all other cases,
          the mark-to-market value of such Hedge Agreement, which will be the
          unrealized gain or loss on such Hedge Agreement to the Loan Party to
          such Hedge Agreement reasonably determined by the Administrative Agent
          as the amount, if any, by which (i) the present value of the future
          cash flows to be paid by such Loan Party exceeds (ii) the present
          value of the future cash flows to be received by such Loan Party
          pursuant to such Hedge Agreement; capitalized terms used and not
          otherwise defined in this definition shall have the respective
          meanings set forth in the above described Master Agreement.

               "Ancillary Services" means services relating to the needs of
          patients with "End Stage Renal Disease" and ancillary to the provision
          of Dialysis Services, including, but not limited to, the
          administration of erythropoietin, intradialytic parenteral nutrition,
          bone densitometry studies, EKGs, nerve conduction studies, Doppler
          Flow Testing, blood transfusions, pharmacy and laboratory services,
          technical services with respect to equipment used in connection with
          the provision of Dialysis Services and management services with
          respect to the provision of Dialysis Services.

               "Applicable Lending Office" means (a) with respect to each of the
          Lenders, the Base Rate Lending Office of such Lender in the case of a
          Base Rate Advance and the Eurodollar Lending Office of such Lender in
          the case of a Eurodollar Rate Advance and (b) with respect to the
          Issuing Bank and the Swing Line Bank, the Base Rate Lending Office of
          the Issuing Bank and the Swing Line Bank, respectively, for all
          purposes of this Agreement.

               "Applicable Margin" means (i) at any time during the period from
          the date of this Agreement through the date of receipt by the
          Administrative Agent of the Required Financial Information for the
          Measurement Period ending March 31, 2001, 1.75% per annum for Base
          Rate Advances under the Term A Facility and the Revolving Credit
          Facility and 1.75% per annum for Base Rate Advances under the Term B
          Facility and 2.75% per annum for Eurodollar Rate Advances under the
          Term A Facility and the Revolving Credit Facility and 2.75% per annum
          for


                                       3

          Eurodollar Rate Advances under the Term B Facility and (ii) at any
          time and from time to time thereafter, on any date of determination, a
          percentage per annum equal to the applicable percentage for the
          Performance Level set forth below as determined by reference to the
          Leverage Ratio for the most recently completed Measurement Period:



======================================================================================================================
                                                   Base Rate Advances                        Eurodollar Rate Advances
- ----------------------------------------------------------------------------------------------------------------------
                                                 Term A                                     Term A            Term
Performance          Leverage          Facility/Revolving Credit         Term B       Facility/Revolving       B
   Level               Ratio                    Facility                Facility       Credit Facility      Facility
- ----------------------------------------------------------------------------------------------------------------------
                                                                                             
I                   Less than          0.75%                           1.75%          1.75%                 2.75%
                    1.75x
- ----------------------------------------------------------------------------------------------------------------------
II                  Greater than or    1.25%                           1.75%          2.25%                 2.75%
                    equal to 1.75x
                    but less than
                    2.25x
- ----------------------------------------------------------------------------------------------------------------------
III                 Greater than or    1.50%                           1.75%          2.50%                 2.75%
                    equal to 2.25x
                    but less than
                    3.0x
- ----------------------------------------------------------------------------------------------------------------------
IV                  Greater than or    1.75%                           1.75%          2.75%                 2.75%
                    equal to 3.0x
                    but less than
                    3.75x
- ----------------------------------------------------------------------------------------------------------------------
V                   Greater than or    2.00%                           1.75%          3.00%                 2.75%
                    equal to 3.75x
======================================================================================================================


               For the purposes of:

                         (A)  clause (ii) of the immediately preceding sentence,
                    the Applicable Margin for each Base Rate Advance shall be
                    determined by reference to the Performance Level in effect
                    from time to time and the Applicable Margin for each
                    Eurodollar Rate Advance shall be determined by reference to
                    the Performance Level in effect on the first day of each
                    Interest Period for such Eurodollar Rate Advance; and

                         (B)  determining the Performance Level in respect of
                    the Applicable Margin at any date of determination, changes
                    in the Performance Level shall be effective on the date on
                    which the Administrative Agent and the Lender Parties
                    receive the Required Financial Information reflecting such
                    change; provided, however, that if the Borrower has not
                    delivered to the Administrative Agent and the Lender Parties
                    all of the information required under this clause (B) within
                    five Business Days after the date on which such information
                    is otherwise required under Section 5.03(b) or 5.03(c), as
                    applicable, the Performance Level shall be deemed to be at
                    Performance Level IV for so long as such information has not
                    been submitted;


                                       4

               "Applicable Percentage" means, with respect to the Commitment
          Fee, (a) at any time during the period from the date of this Agreement
          through the date of receipt by the Administrative Agent of the
          Required Financial Information for the Measurement Period ending March
          31, 2001, 0.50% per annum and (b) at any time and from time to time
          thereafter, a rate per annum equal to the percentage set forth below
          opposite the applicable Performance Level as determined by reference
          to the Leverage Ratio for the most recently completed Measurement
          Period:



          ============================================================================================================
                Performance Level                   Leverage Ratio                         Commitment Fee
          ------------------------------------------------------------------------------------------------------------
                                                                                     
                        I                Less than 1.75x                                       0.375%
          ------------------------------------------------------------------------------------------------------------
                       II                Greater than or equal to 1.75x but                    0.375%
                                         less than 2.25x
          ------------------------------------------------------------------------------------------------------------
                       III               Greater than or equal to 2.25x but                    0.375%
                                         less than 3.0x
          ------------------------------------------------------------------------------------------------------------
                       IV                Greater than or equal to 3.0x but                     0.500%
                                         less than 3.75x
          ------------------------------------------------------------------------------------------------------------
                        V                Greater than or equal to 3.75x                        0.500%
          ============================================================================================================


          For the purposes of:


                         (A)  clause (b) of the immediately preceding sentence,
                    the Applicable Percentage for the Commitment Fee shall be
                    determined by reference to the Performance Level in effect
                    from time to time; and

                         (B)  determining the Performance Level in respect of
                    the Applicable Percentage at any date of determination,
                    changes in the Performance Level shall be effective on the
                    date on which the Administrative Agent and the Lender
                    Parties receive the Required Financial Information
                    reflecting such change; provided, however, that if the
                    Borrower has not delivered to the Administrative Agent and
                    the Lender Parties all of the information required under
                    this clause (B) within five Business Days after the date on
                    which such information is otherwise required under Section
                    5.03(b) or 5.03(c), as applicable, the Performance Level
                    shall be deemed to be at Performance Level IV for so long as
                    such information has not been submitted;

               "Appropriate Lender" means, at any time, (a) with respect to the
          Term A Facility, the Term B Facility or the Revolving Credit Facility,
          a Lender that has a Commitment with respect to such Facility at such
          time, (b) with respect to the Letter of Credit Facility, (i) the
          Issuing Bank and (ii) if the Revolving Credit Lenders have made Letter
          of Credit Advances pursuant to Section 2.03(c) that are outstanding at
          such time, each such Revolving Credit Lender and (c) with respect to
          the Swing Line Facility, (i) the Swing Line Bank and (ii) if the
          Revolving Credit Lenders have made Swing Line Advances pursuant to
          Section 2.02(b) that are outstanding at such time, each such Revolving
          Credit Lender.

               "Approved Fund" means any Person (other than a natural Person)
          that (i) is (or will be) an "accredited investor" (as defined in
          Regulation D under the Securities Act) engaged in making, purchasing,
          holding or otherwise investing in commercial loans and similar
          extensions of credit in the ordinary course of its business and (ii)
          is administered, advised or managed by (a) a Lender, (b) an Affiliate
          of a Lender or (c) an entity or an Affiliate of an entity that
          administers, advises or manages a Lender.


                                       5

               "Assignment and Acceptance" means an assignment and acceptance
          entered into by a Lender Party and an Eligible Assignee, and accepted
          by the Administrative Agent and, if applicable, the Borrower, in
          accordance with Section 8.07 and in substantially the form of Exhibit
          C hereto.

               "Assuming Lender" means an Eligible Assignee not previously a
          Lender that becomes a Lender hereunder pursuant to Section 2.05(d) and
          is acceptable to the Administrative Agent (whose acceptance shall not
          be unreasonably withheld or delayed) and to each Issuing Bank (in the
          sole discretion of each Issuing Bank).

               "Assumption Agreement" means an agreement by which an Eligible
          Assignee agrees to become a Lender hereunder pursuant to Section
          2.05(d), agreeing to be bound by all obligations of a Lender
          hereunder.

               "Available Amount" of any Letter of Credit means, at any time,
          the maximum amount available to be drawn under such Letter of Credit
          at such time (assuming compliance at such time with all conditions to
          drawing).

               "Base Rate" means a fluctuating interest rate per annum in effect
          from time to time, which rate per annum shall at all times be equal to
          the higher of:

                    (a)  the rate of interest established by BofA from time to
               time as its prime rate (which rate of interest may not be the
               lowest rate of interest charged by BofA to its customers); and

                    (b)  the Federal Funds Rate plus 0.50%.

               Any change in the Base Rate resulting from a change in the prime
          rate established by BofA shall become effective on the Business Day on
          which such change in the prime rate is announced by BofA.

               "Base Rate Advance" means an Advance that bears interest as
          provided in Section 2.07(a)(i).

               "Base Rate Lending Office" means, with respect to each of the
          Lender Parties, the office of such Lender Party specified as its "Base
          Rate Lending Office" opposite its name on Schedule I hereto or in the
          Assignment and Acceptance pursuant to which it became a Lender Party,
          as the case may be, or such other office of such Lender Party as such
          Lender Party may from time to time specify to the Borrower and the
          Administrative Agent for such purpose.

               "Borrower's Account" means such account of the Borrower as is
          agreed from time to time in writing between the Borrower and the
          Administrative Agent.

               "Borrower's Percentage" means, in respect of the sale or issuance
          of Equity Interests by any Subsidiary of the Borrower, the percentage
          of the common Equity Interests of such Subsidiary beneficially owned
          directly or indirectly by the Borrower after giving effect to such
          sale or issuance.

               "Borrowing" means a Term A Borrowing, a Term B Borrowing, a
          Revolving Credit Borrowing or a Swing Line Borrowing, as the context
          may require.


                                       6

               "Business Day" means a day of the year on which banks are not
          required or authorized by law to close in New York, New York or
          Charlotte, North Carolina, and, if the applicable Business Day relates
          to any Eurodollar Rate Advances, on which dealings are carried on in
          U.S. dollar deposits in the London interbank market.

               "Capital Assets" means, with respect to any Person, all
          equipment, fixed assets and real property or improvements of such
          Person, or replacements or substitutions therefor or additions
          thereto, that, in accordance with GAAP, have been or should be
          reflected as additions to property, plant or equipment on the balance
          sheet of such Person.

               "Capital Expenditures" means, with respect to any Person for any
          period, all expenditures made directly or indirectly by such Person
          during such period for Capital Assets (whether paid in cash or other
          consideration or accrued as a liability and including, without
          limitation, all expenditures for maintenance and repairs which are
          required, in accordance with GAAP, to be capitalized on the books of
          such Person). For purposes of this definition, the purchase price of
          equipment or other fixed assets that are purchased simultaneously with
          the trade-in of existing assets or with insurance proceeds shall be
          included in Capital Expenditures only to the extent of the gross
          amount by which such purchase price exceeds the credit granted by the
          seller of such assets for the assets being traded in at such time or
          the amount of such insurance proceeds, as the case may be.

               "Capitalized Lease" means any lease with respect to which the
          lessee is required to recognize concurrently the acquisition of
          property or an asset and the incurrence of a liability in accordance
          with GAAP.

               "Capitalized Lease Obligations" means, with respect to any
          Capitalized Lease, the amount required to be capitalized in the
          financial statements of the lessee in accordance with GAAP.

               "Cash Distributions" means, with respect to any Person for any
          period, all dividends and other distributions on any of the
          outstanding Equity Interests in such Person, all purchases,
          redemptions, retirements, defeasances or other acquisitions of any of
          the outstanding Equity Interests in such Person and all returns of
          capital to the stockholders, partners or members (or the equivalent
          persons) of such Person, in each case to the extent paid in cash by or
          on behalf of such Person during such period.

               "Cash Equivalents" means (a) securities with maturities of one
          year or less from the date of acquisition, issued, fully guaranteed or
          insured by the United States Government, (b) securities with
          maturities of one year or less from the date of acquisition issued,
          fully guaranteed or insured by any State of the United States of
          America or any political subdivision thereof rated at least AA- by
          S&P's Ratings Services or Aa3 by Moody's, or carrying an equivalent
          rating by a nationally recognized rating agency if both of the two
          named rating agencies cease publishing ratings of investments, (c)
          certificates of deposit, time deposits, overnight bank deposits,
          bankers' acceptances and repurchase agreements issued by a Qualified
          Issuer having maturities of 270 days or less from the date of
          acquisition, (d) commercial paper of an issuer rated at least A-2 by
          S&P's Ratings Services or P-2 by Moody's, or carrying an equivalent
          rating by a nationally recognized rating agency if both of the two
          named rating agencies cease publishing ratings of investments, and
          having maturities of 270 days or less from the date of acquisition,
          (e) money market accounts or funds, a substantial portion of the
          assets of which constitute Cash Equivalents described in clauses (a)
          through (d) above, with, issued by or managed by Qualified Issuers,
          and (f) money market accounts or funds, a substantial portion of the
          assets of which constitute Cash


                                       7

          Equivalents described in clauses (a) through (d) above, which money
          market accounts or funds have net assets of not less than $500,000,000
          and have the highest rating available of either S&P's Ratings Services
          or Moody's, or carrying an equivalent rating by a nationally
          recognized rating agency if both of the two named rating agencies
          cease publishing ratings of investments.

               "CERCLA" means the Comprehensive Environmental Response,
          Compensation and Liability Act of 1980, as amended from time to time.

               "CERCLIS" means the Comprehensive Environmental Response,
          Compensation and Liability Information System maintained by the U.S.
          Environmental Protection Agency.

               "CHAMPUS" means the United States Department of Defense Human
          Civilian Health and Medical Program of the Uniformed Services.

               "Change of Control" means, at any time:

               (a)  any "person" or "group" (each as used in Sections 13(d)(3)
          and 14(d)(2) of the Exchange Act) (i) becomes the "beneficial owner"
          (as defined in Rule 13d-3 of the Exchange Act), directly or
          indirectly, of Voting Interests in the Borrower (including through
          securities convertible into or exchangeable for such Voting Interests)
          representing 35% or more of the combined voting power of all of the
          Voting Interests in the Borrower (on a fully diluted basis) or (ii)
          otherwise has the ability, directly or indirectly, to elect a majority
          of the board of directors of the Borrower; or

               (b)  during any period of 24 consecutive months, whether
          commencing before or after the date of this Agreement, individuals who
          at the beginning of such 24-month period were Continuing Directors
          shall cease for any reason to constitute a majority of the board of
          directors of the Borrower;

               "Closing Date" means the first date on which all of the
          conditions precedent to the Initial Extension of Credit set forth in
          Article III are satisfied, which date shall occur on or prior to May
          4, 2001.

               "Collateral" means all of the "Collateral" referred to in the
          Collateral Documents and all of the other property and assets that are
          or are 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, collateral assignments, Security Agreement Supplements,
          security agreements, pledge agreements or other similar agreements
          delivered to the Administrative Agent and the Lender Parties pursuant
          to Section 3.01(a) or Section 5.01(j), and each of the other
          agreements, instruments or documents that creates or purports to
          create a Lien in favor of the Administrative Agent for the benefit of
          the Secured Parties.

               "Commitment" means a Revolving Credit Commitment, a Swing Line
          Commitment or a Letter of Credit Commitment, as the context may
          require.

               "Commitment Fee" has the meaning specified in Section 2.08(a).


                                       8

               "Confidential Information" means information that is furnished to
          the Administrative Agent or any of the Lender Parties by or on behalf
          of the Borrower or any of its Subsidiaries in a writing that is marked
          as confidential or otherwise on an expressly confidential basis, but
          does not include any such information that (a) is or becomes generally
          available to the public (other than as a result of a breach by the
          Administrative Agent or such Lender Party of its confidentiality
          obligations under this Agreement) or (b) is or becomes available to
          the Administrative Agent or such Lender Party from a source other than
          the Borrower or any of its Subsidiaries that is not, to the knowledge
          of the Administrative Agent or such Lender Party, acting in violation
          of a confidentiality agreement with the Borrower or any such
          Subsidiary.

               "Consolidated" refers to the consolidation of accounts in
          accordance with GAAP.

               "Consolidated Cash Taxes" means, with respect to any Person for
          any period, (a) the aggregate amount of all payments in respect of
          income taxes made in cash by such Person and its Subsidiaries to any
          applicable Governmental Authority during such period less (b) the
          aggregate amount of all cash refunds in respect of income taxes
          received by such Person and its Subsidiaries from any applicable
          Governmental Authority during such period, after giving effect, to the
          extent available, to the application of net operating losses available
          to such Person or any such Subsidiary.

               "Consolidated EBITDA" means, with respect to any Person for any
          period, the amount equal to (I) the sum of (a) the Consolidated Net
          Income of such Person and its Subsidiaries for such period plus (b)
          the sum of each of the following expenses that have been deducted in
          the determination of the Consolidated Net Income of such Person and
          its Subsidiaries for such period: (i) the Consolidated Interest
          Expense of such Person and its Subsidiaries for such period, (ii) all
          income tax expense (whether federal, state, local, foreign or
          otherwise) of such Person and its Subsidiaries for such period, (iii)
          all depreciation expense of such Person and its Subsidiaries for such
          period, (iv) all amortization expense of such Person and its
          Subsidiaries for such period and (v) all non-cash charges otherwise
          deducted in determining the Consolidated Net Income of such Person and
          its Subsidiaries for such period less all extraordinary gains added in
          determining the Consolidated Net Income of such Person and its
          Subsidiaries for such period; provided that for any period, the amount
          of non-cash charges arising from the write-off of current assets shall
          not be included in this subclause (v) plus (c) for each such period
          ending during the twelve-month period immediately following the
          closing of any acquisition permitted under Section 5.02(f), an amount
          equal to the Consolidated EBITDA (calculated on the basis as provided
          herein) for each such acquisition calculated on a pro forma basis as
          if such acquisition had occurred on the first day of the twelve-month
          period then ended, minus (d) any cash expenditures for such period
          relating to the non-cash charges set forth in subclause (b)(v) hereof,
          whether for such period or any prior period, plus (e) non-recurring
          charges incurred during such period not exceeding in the aggregate
          during the period from April 1, 2000 and continuing through the term
          of this Agreement $45,000,000 resulting from the write-off of accounts
          receivable and other related charges as a result of the pending third
          party carrier review of claims for Medicare reimbursement submitted by
          the Subsidiary of the Borrower operating the Borrower's Florida
          laboratory or other Governmental Reimbursement Program Costs, minus
          (II) in respect of (a) any Subsidiary sold in such period or (b) any
          assets sold or disposed of in such period as to which EBITDA
          attributable thereto can be determined, an amount equal to the
          Consolidated EBITDA (calculated on the basis as provided herein) for
          each such sale or disposition otherwise included in Consolidated
          EBITDA for such period.

               "Consolidated Interest Expense" means, with respect to any Person
          for any period, the gross interest expense accrued on all Debt of such
          Person and its Subsidiaries during such period,


                                       9

          determined on a Consolidated basis and in accordance with GAAP for
          such period, including, without limitation, (a) in the case of the
          Borrower, all fees paid or payable pursuant to Section 2.08(a), (b)
          commissions, discounts and other fees and charges paid or payable in
          connection with letters of credit (including, without limitation, the
          Letters of Credit), (c) all amortization of original issue discount in
          respect of all Debt of such Person and its Subsidiaries, (d) all
          dividends on Redeemable Preferred Interests, to the extent paid or
          payable in cash, and (e) the net payment, if any, paid or payable in
          connection with Hedge Agreements less the net credit, if any, received
          in connection with Hedge Agreements.

               "Consolidated Net Income" means, for any period, the net income
          (or net loss) of any Person and its Subsidiaries for such period,
          determined on a Consolidated basis and in accordance with GAAP.

               "Consolidated Pre-Minority EBITDA" means Consolidated EBITDA plus
          minority interests in income of consolidated Subsidiaries of the
          Borrower to the extent deducted in determining net income of the
          Borrower and its Subsidiaries on a Consolidated basis in the
          calculation of Consolidated EBITDA.

               "Constitutive Documents" means, with respect to any Person, the
          certificate of incorporation or registration (including, if
          applicable, certificate of change of name), articles of incorporation
          or association, memorandum of association, charter, bylaws,
          certificate of limited partnership, partnership agreement, trust
          agreement, joint venture agreement, certificate of formation, articles
          of organization, limited liability company operating or members
          agreement, joint venture agreement or one or more similar agreements,
          instruments or documents constituting the organization or formation of
          such Person.

               "Contingent Obligation" means, with respect to any Person, any
          Obligation or arrangement of such Person to guarantee or intended to
          guarantee any Debt, leases, dividends or other obligations ("primary
          obligations") of any other Person (the "primary obligor") in any
          manner, whether directly or indirectly, including, without limitation,
          (a) the direct or indirect guarantee, endorsement (other than for
          collection or deposit in the ordinary course of business), co-making,
          discounting with recourse or sale with recourse by such Person of the
          Obligation of a primary obligor, (b) the Obligation to make take-or-
          pay or similar payments, if required, regardless of nonperformance by
          any other party or parties to an agreement or (c) any Obligation of
          such Person, whether or not contingent, (i) to purchase any such
          primary obligation or any property constituting direct or indirect
          security therefor, (ii) to advance or supply funds (A) for the
          purchase or payment of any such primary obligation or (B) to maintain
          working capital, equity capital, net worth or other balance sheet
          condition or any income statement condition of the primary obligor or
          otherwise to maintain the solvency of the primary obligor, (iii) to
          purchase, lease or otherwise acquire property, assets, securities or
          services primarily for the purpose of assuring the owner of any such
          primary obligation of the ability of the primary obligor to make
          payment of such primary obligation or (iv) otherwise to assure or hold
          harmless the holder of such primary obligation against loss in respect
          thereof. The amount of any Contingent Obligation shall be deemed to be
          an amount equal to the stated or determinable amount of the primary
          obligation in respect of which such Contingent Obligation is made (or,
          if less, the maximum amount of such primary obligation for which such
          Person may be liable pursuant to the terms of the agreement,
          instrument or other document evidencing such Contingent Obligation)
          or, if not stated or determinable, the maximum reasonably anticipated
          liability in respect thereof (assuming such Person is required to
          perform thereunder), as determined by such Person in good faith.


                                       10

               "Continuing Director" means, for any period, an individual who is
          a member of the board of directors of the Borrower on the first day of
          such period or who has been nominated to the board of directors of the
          Borrower by a majority of the other Continuing Directors who were
          members of the board of directors of the Borrower at the time of such
          nomination.

               "Conversion", "Convert" and "Converted" each refer to a
          conversion of Advances of one Type into Advances of the other Type
          pursuant to Section 2.09 or 2.10.

               "Current Assets" means, with respect to any Person, all assets of
          such Person that, in accordance with GAAP, would be classified as
          current assets on the balance sheet of a company conducting a business
          the same as or similar to that of such Person, after deducting
          appropriate and adequate reserves therefrom in each case in which a
          reserve is proper in accordance with GAAP.

               "Current Liabilities" means, with respect to any Person, (a) all
          Debt of such Person that by its terms is payable on demand or matures
          within one year after the date of determination (excluding any Debt
          renewable or extendible, at the option of such Person, to a date more
          than one year from such date or arising under a revolving credit or
          similar agreement that obligates the lender or lenders to extend
          credit during a period of more than one year from such date), (b) all
          amounts of Funded Debt of such Person required to be paid or prepaid
          within one year after such date and (c) all other items (including,
          without limitation, taxes accrued as estimated and trade payables
          otherwise excluded from Debt under clause (b) of the definition
          thereof) that, in accordance with GAAP, would be classified on the
          balance sheet of such Person as current liabilities of such Person.

               "Debt" means, with respect to any Person (without duplication)
          (a) all indebtedness of such Person for borrowed money, (b) all
          Obligations of such Person for the deferred purchase price of property
          or services (other than unsecured trade payables incurred in the
          ordinary course of such Person's business, provided that at all times
          during which the aggregate amount of such payables exceed 50% of
          Consolidated EBITDA for the most recent Measurement Period, "Debt"
          shall include all such payables which are past due for more than 60
          days (excluding payables being contested in good faith) after the date
          on which such payable was first past due), (c) all Obligations of such
          Person evidenced by notes, bonds, debentures or other similar
          instruments, or upon which interest payments are customarily made, (d)
          all Obligations of such Person created or arising under any
          conditional sale or other title retention agreement with respect to
          property acquired by such Person (even though the rights and remedies
          of the seller or lender under such agreement in the event of default
          are limited to repossession or sale of such property), (e) all
          Capitalized Lease Obligations of such Person, (f) all Obligations,
          contingent or otherwise, of such Person under acceptance, letter of
          credit or similar facilities, (g) all Obligations of such Person to
          purchase, redeem, retire, defease or otherwise make any payment in
          respect of any preferred Equity Interests in such Person or any other
          Person, valued, at the greater of its voluntary or involuntary
          liquidation preference plus accrued and unpaid dividends, (h) all
          Obligations of such Person in respect of Hedge Agreements, take-or-pay
          agreements or other similar arrangements, valued, in the case of Hedge
          Agreements, at the Agreement Value thereof, (i) all Obligations of
          such Person under any synthetic lease, tax retention operating lease,
          off-balance sheet loan or similar off-balance sheet financing if the
          transaction giving rise to such Obligation is considered indebtedness
          for borrowed money for tax purposes but is classified as an operating
          lease in accordance with GAAP; (j) all Contingent Obligations, and (k)
          all indebtedness and other payment Obligations referred to in clauses
          (a) through (j) above of another Person secured by (or for which the
          holder of such indebtedness or other payment Obligations has an
          existing right, contingent or otherwise, to be secured by) any Lien on
          property (including, without limitation,


                                       11

          accounts and contract rights) owned by such Person, even though such
          Person has not assumed or become liable for the payment of such
          indebtedness or other payment Obligations: provided that for the
          purposes of this subclause (k) the amount thereof shall be equal to
          the lesser of (i) the amount of such indebtedness or other payment
          Obligations and (ii) the fair market value of the property subject to
          such Lien.

               "Default" means any Event of Default or any event or condition
          that would constitute an Event of Default but for the requirement that
          notice be given or time elapse or both.

               "Defaulted Advance" means, with respect to any Lender Party at
          any time, the portion of any Advance required to be made by such
          Lender Party to the Borrower pursuant to Section 2.01 or 2.02 at or
          prior to such time that has not been made by such Lender Party or by
          the Administrative Agent for the account of such Lender Party pursuant
          to Section 2.02(e) as of such time. In the event that a portion of a
          Defaulted Advance shall be deemed made pursuant to Section 2.16(a),
          the remaining portion of such Defaulted Advance shall be considered a
          Defaulted Advance originally required to be made pursuant to Section
          2.01 on the same date as the Defaulted Advance so deemed made in part.

               "Defaulted Amount" means, with respect to any Lender Party at any
          time, any amount required to be paid by such Lender Party to the
          Administrative Agent or any other Lender Party hereunder or under any
          other Loan Document at or prior to such time that has not been so paid
          as of such time, including, without limitation, any amount required to
          be paid by such Lender Party to (a) the Swing Line Bank pursuant to
          Section 2.02(b) to purchase a portion of a Swing Line Advance made by
          the Swing Line Bank, (b) the Issuing Bank pursuant to Section 2.03(b)
          to purchase a portion of a Letter of Credit Advance made by the
          Issuing Bank, (c) the Administrative Agent pursuant to Section 2.02(e)
          to reimburse the Administrative Agent for the amount of any Advance
          made by the Administrative Agent for the account of such Lender Party,
          (d) any other Lender Party pursuant to Section 2.14 to purchase any
          participation in Advances owing to such other Lender Party and (e) the
          Administrative Agent or the Issuing Bank pursuant to Section 7.05 to
          reimburse the Administrative Agent or the Issuing Bank for such Lender
          Party's ratable share of any amount required to be paid by the Lender
          Parties to the Administrative Agent or the Issuing Bank as provided
          therein. In the event that a portion of a Defaulted Amount shall be
          deemed paid pursuant to Section 2.16(b), the remaining portion of such
          Defaulted Amount shall be considered a Defaulted Amount originally
          required to be paid hereunder or under any other Loan Document on the
          same date as the Defaulted Amount so deemed paid in part.

               "Defaulting Lender" means, at any time, any Lender Party that, at
          such time, (a) owes a Defaulted Advance or a Defaulted Amount or (b)
          shall take any action or be the subject of any action or proceeding of
          a type described in Section 6.01(f).

               "Dialysis Services" means hemodialysis services and peritoneal
          dialysis services, hemoperfusion, plasmapheresis, continuous
          arteriovenous hemofiltration and bio-medical services related to the
          foregoing.

               "Documentation Agents" has the meaning specified in the recital
          of parties to this Agreement.

               "Domestic Person" means a Person that is organized under the laws
          of, or whose property is located in, a jurisdiction within the United
          States.


                                      12

                  "Domestic Subsidiary" means, at any time, any of the direct or
         indirect Subsidiaries of the Borrower that is incorporated or organized
         under the laws of any state of the United States of America or the
         District of Columbia.

                  "Eligible Assignee" means (a) with respect to any Facility
         (other than the Letter of Credit Facility), (i) a Lender; (ii) an
         Affiliate of a Lender or an Approved Fund of a Lender; (iii) a
         commercial bank organized under the laws of the United States, or any
         State thereof having a combined capital and surplus of at least
         $100,000,000; (iv) a savings and loan association or savings bank
         organized under the laws of the United States, or any State thereof
         having a combined capital and surplus of at least $100,000,000; (v) a
         commercial bank organized under the laws of any other country which is
         a member of the OECD, or a political subdivision of any such country,
         and having a combined capital and surplus of at least $100,000,000,
         provided that such bank is acting through a branch, agency or Affiliate
         located in the United States or managed and controlled by a branch,
         agency or affiliate located in the United States; (vi) the central bank
         of any country that is a member of the OECD; (vii) a finance company,
         insurance company or other financial institution, fund (whether a
         corporation, partnership, trust or other entity) or other entity that
         is engaged in making, purchasing or otherwise investing in commercial
         loans in the ordinary course of its business and having total assets
         (inclusive of assets of Affiliates or Approved Funds thereof) of at
         least $100,000,000; and (viii) any other Person approved by the
         Administrative Agent and, provided no Event of Default is continuing,
         the Borrower, provided that the approval of the Administrative Agent
         and the Borrower, when required, shall not be unreasonably withheld or
         delayed, and (b) with respect to the Letter of Credit Facility, a
         Person that is an Eligible Assignee under subclause (iii) or (v) of
         clause (a) of this definition and is approved by the Administrative
         Agent (such approval not to be unreasonably withheld or delayed);
         provided, however, that neither any Loan Party nor any Affiliate of a
         Loan Party shall qualify as an Eligible Assignee under this definition.

                  "Environmental Action" means any outstanding action, suit,
         demand, demand letter, claim, notice of noncompliance or violation,
         notice of liability or potential liability, investigation, proceeding,
         consent order or consent agreement, abatement order or other order or
         directive (conditional or otherwise) relating in any way to any
         Environmental Law, any Environmental Permit or any Hazardous Materials
         or arising from alleged injury or threat to health, safety, natural
         resources or the environment, including, without limitation, (a) by any
         Governmental Authority for enforcement, cleanup, removal, response,
         remedial or other actions or damages and (b) by any applicable
         Governmental Authority or any other third party for damages,
         contribution, indemnification, cost recovery, compensation or
         injunctive relief.

                  "Environmental Law" means any Requirement of Law relating to
         (a) the generation, use, handling, transportation, treatment, storage,
         disposal, release or discharge of Hazardous Materials, (b) pollution or
         the protection of the environment, health, safety or natural resources
         or (c) occupational safety and health, industrial hygiene, land use or
         the protection of human, plant or animal health or welfare, including,
         without limitation, CERCLA, in each case as amended from time to time,
         and including the regulations promulgated and the rulings issued from
         time to time thereunder.

                  "Environmental Permit" means any permit, approval,
         identification number, license or other authorization required under
         any Environmental Law.

                  "Equipment" has the meaning specified in Section 1(a) of the
         Security Agreement.


                                      13

                  "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 other 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 other
         acquisition from such Person of such shares (or such other interests),
         and all of the other ownership or profit interests in such Person
         (including, without limitation, partnership, member or trust interests
         therein), whether voting or nonvoting, and whether or not such shares,
         warrants, options, rights or other interests are authorized or
         otherwise existing on any date of determination.

                  "ERISA" means the Employee Retirement Income Security Act of
         1974, as amended from time to time, and the regulations promulgated and
         the rulings issued from time to time thereunder.

                  "ERISA Affiliate" means any Person that for purposes of Title
         IV of ERISA is a member of the controlled group of any Loan Party, or
         under common control with any Loan Party, within the meaning of Section
         414 of the Internal Revenue Code.

                  "ERISA Event" means (a)(i) the occurrence of a reportable
         event, within the meaning of Section 4043 of ERISA, with respect to any
         Plan unless the 30-day notice requirement with respect to such event
         has been waived by the PBGC or (ii) the requirements of Section 4043(b)
         of ERISA are met with respect to a contributing sponsor, as defined in
         Section 4001(a)(13) of ERISA, of a Plan, and an event described in
         paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA
         could reasonably be expected to occur with respect to such Plan within
         the following 30 days; (b) the application for a minimum funding waiver
         with respect to a Plan; (c) the provision by the administrator of any
         Plan of a notice of intent to terminate such Plan pursuant to Section
         4041(a)(2) of ERISA (including any such notice with respect to a plan
         amendment referred to in Section 4041(e) of ERISA); (d) the cessation
         of operations at a facility of any Loan Party or any ERISA Affiliate in
         the circumstances described in Section 4062(e) of ERISA; (e) the
         partial or complete withdrawal by any Loan Party or any ERISA Affiliate
         from a Plan or a Multiple Employer Plan; (f) the conditions for
         imposition of a lien under Section 302(f) of ERISA shall have been met
         with respect to any Plan; (g) the adoption of an amendment to a Plan
         requiring the provision of security to such Plan pursuant to Section
         307 of ERISA; or (h) the institution by the PBGC of proceedings to
         terminate a Plan pursuant to Section 4042 of ERISA, or the occurrence
         of any event or condition described in Section 4042 of ERISA, that
         constitutes grounds for the termination of, or the appointment of a
         trustee to administer, a Plan.

                  "ESRD-Related Business" means the business of providing
         Dialysis Services and/or Ancillary Services.

                  "Eurocurrency Liabilities" has the meaning specified in
         Regulation D of the Board of Governors of the Federal Reserve System,
         as in effect from time to time.

                  "Eurodollar Lending Office" means, with respect to each of the
         Lenders, the office of such Lender specified as its "Eurodollar Lending
         Office" opposite its name on Schedule I hereto or in the Assignment and
         Acceptance pursuant to which it became a Lender, as the case may be
         (or, if no such office is specified, its Base Rate Lending Office), or
         such other office of such Lender as such Lender may from time to time
         specify to the Borrower and the Administrative Agent for such purpose.


                                      14

                  "Eurodollar Rate" means, for any Interest Period for all
         Eurodollar Rate Advances comprising part of the same Borrowing, an
         interest rate per annum equal to the rate per annum obtained by
         dividing (a) the rate per annum (rounded upwards, if necessary, to the
         nearest 1/100 of 1%) at which deposits in U.S. dollars appear on page
         3750 (or any successor page thereto) of the Dow Jones Telerate Screen
         two Business Days before the first day of such Interest Period and for
         a term comparable to such Interest Period or, if such rate does not so
         appear on the Dow Jones Telerate Screen on any date of determination,
         on the Reuters Screen LIBO Page two Business Days before the first day
         of such Interest Period and for a term comparable to such Interest
         Period by (b) a percentage equal to 100% minus the Eurodollar Rate
         Reserve Percentage for such Interest Period; provided, however, that if
         the Reuters Screen LIBO Page is being used to determine the Eurodollar
         Rate at any date of determination and more than one rate is specified
         thereon as the London interbank offered rate for deposits in U.S.
         dollars, the applicable rate shall be the average of all such rates
         (rounded upward, if necessary, to the nearest whole multiple of 1/100
         of 1% per annum).

                  "Eurodollar Rate Advance" means an Advance that bears interest
         as provided in Section 2.07(a)(ii).

                  "Eurodollar Rate Reserve Percentage" for any Interest Period
         for all Eurodollar Rate Advances comprising part of the same Borrowing
         means the reserve percentage applicable two Business Days before the
         first day of such Interest Period under regulations issued from time to
         time by the Board of Governors of the Federal Reserve System (or any
         successor thereto) for determining the maximum reserve requirement
         (including, without limitation, any emergency, supplemental or other
         marginal reserve requirement) for a member bank of the Federal Reserve
         System in New York, New York, with respect to liabilities or assets
         consisting of or including Eurocurrency Liabilities (or with respect to
         any other category of liabilities that includes deposits by reference
         to which the interest rate on Eurodollar Rate Advances is determined)
         having a term equal to such Interest Period.

                  "Events of Default" has the meaning specified in Section 6.01.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
         amended from time to time, and the regulations promulgated and the
         rulings issued thereunder.

                  "Existing Credit Agreement" means (a) the Second Amended and
         Restated Revolving Credit Agreement, dated as of July 14, 2000, as
         amended, between Total Renal Care Holdings, Inc., the lender parties
         thereto, DLJ Capital Funding, Inc., as Syndication Agent, First Union
         National Bank, as Documentation Agent, and The Bank of New York, as the
         Administrative Agent and (b) the Second Amended and Restated Term Loan
         Agreement, dated as of July 14, 2000, as amended, between Total Renal
         Care Holdings, Inc., the lender parties thereto, DLJ Capital Funding,
         Inc., as Syndication Agent, and The Bank of New York, as the
         Administrative Agent.

                  "Existing Letters of Credit" means all letters of credit
         issued under the Existing Credit Agreement and outstanding on the
         Closing Date, as more fully described on Schedule II hereto.

                  "Facility" means the Term A Facility, the Term B Facility, the
         Revolving Credit Facility, the Swing Line Facility or the Letter of
         Credit Facility, as the context may require.

                  "Federal Funds Rate" means, for any period, a fluctuating
         interest rate per annum equal for each day during such period to the
         weighted average of the rates on overnight federal funds


                                      15

         transactions with members of the Federal Reserve System arranged by
         federal funds brokers, as published for such day (or, if such day is
         not a Business Day, for the immediately preceding Business Day) by the
         Federal Reserve Bank of New York or, if such rate is not so published
         for any day that is a Business Day, the average rate charged to the
         Administrative Agent (in its individual capacity) on such day on such
         transactions as determined by the Administrative Agent.

                  "Fiscal Quarter" means, with respect to the Borrower or any of
         its Subsidiaries, the period commencing January 1 in any Fiscal Year
         and ending on the next succeeding March 31, the period commencing April
         1 in any Fiscal Year and ending on the next succeeding June 30, the
         period commencing July 1 in any Fiscal Year and ending on the next
         succeeding September 30 or the period commencing October 1 in any
         Fiscal Year and ending on the next succeeding December 31, as the
         context may require, or, if any such Subsidiary was not in existence on
         the first day of any such period, the period commencing on the date on
         which such Subsidiary is incorporated, organized, formed or otherwise
         created and ending on the last day of such period.

                  "Fiscal Year" means, with respect to the Borrower or any of
         its Subsidiaries, the period commencing on January 1 in any calendar
         year and ending on the next succeeding December 31 or, if any such
         Subsidiary was not in existence on January 1 in any calendar year, the
         period commencing on the date on which such Subsidiary is incorporated,
         organized, formed or otherwise created and ending on the next
         succeeding December 31.

                  "Fixed Charge Coverage Ratio" means, for any period, the ratio
         of (a) the amount equal to (i) the sum of (A) Consolidated Pre-Minority
         EBITDA and (B) Lease Expense less (ii) Capital Expenditures, in each
         case for the Borrower and its Subsidiaries for such period, to (b) the
         sum of (i) Consolidated Interest Expense, (ii) the aggregate principal
         amount (or the equivalent thereto) of all Required Principal Payments,
         (iii) the aggregate amount of all Consolidated Cash Taxes, and (iv)
         Lease Expense, in each case for the Borrower and its Subsidiaries for
         such period.

                  "Foreign Subsidiary" means, at any time, any direct or
         indirect Subsidiary of the Borrower that is not a Domestic Subsidiary.

                  "Funded Debt" of any Person means all Debt of such Person that
         by its terms matures more than one year after the date of determination
         or matures within one year from such date but is renewable or
         extendible, at the option of such Person, to a date more than one year
         after such date or arises under a revolving credit or similar agreement
         that obligates the lender or lenders to extend credit during a period
         of more than one year after such date, in each case determined on a
         Consolidated basis in accordance with GAAP, including, without
         limitation, (i) the aggregate amount of Governmental Reimbursement
         Program Costs (exclusive of, with respect to the determination of
         Funded Debt in any period, the portion of Governmental Reimbursement
         Program Costs paid in such period) and (ii) in the case of the
         Borrower, the Advances; provided, however, that the term "Funded Debt"
         shall not include (x) any Contingent Obligations of such Person (if and
         to the extent such Contingent Obligations would otherwise be included
         in such term on any date of determination) that are incurred solely to
         support Debt or Governmental Reimbursement Program Costs of the
         Borrower or one or more Subsidiaries of the Borrower to the extent such
         Contingent Obligations are otherwise expressly permitted to be incurred
         under Section 5.02(b), and (y) all Obligations of such Person to
         purchase, redeem, retire, defease or otherwise make any payment in
         respect of any Redeemable Preferred Interests.

                  "GAAP" has the meaning specified in Section 1.03.


                                      16

                  "Governmental Authority" means any nation or government, any
         state, province, city, municipal entity or other political subdivision
         thereof, and any governmental, executive, legislative, judicial,
         administrative or regulatory agency, department, authority,
         instrumentality, commission, board or similar body, whether federal,
         state, provincial, territorial, local or foreign.

                  "Governmental Authorization" means any authorization,
         approval, consent, franchise, license, covenant, order, ruling, permit,
         certification, exemption, notice, declaration or similar right,
         undertaking or other action of, to or by, or any filing, qualification
         or registration with, any Governmental Authority.

                  "Governmental Reimbursement Program Costs" means with respect
         to and payable by the Borrower and its Subsidiaries the sum of:

                         (i)   all amounts (including punitive and other similar
                  amounts) agreed to be paid in settlement or payable as a
                  result of a final, non-appealable judgment, award or similar
                  order relating to participation in Medical Reimbursement
                  Programs;

                         (ii)  all final, non-appealable fines, penalties,
                  forfeitures or other amounts rendered pursuant to criminal
                  indictments or other criminal proceedings relating to
                  participation in Medical Reimbursement Programs; and

                         (iii) the amount of final, non-appealable recovery,
                  damages, awards, penalties, forfeitures or similar amounts
                  rendered in any litigation, suit, arbitration, investigation
                  or other legal or administrative proceeding of any kind
                  relating to participation in Medical Reimbursement Programs.

                  "Guarantee Supplement" has the meaning specified in the
         Subsidiary Guaranty.

                  "Guaranteed Obligations" has the meaning specified in the
         Subsidiary Guaranty.

                  "Guarantor" means each Subsidiary of the Borrower party to the
         Subsidiary Guarantee or, as the case may be, a Guarantee Supplement.

                  "Hazardous Materials" means (a) petroleum or petroleum
         products, by-products or breakdown products, radioactive materials,
         asbestos-containing materials, polychlorinated biphenyls and radon gas
         and (b) any other chemicals, materials or substances designated,
         classified or regulated as hazardous or toxic or as a pollutant or
         contaminant under any Environmental Law.

                  "Hedge Agreements" means, collectively, interest rate swap,
         cap or collar agreements, interest rate future or option contracts,
         commodity future or option contracts, currency swap agreements,
         currency future or option contracts, equity swap agreements and other
         similar agreements.

                  "Hedge Bank" means any Person that is a Lender Party or an
         Affiliate of a Lender Party, in its capacity as a party to a Hedge
         Agreement.

                  "Indemnified Party" has the meaning specified in Section
         8.04(b).

                  "Information Memorandum" means the information memorandum
         dated March 2001 used by the Book Managers in connection with the
         syndication of the Commitments.


                                      17

                  "Initial Extension of Credit" means, collectively, the initial
         Borrowings under one or more of the Facilities, and/or the initial
         issuances of one or more Letters of Credit, made on the Closing Date.

                  "Initial Issuing Bank" has the meaning specified in the
         recital of parties to this Agreement.

                  "Initial Lenders" has the meaning specified in the recital of
         parties to this Agreement.

                  "Insufficiency" means, with respect to any Plan, the amount,
         if any, of its unfunded benefit liabilities, as defined in Section
         4001(a)(18) of ERISA.

                  "Interest Period" means, for each Eurodollar Rate Advance
         comprising part of the same Borrowing, the period commencing on the
         date of such Eurodollar Rate Advance or the date of the Conversion of
         any Base Rate Advance into such Eurodollar Rate Advance, and ending on
         the last day of the period selected by the Borrower pursuant to the
         provisions below and, thereafter, each subsequent period commencing on
         the last day of the immediately preceding Interest Period and ending on
         the last day of the period selected by the Borrower pursuant to the
         provisions below. The duration of each such Interest Period shall be
         one, two, three or six months, as the Borrower may, upon notice
         received by the Administrative Agent not later than 2:00 P.M.
         (Charlotte, North Carolina time) on the third Business Day prior to the
         first day of such Interest Period, select; provided, however, that:

                       (a)   the Borrower may not select any Interest Period
                  with respect to any Eurodollar Rate Advance under a Facility
                  that ends after any principal repayment installment date for
                  such Facility unless, after giving effect to such selection,
                  the aggregate principal amount of Base Rate Advances and of
                  Eurodollar Rate Advances having Interest Periods that end on
                  or prior to such principal repayment installment date for such
                  Facility shall be at least equal to the aggregate principal
                  amount of Advances under such Facility due and payable on or
                  prior to such date;

                       (b)   Interest Periods commencing on the same date for
                  Eurodollar Rate Advances comprising part of the same Borrowing
                  shall be of the same duration;

                       (c)   whenever the last day of any Interest Period would
                  otherwise occur on a day other than a Business Day, the last
                  day of such Interest Period shall be extended to occur on the
                  next succeeding Business Day; provided, however, that, if such
                  extension would cause the last day of such Interest Period to
                  occur in the next following calendar month, the last day of
                  such Interest Period shall occur on the immediately preceding
                  Business Day; and

                       (d)   whenever the first day of any Interest Period
                  occurs on a day of an initial calendar month for which there
                  is no numerically corresponding day in the calendar month that
                  succeeds such initial calendar month by the number of months
                  equal to the number of months in such Interest Period, such
                  Interest Period shall end on the last Business Day of such
                  succeeding calendar month.

                  "Internal Revenue Code" means the Internal Revenue Code of
         1986, as amended from time to time, and the regulations promulgated and
         the rulings issued thereunder.




                                      18

               "Investment" means, with respect to any Person, any loan or
          advance to such Person, any purchase or other acquisition of Equity
          Interests in or Debt of, or the property and assets comprising a
          division or business unit or all or a substantial part of the business
          of, such Person, any capital contribution to such Person or any other
          investment in such Person, including, without limitation, any
          acquisition by way of a merger or consolidation (or similar
          transaction) and any arrangement pursuant to which the investor incurs
          Debt of the types referred to in clause (j) or (k) of the definition
          of "Debt" set forth in this Section 1.01 in respect of such Person.

               "ISDA Master Agreement" means the Master Agreement
          (Multicurrency-Cross Border) published by the International Swap and
          Derivatives Association, Inc., as in effect from time to time.

               "Issuing Bank" means the Initial Issuing Bank and each other
          Person to which the Letter of Credit Commitment hereunder has been
          assigned pursuant to Section 8.07, in each case for so long as the
          Initial Issuing Bank or such other Person, as the case may be, shall
          be a party to this Agreement in such capacity, and solely with respect
          to the Existing Letters of Credit, means The Bank of New York.

               "L/C Cash Collateral Account" has the meaning specified in the
          Preliminary Statements to the Security Agreement.

               "L/C Related Documents" has the meaning specified in Section
          2.03(b)(ii).

               Lease Expense" means, with respect to any Person, for any period
          for such Person and its subsidiaries on a Consolidated basis, lease
          and rental expense accrued during such period under all leases and
          rental agreements, other than Capitalized Leases and leases of
          personal property, of renal treatment centers, determined in
          conformity with GAAP.

               "Lender Party" means any Lender, the Issuing Bank or the Swing
          Line Bank.

               "Lenders" means, collectively, the Initial Lenders and each
          Person that becomes a Lender pursuant to Section 8.07 for so long as
          such Initial Lender or Person, as the case may be, shall be a party to
          this Agreement.

               "Letter of Credit" has the meaning specified in Section 2.01(e).

               "Letter of Credit Advance" means an advance made by the Issuing
          Bank or any Revolving Credit Lender pursuant to Section 2.03(b).

               "Letter of Credit Agreement" has the meaning specified in
          Section 2.03(a).

               "Letter of Credit Commitment" means, with respect to the Issuing
          Bank at any time, the amount set forth opposite the Issuing Bank's
          name on Part B of Schedule I hereto under the caption "Letter of
          Credit Commitment" or, if the Issuing Bank has entered into one or
          more Assignment and Acceptances, the amount set forth for the Issuing
          Bank in the Register maintained by the Administrative Agent pursuant
          to Section 8.07(d) as the Issuing Bank's "Letter of Credit
          Commitment", as such amount may be reduced at or prior to such time
          pursuant to Section 2.05.


                                      19

               "Letter of Credit Facility" means, at any time, an amount equal
          to the lesser of (a) the amount of the Issuing Bank's Letter of Credit
          Commitment at such time and (b) $50,000,000, as such amount may be
          reduced at or prior to such time pursuant to Section 2.05.

               "Leverage Ratio" means, at any date of determination, the ratio
          of (a) (i) all Funded Debt of the Borrower and its Subsidiaries plus
          (ii) to the extent not otherwise included in subclause (a)(i) of this
          definition, the face amount of all Letters of Credit issued for the
          account of the Borrower or any of its Subsidiaries minus (iii) cash
          and cash equivalents of the Borrower and its Subsidiaries on a
          Consolidated basis to (b) Consolidated Pre-Minority EBITDA of the
          Borrower and its Subsidiaries for the most recently completed
          Measurement Period prior to such date.

               "Lien" means, with respect to any Person, (a) any mortgage, lien
          (statutory or other), pledge, hypothecation, security interest, charge
          or encumbrance of any kind (including, without limitation, any
          agreement to give any of the foregoing), (b) any sale of accounts
          receivable or chattel paper, or any assignment, deposit arrangement or
          lease intended as, or having the effect of, security, (c) any
          easement, right of way or other encumbrance on title to real property
          or (d) any other interest or title of any vendor, lessor, lender or
          other secured party to or of such Person under any conditional sale or
          other title retention agreement or any Capitalized Lease or upon or
          with respect to any property or asset of such Person (including, in
          the case of Equity Interests, voting trust agreements and other
          similar arrangements).

               "Loan Documents" means, collectively, this Agreement, the Notes,
          the Subsidiary Guaranty, the Collateral Documents, each Letter of
          Credit Agreement and each Incremental Facility Agreement pursuant to
          Section 2.05(d)(ii), in each case as amended, supplemented or
          otherwise modified hereafter from time to time in accordance with the
          terms thereof and Section 8.01.

               "Loan Parties" means, collectively, the Borrower and each of the
          Subsidiaries of the Borrower party to the Subsidiary Guaranty or any
          of the Collateral Documents.

               "Margin Stock" means `margin stock' as defined in Regulation U of
          the Board of Governors of the Federal Reserve System, as the same may
          be amended or supplemented from time to time.

               "Material Adverse Change" means any material adverse change in
          the business, condition (financial or otherwise), operations,
          performance, properties or prospects of the Borrower and its
          Subsidiaries, taken as a whole; provided that the occurrence or
          subsistence of any such material adverse change which has been
          disclosed by the Borrower in any filing made with the Securities and
          Exchange Commission prior to the date of this Agreement shall not
          constitute a Material Adverse Change.

               "Material Adverse Effect" means a material adverse effect on (a)
          the business, condition (financial or otherwise), operations,
          performance, properties or prospects of the Borrower and its
          Subsidiaries taken as a whole, (b) the rights and remedies of the
          Administrative Agent or any Lender Party under any Loan Document or
          any Related Document or (c) the ability of any Loan Party to perform
          its Obligations under any Loan Document to which it is or is to be a
          party; provided that the occurrence or subsistence of any such
          material adverse effect which has been disclosed by the Borrower in
          any filing made with the Securities and Exchange Commission prior to
          the date of this Agreement shall not constitute a Material Adverse
          Effect.


                                      20

               "Material Subsidiaries" means, as of any date, any Subsidiary or
          Subsidiaries of the Borrower that either individually or taken as a
          whole accounted for more than 5% of Consolidated Net Income of the
          Borrower and its Subsidiaries for the most recently completed Fiscal
          Quarter on or prior to such date, in each case as reflected in the
          Required Financial Information most recently delivered to the
          Administrative Agent and the Lender Parties on or prior to such date
          and determined in accordance with GAAP for such period.

               "Measurement Period" means, at any date of determination, the
          most recently completed four consecutive Fiscal Quarters ended prior
          to such date for which financial information is available.

               "Medicaid" means that means-tested entitlement program under
          Title XIX of the Social Security Act that provides federal grants to
          states for medical assistance based on specific eligibility criteria.
          (Social Security Act of 1965, Title XIX, P.L. 89-87, as amended; 42
          U.S.C. 1396 et seq.).

               "Medical Reimbursement Programs" means the Medicare, Medicaid and
          CHAMPUS programs and any other health care program operated by or
          financed in whole or in part by any federal, state or local
          government.

               "Medicare" means that government-sponsored entitlement program
          under Title XVIII of the Social Security Act that provides for a
          health insurance system for eligible elderly and disabled individuals.
          (Social Security Act of 1965, Title XVIII, P.L. 89-87 as amended; 42
          U.S.C. 1395 et seq.).

               "Moody's" means Moody's Investors Service, Inc.

               "Multiemployer Plan" means a multiemployer plan (as defined in
          Section 4001(a)(3) of ERISA) to which any Loan Party or any ERISA
          Affiliate is making or accruing an obligation to make contributions,
          or has within any of the preceding five plan years made or accrued an
          obligation to make contributions.

               "Multiple Employer Plan" means a single employer plan (as defined
          in Section 4001(a)(15) of ERISA) that (a) is maintained for employees
          of any Loan Party or any ERISA Affiliate and at least one Person other
          than the Loan Parties and the ERISA Affiliates or (b) was so
          maintained and in respect of which any Loan Party or any ERISA
          Affiliate could reasonably be expected to have liability under Section
          4064 or 4069 of ERISA in the event such plan has been or were to be
          terminated.

               "Net Cash Proceeds" means, with respect to any sale, lease,
          transfer or other disposition of any property or asset, or the
          incurrence or issuance of any Debt, or the sale or issuance of any
          Equity Interests (including, without limitation, any capital
          contribution) in any Person, the aggregate amount of cash received
          from time to time (whether as initial consideration or through payment
          or disposition of deferred consideration) by or on behalf of such
          Person for its own account in connection with any such transaction,
          after deducting therefrom only (without duplication):

                    (a)  out-of-pocket expenses, including brokerage
               commissions, underwriting fees and discounts, legal fees,
               finder's fees and other similar fees and commissions;


                                      21

                    (b)  the amount of taxes payable in connection with or as a
               result of such transaction, and if not paid at the time of the
               respective transaction, the amount thereof reserved in accordance
               with GAAP as in effect on the date of determination;

                    (c)  in the case of any sale, lease, transfer or other
               disposition of any property or asset, the outstanding principal
               amount of, the premium or penalty, if any, on, and any accrued
               and unpaid interest on, any Debt (other than the Debt outstanding
               under the Loan Documents) that is secured by a Lien on the
               property and assets subject to such sale, lease, transfer or
               other disposition and is required to be repaid under the terms
               thereof as a result of such sale, lease, transfer or other
               disposition;

                    (d)  in the case of any sale, lease, transfer or other
               disposition of any property or asset, an amount reserved, in
               accordance with GAAP as in effect on the date on which the Net
               Cash Proceeds from such sale, lease, transfer or other
               disposition are determined, and so reserved, against liabilities
               under indemnification obligations, liabilities related to
               environmental matters or other liabilities associated with the
               property and assets subject to such sale, lease, transfer or
               other disposition that are required to be so provided for under
               the terms of the documentation for such sale, lease, transfer or
               other disposition; and

                    (e)  in the case of any sale, lease, transfer or other
               disposition of any property or asset by a Subsidiary, the amount
               of any payments or distributions required to be made in respect
               of such transaction to owners of Equity Interests in such
               Subsidiary other than the Borrower or any other Subsidiary;

          provided, however, in the case of clauses (b) and (d) of this
          definition, that if, at the time such taxes or such contingent
          liabilities are actually paid or otherwise satisfied, the amount of
          the reserve therefor exceeds the amount paid or otherwise satisfied,
          then the Borrower shall prepay the outstanding Advances in accordance
          with the terms of Section 2.06(b), in an amount equal to the amount of
          such excess reserve.

               "Note" means a Term A Note, a Term B Note or a Revolving Credit
          Note, as the context may require.

               "Notice of Borrowing" has the meaning specified in Section
          2.02(a).

               "Notice of Conversion" has the meaning specified in Section
          2.09(a).

               "Notice of Issuance" has the meaning specified in Section
          2.03(a).

               "Notice of Renewal" has the meaning specified in Section
          2.01(e).

                "Notice of Swing Line Borrowing" has the meaning specified in
          Section 2.02(b).

                "Notice of Termination" has the meaning specified in Section
          2.01(e).

               "NPL" means the National Priorities List under CERCLA.

               "Obligation" means, with respect to any Person, any payment,
          performance or other obligation of such Person of any kind, including,
          without limitation, any liability of such Person on any claim, whether
          or not the right of any creditor to payment in respect of such claim
          is


                                      22

          reduced to judgment, liquidated, unliquidated, fixed, contingent,
          matured, disputed, undisputed, legal, equitable, secured or unsecured,
          and whether or not such claim is discharged, stayed or otherwise
          affected by any proceeding referred to in Section 6.01(f). Without
          limiting the generality of the foregoing, the Obligations of the Loan
          Parties under the Loan Documents include (a) the obligation to pay
          principal, interest, Letter of Credit commissions, charges, expenses,
          fees, attorneys' fees and disbursements, indemnity payments and other
          amounts payable by any Loan Party under any Loan Document and (b) the
          obligation of any Loan Party to reimburse any amount in respect of any
          of the foregoing items that any Lender Party, in its sole discretion,
          may elect to pay or advance on behalf of such Loan Party.

               "OECD" means the Organization for Economic Cooperation and
          Development.

               "Open Year" means, with respect to any Person, any year for
          which United States federal income tax returns have been filed by or
          on behalf of such Person and for which the expiration of the
          applicable statute of limitations for assessment or collection has not
          occurred (whether by reason of extension or otherwise).

               "Other Taxes" has the meaning specified in Section 2.13(b).

               "PBGC" means the Pension Benefit Guaranty Corporation or any
          successor thereto.

               "Performance Level" means Performance Level I, Performance
          Level II, Performance Level III, Performance Level IV or Performance
          Level V, as identified in the definition of "Applicable Margin" and
          Applicable Percentage", as the context may require.

               "Permitted Liens" means the following types of Liens (excluding
          any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the
          Internal Revenue Code or by ERISA or any such Lien relating to or
          imposed in connection with any Environmental Action): (a) Liens for
          taxes, assessments and governmental charges or levies to the extent
          not otherwise required to be paid under Section 5.01(b); (b) Liens
          imposed by law, such as materialmen's, mechanics', carriers',
          landlords', workmen's and repairmen's Liens and other similar Liens
          arising in the ordinary course of business securing obligations (other
          than Debt for borrowed money) (i) that are not overdue for a period of
          more than 60 days or (ii) the amount, applicability or validity of
          which are being contested in good faith and by appropriate proceedings
          diligently conducted and with respect to which the Borrower or any of
          its Subsidiaries, as the case may be, has established reserves in
          accordance with GAAP; (c) pledges or deposits to secure obligations
          incurred in the ordinary course of business under workers'
          compensation laws, unemployment insurance or similar social security
          legislation (other than in respect of employee benefit plans subject
          to ERISA) or to secure public or statutory obligations; (d) Liens,
          pledges and deposits securing the performance of, or payment in
          respect of, bids, tenders, leases, contracts (other than for the
          repayment of borrowed money), surety and appeal bonds, letters of
          credit, and other obligations of a similar nature incurred in the
          ordinary course of business; (e) any interest or title of a lessor or
          sublessor and any restriction or encumbrance to which the interest or
          title of such lessor or sublessor may be subject that is incurred in
          the ordinary course of business and, either individually or when
          aggregated with all other Permitted Liens in effect on any date of
          determination, could not be reasonably expected to have a Material
          Adverse Effect; (f) Liens in favor of customs and revenue authorities
          arising as a matter of law or pursuant to a bond to secure payment of
          customs duties in connection with the importation of goods; (g) Liens
          arising out of judgments or awards that do not constitute an Event of
          Default under Section 6.01(g) or 6.01(h) and in respect of which the
          Borrower or any of its Subsidiaries subject thereto shall be
          prosecuting an appeal or proceedings for review in good faith and,
          pending such appeal or


                                      23

          proceedings, shall have secured within 30 days after the entry thereof
          a subsisting stay of execution and shall be maintaining reserves, in
          accordance with GAAP, with respect to any such judgment or award; (h)
          unperfected Liens of suppliers and vendors to secure the purchase
          price of the property or assets sold; (i) protective Uniform
          Commercial Code filings by lessors under operating leases; and (j) any
          easements, rights of way, restrictions, defects, encroachments and
          other encumbrances on title to real property which either individually
          or when aggregated with all other permitted Liens, would not be
          reasonably expected to have a Material Adverse Effect.

               "Person" means an individual, partnership, corporation (including
          a business trust), limited liability company, unlimited liability
          company, joint stock company, trust, unincorporated association, joint
          venture or other entity, or a government or any political subdivision
          or agency thereof.

               "Plan" means a Single Employer Plan or a Multiple Employer Plan.

               "Pledged Debt" has the meaning specified in Section 1 of the
          Security Agreement.

               "Pledged Shares" has the meaning specified in Section 1 of the
          Security Agreement.

               "primary obligation" has the meaning specified in the definition
          of "Contingent Obligation" set forth in this Section 1.01.

               "primary obligor" has the meaning specified in the definition of
          "Contingent Obligation" set forth in this Section 1.01.

               "Pro Rata Share" of any amount means, with respect to any of the
          Lenders at any time, the product of (a) a fraction the numerator of
          which is the amount of such Lender's Commitment(s) under the
          applicable Facility or Facilities at such time (or, if the Commitments
          shall have been terminated pursuant to Section 2.05 or 6.01 at or
          prior to such time, such Lender's Commitment(s) under the applicable
          Facility or Facilities as in effect immediately prior to such
          termination) and the denominator of which is the aggregate amount of
          such Facility or Facilities at such time (or, if the Commitments shall
          have been terminated pursuant to Section 2.05 or 6.01 at or prior to
          such time, the applicable Facility or Facilities as in effect
          immediately prior to such termination) multiplied by (b) such amount.

               "Qualified Issuer" means (a) any Lender hereunder and (b) any
          commercial bank that has a combined capital and surplus in excess of
          $100,000,000.

               "Reedemable Preferred Interest" means with respect to any Person,
          (a) any Equity Interest of such Person that, by its terms or by the
          terms of any security into which it is convertible, exercisable or
          exchangeable, is, or upon the happening of an event or the passage of
          time or both would be, required to be redeemed or repurchased
          (including at the option of the holder thereof) by such Person or any
          of its Subsidiaries, in whole or in part, not earlier than July 1,
          2007, and (b) any Equity Interest of any Subsidiary of such Person
          other than any common equity with no preferences, privileges, and no
          redemption or repayment provisions; provided, however, that any Equity
          Interest that would constitute a Redeemable Preferred Interest solely
          because the holders thereof have the right to require the issuer to
          repurchase such a Redeemable Preferred Interest upon the occurrence of
          a change of control shall not be so treated if the terms thereof (a)
          do not trigger any rights upon any circumstance constituting a change
          of control under such Redeemable Preferred Interest that would not
          constitute a Change of Control under this Agreement and (b) do not
          permit either any repurchase by such Person or any rights of



                                      24

          the holder of such Equity Interest to assert any claim in respect of
          such failure to purchase as long as any Event of Default exists
          hereunder.

               "Reduction Amount" has the meaning specified in Section
          2.06(b)(iv).

               "Register" has the meaning specified in Section 8.07(d).

               "Regulation U" means Regulation U of the Board of Governors of
          the Federal Reserve System, as in effect from time to time.

               "Required Financial Information" means, at any date of
          determination, the Consolidated financial statements of the Borrower
          and its Subsidiaries most recently delivered to the Administrative
          Agent and the Lender Parties on or prior to such date pursuant to, and
          satisfying all of the requirements of, Section 5.03(b) or 5.03(c) and
          accompanied by the certificates and other information required to be
          delivered therewith.

               "Required Lenders" means, at any time, Lenders owed or holding at
          least a majority in interest of the sum of (a) the aggregate principal
          amount of the Advances outstanding at such time, (b) the aggregate
          Available Amount of all Letters of Credit outstanding at such time,
          and (c) the aggregate Unused Revolving Credit Commitments at such
          time; provided, however, that if any Lender shall be a Defaulting
          Lender at such time, there shall be excluded from the determination of
          Required Lenders at such time (A) the aggregate principal amount of
          the Advances owing to such Lender (in its capacity as a Lender) and
          outstanding at such time, (B) such Lender's Pro Rata Share of the
          aggregate Available Amount of all Letters of Credit issued by such
          Lender and outstanding at such time, and (C) the Unused Revolving
          Credit Commitment of such Lender at such time. For purposes of this
          definition, the aggregate principal amount of Swing Line Advances
          owing to the Swing Line Bank and of Letter of Credit Advances owing to
          the Issuing Bank and the Available Amount of each Letter of Credit
          shall be considered to be owed to the Revolving Credit Lenders ratably
          in accordance with their respective Revolving Credit Commitments.

               "Required Principal Payments" means, with respect to any Person
          for any period, the sum of all regularly scheduled principal payments
          or redemptions and all required prepayments, repurchases, redemptions
          or similar acquisitions for value of outstanding Funded Debt made
          during such period.

               "Requirements of Law" means, with respect to any Person, all
          laws, constitutions, statutes, treaties, ordinances, rules and
          regulations, all orders, writs, decrees, injunctions, judgments,
          determinations and awards of an arbitrator, a court or any other
          Governmental Authority, and all Governmental Authorizations, binding
          upon or applicable to such Person or to any of its properties, assets
          or businesses.

               "Responsible Officer" means, with respect to the Borrower or any
          of its Subsidiaries, the chief executive officer, the president, the
          chief financial officer, the principal accounting officer or the
          treasurer (or the equivalent of any of the foregoing) or any other
          officer, partner or member (or person performing similar functions) of
          the Borrower or any such Subsidiary responsible for overseeing the
          administration of, or reviewing compliance with, all or any portion of
          this Agreement or any of the other Loan Documents.

               "Revolving Credit Advance" has the meaning specified in Section
          2.01(c).


                                      25

               "Revolving Credit Borrowing" means a borrowing consisting of
          simultaneous Revolving Credit Advances of the same Type made by the
          Revolving Credit Lenders.

               "Revolving Credit Commitment" means, with respect to any
          Revolving Credit Lender at any time, the amount set forth opposite
          such Revolving Credit Lender's name on Part B of Schedule I hereto
          under the caption "Revolving Credit Commitment" or, if such Revolving
          Credit Lender has entered into one or more Assignment and Acceptances,
          the amount set forth for such Revolving Credit Lender in the Register
          maintained by the Administrative Agent pursuant to Section 8.07(d) as
          such Revolving Credit Lender's "Revolving Credit Commitment", as such
          amount may be reduced at or prior to such time pursuant to Section
          2.05.

               "Revolving Credit Facility" means, at any time, the aggregate
          amount of the Revolving Credit Lenders' Revolving Credit Commitments
          at such time.

               "Revolving Credit Lender" means, at any time, any Lender that has
          a Revolving Credit Commitment at such time.

               "Revolving Credit Note" means a promissory note of the Borrower
          payable to the order of any Revolving Credit Lender, in substantially
          the form of Exhibit A-3 hereto, evidencing the aggregate indebtedness
          of the Borrower to such Revolving Credit Lender resulting from the
          Revolving Credit Advances made by such Revolving Credit Lender.

               "S&P" means Standard & Poor's, a division of The McGraw-Hill
          Companies, Inc.

               "Secured Obligations" has the meaning specified in Section 2 of
          the Security Agreement.

               "Secured Parties" means, collectively, the Agents, the Lender
          Parties, and the other Persons the Obligations owing to which are or
          are purported to be secured by the Collateral under the terms of the
          Collateral Documents.

               "Securities Act" means the Securities Act of 1933, as amended,
          and the regulations promulgated and the rulings issued thereunder.

               "Security Agreement" has the meaning specified in Section
          3.01(a)(ii).

               "Security Agreement Supplement" has the meaning specified in
          Section 24 of the Security Agreement.

               "Share Repurchase Ratio" means, at any date of determination,
          the ratio of (a) (i) all Funded Debt of the Borrower and its
          Subsidiaries plus (ii) to the extent not otherwise included in
          subclause (a)(i) of this definition, the face amount of all
          outstanding Letters of Credit issued for the account of the Borrower
          or any of its Subsidiaries minus (iii) cash and cash equivalents of
          the Borrower and its Subsidiaries on a Consolidated basis minus (iv)
          the outstanding principal amount of Subordinated Debt of the Borrower
          and its Subsidiaries to (b) Consolidated Pre-Minority EBITDA of the
          Borrower and its Subsidiaries on an annualized basis determined by
          such Consolidated Pre-Minority EBITDA for the two Fiscal Quarters
          immediately preceding such date.

               "Single Employer Plan" means a single employer plan (as defined
          in Section 4001(a)(15) of ERISA) that (a) is maintained for employees
          of any Loan Party or any ERISA Affiliate and no Person other than the
          Loan Parties and the ERISA Affiliates or (b) was so


                                      26

          maintained and in respect of which any Loan Party or any ERISA
          Affiliate could have liability under Section 4069 of ERISA in the
          event such plan has been or were to be terminated.

               "Solvent" and "Solvency" mean, with respect to any Person on any
          date of determination, that on such date (a) the fair value of the
          property and assets of such Person is greater than the total amount of
          liabilities (including, without limitation, contingent liabilities),
          of such Person, (b) the present fair salable value of the property and
          assets of such Person is not less than the amount that will be
          required to pay the probable liability of such Person on its debts as
          they become absolute and matured, (c) such Person does not intend to,
          and does not believe that it will, incur debts or liabilities beyond
          such Person's ability to pay such debts and liabilities as they mature
          and (d) such Person is not engaged in business or in a transaction,
          and is not about to engage in business or in a transaction, for which
          such Person's property and assets would constitute an unreasonably
          small capital. The amount of contingent liabilities of any such Person
          at any time shall be computed as the amount that, in the light of all
          of the facts and circumstances existing at such time, represents the
          amount that can reasonably be expected to become an actual or matured
          liability.

               "Subordinated Debt" means the subordinated debt evidenced by the
          Subordinated Notes or other subordinated Debt issued or incurred by
          the Borrower subordinated in right of payment to the payment in full
          of the Obligations of the Borrower to the Loan Parties under the Loan
          Documents and other senior obligations of the Borrower; provided that
          (i) the negative covenants in such subordinated Debt are less
          burdensome than the negative covenants in this Agreement as in effect
          at the time such subordinated Debt is incurred, (ii) the affirmative
          covenants in such subordinated Debt are no more burdensome than the
          affirmative covenants in this Agreement as in effect at the time such
          subordinated Debt is incurred, (iii) the events of default in such
          subordinated Debt relating to insolvency and nonpayment of amounts
          owed thereunder are no more restrictive than the corresponding
          defaults in this Agreement as in effect at the time such subordinated
          Debt is incurred, (iv) such subordinated Debt does not cross-default
          to other Debt (but may cross-accelerate to other Debt of Borrower or
          any Subsidiary that has guaranteed such subordinated Debt), (v) the
          subordination provisions in such subordinated Debt are either (A)
          reasonably satisfactory to the Administrative Agent or (B) confirmed
          by a nationally recognized investment bank (that is not the
          Administrative Agent) as market terms and conditions at such time for
          similar debt securities issued by Persons whose debt securities have
          credit ratings not greater than that of the Borrower, and (vi) such
          subordinated Debt does not provide for any scheduled payment or
          mandatory prepayment of principal earlier than July 1, 2007, other
          than (x) redemptions made at the option of the holders of such
          subordinated Debt upon a change in control of the Borrower in
          circumstances that would also constitute a Change of Control under
          this Agreement (provided that any such redemption cannot be made fewer
          than 30 days after such change in control and that any such redemption
          is fully and absolutely subordinated to the indefeasible payment in
          full of all principal, interest and other amounts under the Loan
          Documents) and (y) mandatory prepayments required as a result of asset
          dispositions if such subordinated Debt allows the Borrower to satisfy
          such mandatory prepayment requirement by prepayment of Loans under
          this Agreement or other senior obligations of the Borrower or
          reinvestment of the asset disposition proceeds within a specified
          period of time.

               "Subordinated Notes" means (i) the 5 5/8% convertible
          subordinated notes of Renal Treatment Centers, Inc. due 2006 in the
          aggregate principal amount of $125,000,000 issued pursuant to the
          Indenture dated June 12, 1996 between Rental Treatment Centers, Inc.
          and PNC Bank, National Association as trustee; (ii) the 7% convertible
          subordinated notes of the Borrower (f/k/a Total Renal Care Holdings,
          Inc.) due 2009 in the aggregate principal amount of $345,000,000
          issued pursuant to the Indenture dated November 18, 1998 between Total
          Renal



                                      27

          Care Holdings, Inc. and United States Trust Company of New York as
          trustee; and (iii) the 9 1/4% senior subordinated notes of the
          Borrower due April 15, 2011, in the aggregate principal amount of
          $225,000,000 issued pursuant to the Indenture dated April 11, 2001
          between the Borrower, certain of its Subsidiaries and U.S. Trust
          Company of Texas, N.A.

               "Subordinated Notes Documents" means the Subordinated Notes, any
          indentures or other agreements, instruments and other documents
          pursuant to which the Subordinated Notes or other Subordinated Debt
          have been or will be issued or otherwise setting forth the terms of
          the Subordinated Notes or such Subordinated Debt, including guarantees
          in respect of the Subordinated Debt referred to in clauses (i) and
          (iii) of the definition of "Subordinated Notes," in each case as such
          agreement, instrument or other document may be amended, supplemented
          or otherwise modified from time to time in accordance with the terms
          thereof, but only to the extent permitted under the terms of the Loan
          Documents.

               "Subsidiary Guaranty" has the meaning specified in Section
          3.01(a)(iii).

               "Subsidiary" of any Person means any corporation, partnership,
          joint venture, limited liability company, unlimited liability company,
          trust or estate of which (or in which) more than 50% of (a) the issued
          and outstanding shares of capital stock having ordinary voting power
          to elect a majority of the board of directors of such corporation
          (irrespective of whether at the time shares of capital stock of any
          other class or classes of such corporation shall or might have voting
          power upon the occurrence of any contingency), (b) the interest in the
          capital or profits of such partnership, joint venture, limited
          liability company or unlimited liability company or (c) the beneficial
          interest in such trust or estate, is at the time directly or
          indirectly owned or controlled by such Person, by such Person and one
          or more of its other Subsidiaries or by one or more of such Person's
          other Subsidiaries, provided however, that the entities listed on
          Exhibit H attached hereto shall not be Subsidiaries.

               "Swing Line Advance" means an advance made by (a) the Swing Line
          Bank pursuant to Section 2.01(d) or (b) simultaneous Swing Line
          Advances made by the Revolving Credit Lenders pursuant to Section
          2.02(b).

               "Swing Line Bank" has the meaning specified in the recital of
          parties to this Agreement.

               "Swing Line Borrowing" means a borrowing consisting of a Swing
          Line Advance made by the Swing Line Bank.

               "Swing Line Commitment" means, with respect to the Swing Line
          Bank at any time, the amount set forth opposite the Swing Line Bank's
          name on Part B of Schedule I hereto under the caption "Swing Line
          Commitment", as such amount may be reduced at or prior to such time
          pursuant to Section 2.05.

               "Swing Line Facility" means, at any time, an amount equal to the
          lesser of (a) the amount of the Swing Line Commitment at such time and
          (b) $25,000,000, as such amount may be reduced at or prior to such
          time pursuant to Section 2.05.

               "Taxes" has the meaning specified in Section 2.13(a).

               "Term Advance" means a Term A Advance or a Term B Advance.

               "Term A Advance" has the meaning specified in Section 2.01(a).


                                      28

                  "Term A Borrowing" means a borrowing consisting of
         simultaneous Term A Advances of the same Type made by the Term A
         Lenders.

                  "Term A Facility" means, at any time, the aggregate Term A
         Advances of all Term A Lenders at such time.

                  "Term A Lender" means, at any time, any Lender that has a Term
         A Advance outstanding at such time.

                  "Term A Note" means a promissory note of the Borrower payable
         to the order of any Term A Lender, in substantially the form of Exhibit
         A-1 hereto, evidencing the indebtedness of the Borrower to such Term A
         Lender resulting from the Term A Advance made by such Term A Lender.

                  "Term B Advance" has the meaning specified in Section 2.01(b).

                  "Term B Borrowing" means a borrowing consisting of
         simultaneous Term B Advances of the same Type made by the Term B
         Lenders.

                  "Term B Facility" means, at any time, the aggregate Term B
         Advances of all Term B Lenders at such time.

                  "Term B Lender" means, at any time, any Lender that has a Term
         B Advance outstanding at such time.

                  "Term B Note" means a promissory note of the Borrower payable
         to the order of any Term B Lender, in substantially the form of Exhibit
         A-2 hereto, evidencing the indebtedness of the Borrower to such Term B
         Lender resulting from the Term B Advance made by such Term B Lender.

                  "Term Facility" means a Term A Facility or a Term B Facility,
         as the context requires.

                  "Term Lender" means a Term A Lender or a Term B Lender, as the
         context requires.

                  "Termination Date" means the earlier of (a) May 4, 2006 and
         (b) the date of termination in whole of the Letter of Credit
         Commitments, the Swing Line Commitments and the Revolving Credit
         Commitments pursuant to Section 2.05 or 6.01.

                  "Transaction" means, collectively, (a) the entering into by
         the Loan Parties of the Loan Documents, to which they are or are
         intended to be a party, (b) the refinancing of certain outstanding Debt
         of the Borrower and its Subsidiaries and the termination of all
         commitments thereunder, and (c) the payment of the fees and expenses
         incurred in connection with the consummation of the foregoing.

                  "TRC" means Total Renal Care, Inc., a California corporation.

                  "Type" refers to the distinction between Advances bearing
         interest at the Base Rate and Advances bearing interest at the
         Eurodollar Rate.

                  "Unused Revolving Credit Commitment" means, with respect to
         any Revolving Credit Lender at any time, (a) such Revolving Credit
         Lender's Revolving Credit Commitment at such


                                       29

         time minus (b) the sum of (i) the aggregate principal amount of all
         Revolving Credit Advances, Swing Line Advances and Letter of Credit
         Advances made by such Revolving Credit Lender (in its capacity as a
         Lender) and outstanding at such time and (ii) such Lender's Pro Rata
         Share of (A) the aggregate Available Amount of all Letters of Credit
         outstanding at such time, (B) the aggregate principal amount of all
         Letter of Credit Advances made by the Issuing Bank pursuant to Section
         2.03(c) and outstanding at such time and (C) the aggregate principal
         amount of all Swing Line Advances made by the Swing Line Bank pursuant
         to Section 2.01(d) and outstanding at such time.

                  "Voting Interests" means shares of capital stock issued by a
         corporation, or equivalent Equity Interests in any other Person, the
         holders of which are ordinarily, in the absence of contingencies,
         entitled to vote for the election of directors (or persons performing
         similar functions) of such Person, even if the right so to vote has
         been suspended by the happening of such a contingency.

                  "Welfare Plan" means a welfare plan (as defined in Section
         3(1) of ERISA) that is maintained for employees of any Loan Party or in
         respect of which any Loan Party could reasonably be expected to have
         liability.

                  "Weighted Average Life to Maturity" means, on any date and
         with respect to the Term A Facility, the Term B Facility or any
         Incremental Loans (as defined in Section 2.05(d)) to supplement either
         such Facility, an amount equal to (i) the sum of the products of (x)
         the amount of each scheduled repayment of the Term A Facility, the Term
         B Facility or Incremental Facility (as defined in Section 2.05(d)), as
         the case may be, to be made after such date, multiplied by (y) the
         number of days from such date to the date of such scheduled repayment
         divided by (ii) the aggregate outstanding principal amount of such Term
         A Facility, Term B Facility or Incremental Facility, as the case may
         be.

                  "Withdrawal Liability" has the meaning specified in Part I of
         Subtitle E of Title IV of ERISA.

         SECTION 1.02. Computation of Time Periods; Other Definitional
         -------------------------------------------------------------
Provisions. In In this Agreement and the other Loan Documents, in the
- ----------
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including", the word "through" means "through
and including" and the words "to" and "until" each means "to but excluding."
References in this Agreement or any of the other Loan Documents to any
agreement, instrument or other document "as amended" shall mean and be a
reference to such agreement , instrument or other document as amended, amended
and restated, supplemented or otherwise modified hereafter from time to time in
accordance with its terms, but solely to the extent permitted hereunder. In this
Agreement, the words "herein," "hereof" and words of similar import refer to the
entirety of this Agreement and not to any particular Section, subsection, or
Article of this Agreement.

         SECTION 1.03. Accounting Terms. All accounting terms not specifically
         ------------------------------
defined herein shall be construed in accordance with generally accepted
accounting principles consistent with those applied in the preparation of the
Consolidated financial statements of the Borrower and its Subsidiaries as at
December 31, 2000 and for the Fiscal Year then ended referred to in Section
4.01(g) ("GAAP").

         SECTION 1.04. Currency Equivalents Generally. Any amount specified in
         --------------------------------------------
this Agreement (other than in Articles II, VII and VIII) or any of the other
Loan Documents to be in U.S. dollars shall also include the equivalent of such
amount in any currency other than U.S. dollars, such equivalent amount to be
determined at the rate of exchange quoted by BofA in Charlotte, North Carolina
at the close


                                       30

of business on the Business Day immediately preceding any date of determination
thereof, to prime banks in New York, New York for the spot purchase in the New
York foreign exchange market of such amount in U.S. dollars with such other
currency.

                                  ARTICLE II

                       AMOUNTS AND TERMS OF THE ADVANCES
                           AND THE LETTERS OF CREDIT

         SECTION 2.01. The Advances and the Letters of Credit.
         ----------------------------------------------------

               (a)  The Term A Advances. Each Term A Lender severally agrees, on
                    -------------------
         the terms and conditions hereinafter set forth, to make a single
         advance (a "Term A Advance") in U.S. dollars to the Borrower on the
         Closing Date in an amount equal to the respective amount set forth
         opposite such Term A Lender's name on Schedule I hereto. The Term A
         Borrowing shall consist of Term A Advances made simultaneously by the
         Term A Lenders in accordance with their respective Pro Rata Shares of
         the Term A Facility. Amounts borrowed under this Section 2.01(a) and
         repaid or prepaid may not be reborrowed.

               (b)  The Term B Advances. Each Term B Lender severally agrees, on
                    -------------------
         the terms and conditions hereinafter set forth, to make a single
         advance (a "Term B Advance") in U.S. dollars to the Borrower on the
         Closing Date in an amount equal to the respective amount set forth
         opposite such Term B Lender's name on Schedule I hereto. The Term B
         Borrowing shall consist of Term B Advances made simultaneously by the
         Term B Lenders in accordance with their respective Pro Rata Shares of
         the Term B Facility. Amounts borrowed under this Section 2.01(b) and
         repaid or prepaid may not be reborrowed.

               (c)  The Revolving Credit Advances.
                    -----------------------------

                    (i)   Each Revolving Credit Lender severally agrees, on the
               terms and conditions hereinafter set forth, to make advances
               (each a "Revolving Credit Advance") in U.S. dollars to the
               Borrower from time to time on the Closing Date until the
               Termination Date, in each case in an amount not to exceed the
               Unused Revolving Credit Commitment of such Revolving Credit
               Lender at such time. Each Revolving Credit Borrowing shall be in
               an aggregate amount of $5,000,000 or an integral multiple of
               $1,000,000 in excess thereof (other than a Borrowing the proceeds
               of which shall be used solely to repay or prepay in full
               outstanding Swing Line Advances or the outstanding Letter of
               Credit Advances) or, if less, the amount of the aggregate Unused
               Revolving Credit Commitments at such time. Each Revolving Credit
               Borrowing shall consist of Revolving Credit Advances made
               simultaneously by the Revolving Credit Lenders in accordance with
               their respective Pro Rata Shares of the Revolving Credit
               Facility. Within the limits of each Revolving Credit Lender's
               Unused Revolving Credit Commitment in effect from time to time,
               the Borrower may borrow under this Section 2.01(c), prepay
               pursuant to Section 2.06(a) and reborrow under this Section
               2.01(c).

                    (ii)  The Revolving Credit Commitment of each of the
               Revolving Credit Lenders shall be deemed utilized for the 60-day
               period immediately following the date of each purchase by the
               Borrower of any of its Equity Interests pursuant to Section
               5.02(g)(iv)(B) or (C) by such Revolving Credit Lender's pro rata
               share of $75,000,000.


                                       31

               (d)  The Swing Line Advances. The Borrower may request the Swing
                    -----------------------
         Line Bank to make, and the Swing Line Bank shall on the terms and
         conditions hereinafter set forth, make Swing Line Advances to the
         Borrower from time to time on any Business Day during the period from
         the Closing Date until the Termination Date (i) in an aggregate amount
         not to exceed $25,000,000 at any time outstanding (the "Swing Line
         Facility") and (ii) in an amount for each such Swing Line Borrowing not
         to exceed the aggregate Unused Revolving Credit Commitments of the
         Revolving Credit Lenders at such time. No Swing Line Advance shall be
         used for the purpose of funding the payment of principal of any other
         Swing Line Advance. Each Swing Line Borrowing shall be in an amount of
         $500,000 or an integral multiple of $250,000 in excess thereof and
         shall bear interest at a rate to be agreed on by the Borrower and the
         Swing Line Bank. Within the limits of the first sentence of this
         Section 2.01(d), the Borrower may borrow under this Section 2.01(d),
         repay pursuant to Section 2.04(c), prepay pursuant to Section 2.06(a)
         and reborrow under this Section 2.01(d).

               (e)  Letters of Credit.
                    -----------------

                    (i)   The Borrower, the Bank of New York as Issuing Bank and
               each of the Revolving Credit Lenders hereby agree that each of
               the Existing Letters of Credit shall, on and after the Closing
               Date, be deemed for all purposes of this Agreement to be a Letter
               of Credit issued and outstanding under the terms of this
               Agreement. The Issuing Bank agrees, on the terms and conditions
               hereinafter set forth, to issue letters of credit (the "Letters
               of Credit") in U.S. dollars for the account of the Borrower from
               time to time on any Business Day during the period from the date
               hereof until five Business Days before the scheduled Termination
               Date (A) in an Available Amount for each such Letter of Credit of
               the Revolving Credit Lenders not to exceed at any time the Unused
               Letter of Credit Commitment at such time and (B) in an aggregate
               Available Amount for all Letters of Credit not to exceed the
               lesser of (1) the Letter of Credit Facility at such time and (2)
               the aggregate Unused Revolving Credit Commitments at such time.
               No Letter of Credit shall have an expiration date (including all
               rights of the Borrower or the beneficiary of such Standby Letter
               of Credit to require renewal) later than the earlier of (x) five
               Business Days prior to the scheduled Termination Date and (y) one
               year after the date of issuance thereof, but any such Letter of
               Credit may by its terms be renewable annually on the terms set
               forth in clause (ii) of this Section 2.01(e). Within the limits
               of the Letter of Credit Facility, and subject to the limits
               referred to above, the Borrower may request the issuance of
               Letters of Credit under this Section 2.01(e)(i), repay any Letter
               of Credit Advances resulting from drawings thereunder pursuant to
               Section 2.03(c) and request the issuance of additional Letters of
               Credit under this Section 2.01(e)(i).

                    (ii)  Each Letter of Credit may by its terms be renewable
               annually upon notice (a "Notice of Renewal") given to the Issuing
               Bank and the Administrative Agent on or prior to any date for
               notice of renewal set forth in such Letter of Credit but in any
               event at least three Business Days prior to the date of the
               proposed renewal of such Letter of Credit and upon fulfillment of
               the applicable conditions set forth in Article III unless such
               Issuing Bank has notified the Borrower (with a copy to the
               Administrative Agent) on or prior to the date for notice of
               termination set forth in such Letter of Credit but in any event
               at least 30 Business Days prior to the date of automatic renewal
               of its election not to renew such Letter of Credit (a "Notice of
               Termination"); provided that the terms of each Letter of Credit
               that is automatically renewable annually (A) shall require the
               Issuing Bank to give the beneficiary of such Letter of Credit
               notice of any Notice of Termination, (B) shall permit such
               beneficiary, upon receipt of such notice, to draw under such
               Letter of Credit prior to the date such Letter of Credit
               otherwise would have been


                                       32

               automatically renewed and (C) shall not permit the expiration
               date (after giving effect to any renewal) of such Letter of
               Credit in any event to be extended to a date later than five
               Business Days prior to the scheduled Termination Date. If either
               a Notice of Renewal is not given by the Borrower or a Notice of
               Termination is given by the Issuing Bank pursuant to the
               immediately preceding sentence, such Letter of Credit shall
               expire on the date on which it otherwise would have been
               automatically renewed; provided, however, that in the absence of
               receipt of a Notice of Renewal the Issuing Bank may in its
               discretion, unless instructed to the contrary by the
               Administrative Agent or the Borrower deem that a Notice of
               Renewal had been timely delivered and, in such case, a Notice of
               Renewal shall be deemed to have been so delivered for all
               purposes under this Agreement.

         SECTION 2.02. Making the Advances.
         ---------------------------------

               (a)  Except as otherwise provided in Section 2.02(b) or 2.03 or
         in respect of any Borrowing requested to be made on the date of the
         Initial Extension of Credit, in which case notice will be given not
         later than one Business Day prior to the date of the Initial Extension
         of Credit and which Borrowing shall be comprised of Base Rate Advances,
         each Borrowing (other than a Swing Line Borrowing) shall be made on
         notice, given not later than 2:00 P.M. (Charlotte, North Carolina time)
         on the third Business Day prior to the date of the proposed Borrowing
         in the case of a Borrowing comprised of Eurodollar Rate Advances, or on
         the first Business Day prior to the date of the proposed Borrowing in
         the case of a Borrowing comprised of Base Rate Advances, by the
         Borrower to the Administrative Agent, which shall give prompt notice
         thereof to each Appropriate Lender by telecopier. Each notice of a
         Borrowing (a "Notice of Borrowing") shall be by telephone, confirmed
         immediately in writing, or by telecopier, in substantially the form of
         Exhibit B-1 hereto, shall be duly executed by a Responsible Officer of
         the Borrower, and shall specify therein: (i) the requested date of such
         Borrowing (which shall be a Business Day); (ii) the Facility under
         which such Borrowing is requested to be made; (iii) the Type of
         Advances requested to comprise such Borrowing; (iv) the requested
         aggregate amount of such Borrowing; and (v) in the case of a Borrowing
         comprised of Eurodollar Rate Advances, the requested duration of the
         initial Interest Period for each such Advance. Each Appropriate Lender
         shall, before 2:00 P.M. (Charlotte, North Carolina time) on the date of
         such Borrowing, make available for the account of its Applicable
         Lending Office to the Administrative Agent at the Administrative
         Agent's Account, in same day funds, such Lender's Pro Rata Share of
         such Borrowing. After the Administrative Agent's receipt of such funds
         and upon fulfillment of the applicable conditions set forth in Article
         III, the Administrative Agent will make such funds available to the
         Borrower by crediting the Borrower's Account; provided, however, that,
         in the case of any Revolving Credit Borrowing, the Administrative Agent
         shall first make a portion of such funds equal to the aggregate
         principal amount of any Swing Line Advances and Letter of Credit
         Advances made by the Swing Line Bank or the Issuing Bank, as the case
         may be, and by any Revolving Credit Lender and outstanding on the date
         of such Revolving Credit Borrowing, plus accrued and unpaid interest
         thereon to and as of such date, available to the Swing Line Bank or the
         Issuing Bank, as applicable, and such other Revolving Credit Lenders
         for repayment of such Swing Line Advances and Letter of Credit
         Advances.

                    (a)   Each Swing Line Borrowing shall be made on notice,
               given not later than 2:00 P.M. (Charlotte, North Carolina time)
               on the date of the proposed Swing Line Borrowing, by the Borrower
               to the Swing Line Bank and the Administrative Agent. Each notice
               of a Swing Line Borrowing (a "Notice of Swing Line Borrowing")
               shall be by telephone, confirmed immediately in writing, or
               telecopier, shall be in substantially the form of Exhibit B-2
               hereto and duly executed by a Responsible Officer of the
               Borrower,


                                       33

               and shall specify therein: (A) the requested date of such
               Borrowing (which shall be a Business Day); (B) the requested
               amount of such Borrowing; and (C) the requested maturity of such
               Borrowing (which maturity shall be no later than the seventh day
               after the requested date of such Borrowing). The Swing Line Bank
               will make the amount thereof available for the account of its
               Applicable Lending Office to the Administrative Agent at the
               Administrative Agent's Account, in same day funds. After the
               Administrative Agent's receipt of such funds and upon fulfillment
               of the applicable conditions set forth in Article III, the
               Administrative Agent will make such funds available to the
               Borrower by crediting the Borrower's Account.

                    (i)   Upon demand by the Swing Line Bank, with a copy of
               such demand to the Administrative Agent (which shall give prompt
               notice thereof to each Revolving Credit Lender), each Revolving
               Credit Lender shall purchase from the Swing Line Bank, and the
               Swing Line Bank shall sell and assign to each such Revolving
               Credit Lender, such Revolving Credit Lender's Pro Rata Share of
               such outstanding Swing Line Borrowing as of the date of such
               demand, by making available for the account of its Applicable
               Lending Office to the Administrative Agent at the Administrative
               Agent's Account for the account of the Swing Line Bank, in same
               day funds, an amount equal to such Pro Rata Share. Promptly after
               receipt of such funds, the Administrative Agent shall transfer
               such funds to the Swing Line Bank at its Applicable Lending
               Office. Each Revolving Credit Lender hereby agrees to purchase
               its Pro Rata Share of an outstanding Swing Line Borrowing on (A)
               the Business Day on which demand therefor is made by the Swing
               Line Bank so long as notice of such demand is given not later
               than 12:00 Noon (Charlotte, North Carolina time) on such Business
               Day or (B) the first Business Day next succeeding such demand if
               notice of such demand is given after such time. The Borrower
               hereby agrees to each such sale and assignment. Upon any such
               assignment by the Swing Line Bank to any Revolving Credit Lender
               of a portion of a Swing Line Borrowing, the Swing Line Bank
               represents and warrants to such Revolving Credit Lender that the
               Swing Line Bank is the legal and beneficial owner of such
               interest being assigned by it, but makes no other representation
               or warranty and assumes no responsibility with respect to such
               Swing Line Borrowing, the Loan Documents or any Loan Party. If
               and to the extent that any Revolving Credit Lender shall not have
               so made its Pro Rata Share of any applicable Swing Line Borrowing
               available to the Administrative Agent in accordance with the
               foregoing provisions of this Section 2.02(b)(ii), such Revolving
               Credit Lender hereby agrees to pay to the Administrative Agent
               forthwith on demand the amount of its Pro Rata Share, together
               with interest thereon, for each day from the date of demand by
               the Swing Line Bank therefor until the date such amount is paid
               to the Administrative Agent, at the Federal Funds Rate. If such
               Lender shall pay to the Administrative Agent the amount of its
               Pro Rata Share for the account of the Swing Line Bank on any
               Business Day, such amount so paid in respect of principal shall
               constitute a Swing Line Advance made by such Lender on such
               Business Day for all purposes of this Agreement, and the
               outstanding principal amount of the Swing Line Advance made by
               the Swing Line Bank shall be reduced by such amount on such
               Business Day.

                    (ii)  The obligation of each Revolving Credit Lender to
               purchase its Pro Rata Share of each outstanding Swing Line
               Borrowing upon demand by the Swing Line Bank therefor pursuant to
               clause (ii) of this Section 2.02(b) shall be absolute,
               unconditional and irrevocable, and shall be made strictly in
               accordance with the terms of clause (ii) of this Section 2.02(b)
               under all circumstances, including, without limitation, the
               following circumstances:


                                       34

                    (A)   any lack of validity or enforceability of any Loan
               Document or any other agreement or instrument relating thereto;

                    (B)   the existence of any claim, set-off, defense or other
               right that such Revolving Credit Lender may have at any time
               against the Swing Line Bank, the Borrower or any other Person,
               whether in connection with the transactions contemplated by the
               Loan Documents or any unrelated transaction;

                    (C)   the occurrence and continuance of any Default or Event
               of Default; or

                    (D)   any other circumstance or happening whatsoever,
               whether or not similar to any of the foregoing.

         (c)   Anything in subsection (a) of this Section 2.02 to the contrary
notwithstanding, (i) the Borrower may not select Eurodollar Rate Advances if the
obligation of the Appropriate Lenders to make Eurodollar Rate Advances shall
then be suspended pursuant to Section 2.09 or 2.10. In addition, the Term
Advances may not be outstanding as part of more than 10 separate Borrowings and
the Revolving Credit Advances may not be outstanding as part of more than 10
separate Borrowings.

         (d)   Each Notice of Borrowing and Notice of Swing Line Borrowing shall
be irrevocable and binding on the Borrower. In the case of any Borrowing that
the related Notice of Borrowing specifies is to be comprised of Eurodollar Rate
Advances, the Borrower shall indemnify each Appropriate Lender against any loss,
cost or expense incurred by such Lender as a result of any failure to fulfill on
or before the date specified in such Notice of Borrowing for such Borrowing the
applicable conditions set forth in Article III, including, without limitation,
any loss, cost or expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by such Lender to fund the Eurodollar Rate
Advance to be made by such Lender as part of such Borrowing when such Advance,
as a result of such failure, is not made on such date. A certificate of the
Lender requesting compensation pursuant to this subsection (d) submitted to the
Borrower by such Lender (with a copy to the Administrative Agent) and specifying
therein the amount of such additional compensation (including the basis of
calculation thereof) shall be conclusive and binding for all purposes, absent
manifest error.

         (e)   Unless the Administrative Agent shall have received notice from
an Appropriate Lender prior to the date of any Borrowing under a Facility under
which such Lender has a Commitment that such Lender will not make available to
the Administrative Agent such Lender's Pro Rata Share of such Borrowing, the
Administrative Agent may assume that such Lender has made the amount of such Pro
Rata Share available to the Administrative Agent on the date of such Borrowing
in accordance with subsection (a) or (b) of this Section 2.02, as applicable,
and the Administrative Agent may, in reliance upon such assumption, make
available to the Borrower on such date a corresponding amount. If and to the
extent that such Lender shall not have so made the amount of such Pro Rata Share
available to the Administrative Agent, such Lender and the Borrower severally
agree to repay or to pay to the Administrative Agent forthwith on demand such
corresponding amount, together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid or paid to the Administrative Agent, at (i) in the case of the Borrower,
the interest rate applicable at such time under Section 2.07 to Advances
comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds
Rate. If such Lender shall pay to the Administrative Agent such corresponding


                                       35

amount, such amount so paid shall constitute such Lender's Advance as part of
such Borrowing for all purposes under this Agreement.

         (f)   The failure of any Lender to make the Advance to be made by it as
part of any Borrowing shall not relieve any other Lender of its obligation, if
any, hereunder to make its Advance on the date of such Borrowing, but no Lender
shall be responsible for the failure of any other Lender to make the Advance to
be made by such other Lender on the date of any Borrowing.

SECTION 2.03. Issuance of and Drawings and Reimbursement Under Letters of
- -------------------------------------------------------------------------
Credit.
- ------

         (a)   Request for Issuance. Each Letter of Credit shall be issued upon
               --------------------
notice, given not later than 2:00 P.M. (Charlotte, North Carolina time) on the
fifth Business Day prior to the date of the proposed issuance of such Letter of
Credit (or such later day as the Issuing Bank in its sole discretion shall
agree), by the Borrower to the Issuing Bank, which shall give to the
Administrative Agent and each Revolving Credit Lender prompt notice thereof by
telecopier. Each notice of issuance of a Letter of Credit (a "Notice of
Issuance") shall be by telephone, confirmed immediately in writing, or by
telecopier, shall be duly executed by a Responsible Officer of the Borrower, and
shall specify therein: (i) the requested date of such issuance (which shall be a
Business Day); (ii) the requested Available Amount of such Letter of Credit;
(iii) the requested expiration date of such Letter of Credit (which shall comply
with the requirements of Section 2.01(e)); (iv) the name and address of the
proposed beneficiary of such Letter of Credit; and (v) the proposed form of such
Letter of Credit, and shall be accompanied by such application and agreement for
letters of credit as the Issuing Bank may specify to the Borrower for use in
connection with such requested Letter of Credit (such applications and
agreements, and all similar agreements entered into in connection with an
Existing Letter of Credit, a "Letter of Credit Agreement"). If the requested
form of such Letter of Credit is acceptable to the Issuing Bank in its sole
discretion, the Issuing Bank will, upon fulfillment of the applicable conditions
set forth in Article III, make such Letter of Credit available to the Borrower
at its office referred to in Section 8.02 or as otherwise agreed with the
Borrower in connection with the issuance of such Letter of Credit. If and to the
extent that the provisions of any Letter of Credit Agreement shall conflict with
this Agreement, the provisions of this Agreement shall govern.

         (b)   Drawing and Reimbursement.
               -------------------------

               (i)  The obligation of the Borrower to reimburse the Issuing Bank
         for each payment made by the Issuing Bank under any Letter of Credit,
         and to pay interest thereon as provided herein, shall be absolute,
         unconditional and irrevocable, without regard to any circumstances,
         including, without limitation, those referred to in Section 2.04(d)
         below. The payment by the Issuing Bank of a draft drawn under any
         Letter of Credit shall constitute for all purposes of this Agreement
         the making by the Issuing Bank of a Letter of Credit Advance, which
         shall be a Base Rate Advance, in the amount of such draft; provided
         that such payment shall not be deemed a Base Rate Advance if the
         Borrower reimburses the Issuing Bank therefor prior to 2:00 P.M.
         (Charlotte, North Carolina time) on the date of such payment, or if
         such payment by the Issuing Bank is made on or after 2:00 P.M.
         (Charlotte, North Carolina time), then prior to 2:00 P.M. (Charlotte,
         North Carolina time), on the Business Day immediately succeeding the
         date of such payment, together with interest thereon from the date of
         such payment to the date of such reimbursement at a rate per annum
         equal to the sum of the Base Rate then in effect from time to time and
         the Applicable Margin for Base Rate Advances that are Revolving Credit
         Advances then in effect from time to time. Upon demand by the


                                       36

         Issuing Bank, with a copy of such demand to the Administrative Agent,
         each Revolving Credit Lender shall purchase from the Issuing Bank, and
         the Issuing Bank shall sell and assign to each such Revolving Credit
         Lender, such Lender's Pro Rata Share of such outstanding Letter of
         Credit Advance as of the date of such purchase, by making available for
         the account of its Applicable Lending Office to the Administrative
         Agent for the account of the Issuing Bank, at the Administrative
         Agent's Account, in same day funds, an amount equal to the portion of
         the outstanding principal amount of such Letter of Credit Advance to be
         purchased by such Lender. Promptly after receipt thereof, the
         Administrative Agent shall transfer such funds to the Issuing Bank. The
         Borrower hereby agrees to each such sale and assignment. Each Revolving
         Credit Lender agrees to purchase its Pro Rata Share of an outstanding
         Letter of Credit Advance on (A) the Business Day on which demand
         therefor is made by the Issuing Bank so long as notice of such demand
         is given not later than 2:00 P.M. (Charlotte, North Carolina time) on
         such Business Day or (B) the first Business Day next succeeding such
         demand if notice of such demand is given after such time. Upon any such
         assignment by the Issuing Bank to any other Revolving Credit Lender of
         a portion of a Letter of Credit Advance, the Issuing Bank represents
         and warrants to such other Lender that the Issuing Bank is the legal
         and beneficial owner of such interest being assigned by it, free and
         clear of any liens, but makes no other representation or warranty and
         assumes no responsibility with respect to such Letter of Credit
         Advance, the Loan Documents or any Loan Party. If and to the extent
         that any Revolving Credit Lender shall not have so made the amount of
         such Letter of Credit Advance available to the Administrative Agent,
         such Revolving Credit Lender agrees to pay to the Administrative Agent
         forthwith on demand such amount, together with interest thereon, for
         each day from the date of demand by the Issuing Bank until the date
         such amount is paid to the Administrative Agent, at the Federal Funds
         Rate, for its account or the account of the Issuing Bank, as
         applicable. If such Revolving Credit Lender shall pay to the
         Administrative Agent such amount for the account of the Issuing Bank on
         any Business Day, such amount so paid in respect of principal shall
         constitute a Letter of Credit Advance made by such Revolving Credit
         Lender on such Business Day for all purposes of this Agreement, and the
         outstanding principal amount of the Letter of Credit Advance made by
         the Issuing Bank shall be reduced by such amount on such Business Day.

               (ii) The Obligation of each Revolving Credit Lender to purchase
         its Pro Rata Share of each outstanding Letter of Credit Advance upon
         demand by the Issuing Bank therefor pursuant to clause (i) of this
         Section 2.03(c) shall be absolute, unconditional and irrevocable, and
         shall be made strictly in accordance with the terms of clause (i) of
         this Section 2.03(c) under all circumstances, including, without
         limitation, the following circumstances:

                    (A)   any lack of validity or enforceability of any Loan
               Document, any Letter of Credit Agreement, any Letter of Credit or
               any other agreement or instrument relating thereto (collectively,
               the "L/C Related Documents");

                    (B)   the existence of any claim, set-off, defense or other
               right that such Revolving Credit Lender may have at any time
               against any beneficiary or any transferee of a Letter of Credit
               (or any Person for whom any such beneficiary or any such
               transferee may be acting), the Issuing Bank, the Borrower or any
               other Person, whether in connection with the transactions
               contemplated by the L/C Related Documents or any unrelated
               transaction;


                                       37

               (C)  the occurrence and continuance of any Default or Event of
         Default; or

               (D)  any other circumstance or happening whatsoever, whether or
         not similar to any of the foregoing.

     (c) Failure to Make Letter of Credit Advances. The failure of any Revolving
         -----------------------------------------
Credit Lender to make the Letter of Credit Advance to be made by it on the date
specified in Section 2.03(b) shall not relieve any other Revolving Credit Lender
of its obligation hereunder to make its Letter of Credit Advance on such date,
but no Revolving Credit Lender shall be responsible for the failure of any other
Revolving Credit Lender to make the Letter of Credit Advance to be made by such
other Revolving Credit Lender on such date.

SECTION 2.04.  Repayment of Advances.
- -------------------------------------

     (a) Term Advances.
         -------------
         (i)   Subject to Section 2.04(a)(ii) with respect to the Term B
     Facility, the Borrower shall repay to the Administrative Agent for the
     ratable account of the Appropriate Lenders the aggregate principal amount
     of all Term Advances outstanding on the following dates in the respective
     amounts set forth opposite such dates (which amounts shall be reduced as a
     result of the application of prepayments in accordance with the order of
     priority set forth in Section 2.05):



       =====================================================================
              DATE                                AMOUNT
       ---------------------------------------------------------------------
                                   Term A Facility        Term B Facility
       ---------------------------------------------------------------------
                                                    
       June 30, 2001               $2,500,000             $500,000
       ---------------------------------------------------------------------
       September 30, 2001          $2,500,000             $500,000
       ---------------------------------------------------------------------
       December 31, 2001           $2,500,000             $500,000
       ---------------------------------------------------------------------
       March 31, 2002              $2,500,000             $500,000
       ---------------------------------------------------------------------
       June 30, 2002               $2,500,000             $500,000
       ---------------------------------------------------------------------
       September 30, 2002          $2,500,000             $500,000
       ---------------------------------------------------------------------
       December 31, 2002           $2,500,000             $500,000
       ---------------------------------------------------------------------
       March 31, 2003              $2,500,000             $500,000
       ---------------------------------------------------------------------
       June 30, 2003               $2,500,000             $500,000
       ---------------------------------------------------------------------
       September 30, 2003          $2,500,000             $500,000
       ---------------------------------------------------------------------
       December 31, 2003           $2,500,000             $500,000
       ---------------------------------------------------------------------
       March 31, 2004              $2,500,000             $500,000
       ---------------------------------------------------------------------
       June 30, 2004               $2,500,000             $500,000
       ---------------------------------------------------------------------
       September 30, 2004          $2,500,000             $500,000
       ---------------------------------------------------------------------
       December 31, 2004           $2,500,000             $500,000
       ---------------------------------------------------------------------
       March 31, 2005              $2,500,000             $500,000
       ---------------------------------------------------------------------
       June 30, 2005               $2,500,000             $500,000
       ---------------------------------------------------------------------
       September 30, 2005          $2,500,000             $500,000
       ---------------------------------------------------------------------
       December 31, 2005           $2,500,000             $500,000
       ---------------------------------------------------------------------
       March 31, 2006              $2,500,000             $190,500,000
       =====================================================================



                                       38

          provided, however, that the final principal installment of the
          respective Term Advances shall be in an amount equal to the aggregate
          principal amount of all such Term Advances then outstanding.

               (ii) Notwithstanding Section 2.04(a)(i), if the maturity of the
          subordinated notes referred to in clause (i) of the definition of
          "Subordinated Notes" has been extended by March 1, 2006 to a date not
          earlier than June 1, 2007, or if such subordinated notes have been
          converted to Equity Interests of the Borrower by March 1, 2006, then
          the Borrower shall repay to the Administrative Agent for the ratable
          account of the Term B Lenders the aggregate principal amount of all
          Term B Advances outstanding on the following dates in the respective
          amounts set forth opposite such dates (which amounts shall be reduced
          as a result of the application of prepayments in accordance with the
          order of priority set forth in Section 2.05):

               -------------------------------------------
                        DATE                  AMOUNT
               -------------------------------------------
                                Term B Facility
               -------------------------------------------
               June 30, 2001           $500,000
               -------------------------------------------
               September 30, 2001      $500,000
               -------------------------------------------
               December 31, 2001       $500,000
               -------------------------------------------
               March 31, 2002          $500,000
               -------------------------------------------
               June 30, 2002           $500,000
               -------------------------------------------
               September 30, 2002      $500,000
               -------------------------------------------
               December 31, 2002       $500,000
               -------------------------------------------
               March 31, 2003          $500,000
               -------------------------------------------
               June 30, 2003           $500,000
               -------------------------------------------
               September 30, 2003      $500,000
               -------------------------------------------
               December 31, 2003       $500,000
               -------------------------------------------
               March 31, 2004          $500,000
               -------------------------------------------
               June 30, 2004           $500,000
               -------------------------------------------
               September 30, 2004      $500,000
               -------------------------------------------
               December 31, 2004       $500,000
               -------------------------------------------
               March 31, 2005          $500,000
               -------------------------------------------
               June 30, 2005           $500,000
               -------------------------------------------
               September 30, 2005      $500,000
               -------------------------------------------
               December 31, 2005       $500,000
               -------------------------------------------
               March 31, 2006          $500,000
               -------------------------------------------
               June 30, 2006           $500,000
               -------------------------------------------
               September 30, 2006      $500,000
               -------------------------------------------
               December 31, 2006       $500,000
               -------------------------------------------
               March 31, 2007          $188,500,000
               -------------------------------------------

          provided, however, that the final installment of the Term B Advances
          shall be in an amount equal to the aggregate principal amount of all
          Term B Advances then outstanding.

          (b)  Revolving Credit Advances. The Borrower shall repay to the
               -------------------------
     Administrative Agent for the ratable account of the Revolving Credit
     Lenders on the Termination Date the aggregate principal amount of all
     Revolving Credit Advances outstanding on such date.


                                       39

          (c)  Swing Line Advances. The Borrower shall repay to the
               -------------------
     Administrative Agent for the account of the Swing Line Bank and each
     Revolving Credit Lender that has made a Swing Line Advance on the earlier
     of (i) the maturity date for each Swing Line Advance (as specified in the
     applicable Notice of Swing Line Borrowing (which maturity shall be no later
     than the seventh day after the date on which such Swing Line Borrowing was
     initially made by the Swing Line Bank) and (ii) the Termination Date, the
     principal amount of each such Swing Line Advance made by the Swing Line
     Bank and each such Revolving Credit Lender and outstanding on such date.

          (d)  Letter of Credit Advances.
               -------------------------

               (i)  The Borrower shall repay to the Administrative Agent for the
          account of the Issuing Bank and each Revolving Credit Lender that has
          made a Letter of Credit Advance on the earlier of (A) the date of
          demand therefor and (B) the Termination Date, the principal amount of
          each such Letter of Credit Advance made by the Issuing Bank and each
          such Revolving Credit Lender and outstanding on such date.

               (ii) The Obligations of the Borrower under this Agreement, any
          Letter of Credit Agreement and any other agreement or instrument
          relating to any Letter of Credit shall be absolute, unconditional and
          irrevocable, and shall be paid strictly in accordance with the terms
          of this Agreement, such Letter of Credit Agreement or such other
          agreement or instrument under all circumstances, including, without
          limitation, the following circumstances (it being understood that any
          such payment by the Borrower is without prejudice to, and does not
          constitute a waiver of, any rights the Borrower might have or might
          acquire as a result of the payment by the Issuing Bank of any draft
          drawn or the reimbursement by the Borrower thereof):

                    (A)  any lack of validity or enforceability of any L/C
               Related Document;

                    (B)  any change in the time, manner or place of payment of,
               or in any other term of, all or any of the Obligations of the
               Borrower in respect of any L/C Related Document or any other
               amendment or waiver of or any consent to departure from all or
               any of the L/C Related Documents;

                    (C)  the existence of any claim, set-off, defense or other
               right that the Borrower may have at any time against any
               beneficiary or any transferee of a Letter of Credit (or any
               Person for whom any such beneficiary or any such transferee may
               be acting), the Issuing Bank or any other Person, whether in
               connection with the transactions contemplated by the L/C Related
               Documents or any unrelated transaction;

                    (D)  any statement or any other document presented under a
               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;

                    (E)  payment by the Issuing Bank under a Letter of Credit
               against presentation of a draft, certificate or other document
               that does not strictly comply with the terms of such Letter of
               Credit;


                                       40

                    (F)  any exchange, release or nonperfection of any
               Collateral or other collateral, or any release or amendment or
               waiver of or consent to departure from the Subsidiary Guaranty or
               any other guarantee, for all or any of the Obligations of the
               Borrower in respect of the L/C Related Documents; or

                    (G)  any other circumstance or happening whatsoever, whether
               or not similar to any of the foregoing, including, without
               limitation, any other circumstance that might otherwise
               constitute a defense available to, or a discharge of, the
               Borrower or a guarantor.

     SECTION 2.05. Termination or Reduction of the Commitments.
     ---------------------------------------------------------

          (a)  Optional. The Borrower may, upon at least three Business Days'
               --------
     notice to the Administrative Agent, terminate in whole or reduce in part
     the unused portions of the Letter of Credit Facility or the Unused
     Revolving Credit Commitments; provided, however, that each partial
     reduction of a Facility shall be in an aggregate amount of $5,000,000 or an
     integral multiple of $1,000,000 in excess thereof or, if less, the
     aggregate amount of such Facility.

          (b)  Mandatory.
               ---------

               (i)   The Revolving Credit Facility shall be automatically and
          permanently reduced on each date on which the prepayment of Revolving
          Credit Advances outstanding thereunder is required to be made pursuant
          to Section 2.06(b)(i) by an amount equal to the applicable Reduction
          Amount.

               (ii)  The Swing Line Facility shall be automatically and
          permanently reduced on the date of each reduction in the Revolving
          Credit Facility by the amount, if any, by which the amount of the
          Swing Line Facility on such date exceeds the amount of the Revolving
          Credit Facility on such date (after giving effect to such reduction of
          the Revolving Credit Facility on such date).

               (iii) The Letter of Credit Facility shall be automatically and
          permanently reduced on the date of each reduction in the Revolving
          Credit Facility by an amount equal to the amount, if any, by which (A)
          the Letter of Credit Facility on such date exceeds (B) the Revolving
          Credit Facility on such date, after giving effect to such reduction of
          the Revolving Credit Facility.

          (c)  Application of Commitment Reductions. Upon each reduction of a
               ------------------------------------
     Facility pursuant to this Section 2.05, the Commitment of each Appropriate
     Lender under such Facility shall be reduced by such Lender's Pro Rata Share
     of the amount by which such Facility is reduced.

          (d)  Incremental Facilities and Commitments.
               --------------------------------------

               (i)   At any time during the term of this Agreement, and so long
          as no Default or Event of Default shall have occurred and be
          continuing or would result therefrom, the Borrower may request, from
          time to time, by notice to the Administrative Agent that one or more
          Lenders (and/or one or more other Persons which shall become Lenders
          as provided in Section 2.05(d)(iii) below) provide one or more
          additional facilities to supplement the Revolving Credit Facility, the
          Term A Facility or the Term B Facility (each, an "Incremental
          Facility"), which Incremental Facilities together shall provide for


                                       41

          commitments ("Incremental Commitments") for loans in an aggregate
          amount of not greater than $100,000,000 in excess of the aggregate
          outstanding amount of the Term A Advances, the Term B Advances or the
          Revolving Credit Commitment, as the case may be, at the time of the
          respective request (collectively, "Incremental Loans") provided that
          (A) no Lender shall have any obligation to provide any Incremental
          Commitment, (B) any Lender (or any other Person which becomes a Lender
          pursuant to Section 2.05(d)(iii) below) may provide Incremental
          Commitments without the consent of any other Lender and (C) each of
          the Term A Facility, the Term B Facility and the Revolving Credit
          Facility, as the case may be, may only be supplemented once as
          provided herein.

               (ii)  The maturity date, scheduled amortization and commitment
          reductions, mandatory prepayments and commitment reductions, interest
          rate, minimum borrowings and prepayments, commitment fees and other
          amounts payable in respect of any Incremental Facility, and certain
          agent determinations and other relevant provisions, shall be as set
          forth in an agreement (an "Incremental Facility Agreement") among the
          Loan Parties, the Administrative Agent, the Lenders and other Persons
          agreeing to provide Incremental Commitments thereunder; provided that
          any Incremental Loans to supplement the Term A Facility shall have a
          Weighted Average Life to Maturity of no less than the Weighted Average
          Life to Maturity of the Term A Advances then outstanding, any
          Incremental Loans to supplement the Term B Facility shall have a
          Weighted Average Life to Maturity of no less than the Weighted Average
          Life to Maturity of the Term B Advances then outstanding and any
          revolving Incremental Commitment to supplement the Revolving Credit
          Commitment shall have a termination date not later than the then
          scheduled Termination Date.

               (iii) The effectiveness of any Incremental Facility to be created
          under this Section 2.05(d), and the obligation of any Lender or other
          Person providing any Incremental Commitment thereunder to make any
          Incremental Loans pursuant thereto, is subject to, in addition to the
          conditions set forth in Article III, the satisfaction of each of the
          following conditions: (i) each Loan Party, the Administrative Agent,
          and each Lender or other Person providing Incremental Commitments
          thereunder (each, an "Incremental Lender") shall have executed and
          delivered to the Administrative Agent an Incremental Facility
          Agreement with respect to such Incremental Facility, (ii) the
          Administrative Agent shall have received for its account and for the
          respective accounts of any other agents and the Incremental Lenders,
          all fees and other amounts payable by the Borrower in respect of such
          Incremental Facility on or prior to such date of effectiveness and
          (iii) the Administrative Agent (or its counsel) shall have received
          such documents and certificates, and such legal opinions, as the
          Administration Agent or its counsel shall reasonably request,
          including documents, certificates and legal opinions relating to the
          organization, existence and good standing of each Loan Party, the
          authorization of such Incremental Facility and other legal matters
          relating to the Loan Parties or the Loan Documents (including the
          applicable Incremental Facility Agreement). The Administrative Agent
          shall notify each Lender as to the effectiveness of each Incremental
          Facility hereunder.

     SECTION 2.06. Prepayments.
     -------------------------

          ()   Optional. The Borrower may, on any Business Day, prepay all or
               --------
     any portions of any Swing Line Advance and (ii) upon at least three
     Business Days' notice to the Administrative Agent stating the Facility
     under which Advances are proposed to be prepaid and the proposed date and
     aggregate principal amount of the prepayment, and if such notice is given
     the Borrower


                                       42

     shall, prepay the aggregate principal amount of the Advances comprising
     part of the same Borrowing and outstanding on such date, in whole or
     ratably in part; provided, however, that each partial prepayment of
     (i) Revolving Credit Advances shall be in an aggregate principal amount of
     $1,000,000 or an integral multiple of $250,000 in excess thereof and
     (ii) Term Advances shall be in an aggregate principal amount of $5,000,000
     or an integral multiple of $500,000 in excess thereof or, if less, the
     aggregate outstanding principal amount of such Facility. Each prepayment of
     Term Advances made pursuant to this clause (a) shall be applied against the
     principal repayment installments of the respective Term Facility designated
     by the Borrower in the respective notice of prepayment.

          (b)  Mandatory.
               ---------

               (i)  The Borrower shall, not later than one Business Day after
          the date of receipt of the Net Cash Proceeds by the Borrower or any of
          its Subsidiaries from:

                    (A)  the sale, lease, transfer or other disposition of any
               property or assets of the Borrower or any of its Subsidiaries
               (other than any property or assets expressly permitted to be
               sold, leased, transferred or otherwise disposed of pursuant to
               clause (i), (ii), (iii), (iv) or (v) of Section 5.02(e));

                    (B)  the incurrence or issuance by the Borrower or any of
               its Subsidiaries of any Debt (other than Debt expressly permitted
               to be incurred or issued pursuant to clause (i), (iii), (iv),
               (v), (vi), (vii), (viii), (ix), (x), (xi) or (xiii) of Section
               5.02(b)); and

                    (C)  the issuance or sale by the Borrower or any Subsidiary
               thereof (which is or will be as a result thereof subject to the
               Securities Exchange Act of 1934, as amended) of any Equity
               Interests therein (other than (i) the issuance by the Borrower of
               (a) its common stock to employees of the Borrower or its
               Subsidiaries pursuant to employee equity incentive or benefit
               plans, (b) Equity Interests to effect any acquisition permitted
               under Section 5.02(f) hereof, provided that in the case in which
               the proceeds of such issuance are contemplated to be used to
               effect such acquisition, then all the proceeds thereof are used
               within 180 days of such issuance to effect such acquisition, and
               any such proceeds not so used by such 180th day shall be applied
               as a prepayment as provided herein, or (c) Equity Interests in
               connection with a redemption of Subordinated Debt to the extent
               contemplated in Section 5.02(i) and, (ii) the issuance by any
               Subsidiary of the Borrower of any Equity Interests therein to the
               Borrower or to another Subsidiary thereof), prepay an aggregate
               principal amount of the Advances comprising part of the same
               Borrowings equal to (x) 100% of the amount of the Net Cash
               Proceeds in respect of any sale, lease, transfer or other
               disposition of any property or assets of the Borrower or any of
               its Subsidiaries referred to in subclause (b)(i)(A) above to the
               extent such Net Cash Proceeds have not been reinvested within the
               applicable reinvestment period as provided in
               Section 5.02(e)(vi); (y) the first $150,000,000 of Net Cash
               Proceeds from the incurrence or issuance by the Borrower or any
               of its Subsidiaries of all Debt referred to in subclause
               (b)(i)(B) above plus 50% of any such Net Cash Proceeds in excess
               of $150,000,000; and (z) 50% of the amount of the Net Cash
               Proceeds of the issuance or sale by the Borrower of any Equity
               Interests other than common Equity Interests and 25% of the
               amount of Net Cash Proceeds of the issuance or sale by the
               Borrower of any common Equity Interests referred to in subclause
               (b)(i)(C) above, and in the case of Net Cash Proceeds from the
               issuance or sale by any Subsidiary of the Borrower of Equity
               Interests


                                       43

               referred to in subclause (b)(i)(C) above other than common Equity
               Interests, 50% of an amount equal to the Borrower's Percentage of
               such Net Cash Proceeds and in the case of Net Cash Proceeds from
               the issuance by any Subsidiary of the Borrower of common Equity
               Interests referred to in subclause (b)(i)(C) above, 25% of an
               amount equal to the Borrower's Percentage of such Net Cash
               Proceeds. Each prepayment of advances required to be made
               pursuant to this subclause (i) shall first be applied on a pro
               rata basis between the Term Facilities, and with respect to each
               Term Facility, applied on a pro rata basis against the respective
               principal repayment installments thereof, and thereafter applied
               to the Revolving Credit Facility in the manner set forth in this
               Section 2.06(b).


               (ii)  The Borrower shall, on each Business Day, prepay an
          aggregate principal amount of the Revolving Credit Advances comprising
          part of the same Borrowings, the Letter of Credit Advances and the
          Swing Line Advances and, if applicable, deposit an amount into the L/C
          Cash Collateral Account equal to the amount by which (A) the sum of
          (1) the aggregate principal amount of all Revolving Credit Advances,
          Letter of Credit Advances and Swing Line Advances outstanding on such
          Business Day and (2) the aggregate Available Amount of all Letters of
          Credit outstanding on such Business Day exceeds (B) the Revolving
          Credit Facility on such Business Day (after giving effect to any
          permanent reduction thereof pursuant to Section 2.05 on such Business
          Day).

               (iii) The Borrower shall, on each Business Day, pay to the
          Administrative Agent for deposit into the L/C Cash Collateral Account
          an amount sufficient to cause the aggregate amount on deposit in the
          L/C Cash Collateral Account on such Business Day to equal the amount
          by which (A) the aggregate Available Amount of all Letters of Credit
          outstanding on such Business Day exceeds (B) the Letter of Credit
          Facility on such Business Day (after giving effect to any permanent
          reduction thereof pursuant to Section 2.05 on such Business Day).

               (iv)  Prepayments of the Revolving Credit Facility made pursuant
          to clause (i), (ii), or (iii) of this Section 2.06(b), first, shall be
          applied to prepay Letter of Credit Advances outstanding at such time
          until all such Letter of Credit Advances are paid in full, second,
          shall be applied to prepay Swing Line Advances outstanding at such
          time until all such Swing Line Advances are paid in full, third, shall
          be applied to prepay Revolving Credit Advances comprising part of the
          same Borrowings and outstanding at such time until all such Revolving
          Credit Advances are paid in full and, fourth, shall be deposited into
          the L/C Cash Collateral Account to cash collateralize 100% of the
          Available Amount of all Letters of Credit outstanding at such time;
          and, in the case of prepayments of the Revolving Credit Facility
          required pursuant to clause (i) or (ii) of this Section 2.06(b), the
          amount remaining, if any, after the prepayment in full of all Advances
          outstanding at such time and the 100% cash collateralization of the
          aggregate Available Amount of all Letters of Credit outstanding at
          such time (the sum of such prepayment amounts, cash collateralization
          amounts and remaining amount being, collectively, the "Reduction
          Amount") may be retained by the Borrower for use in the ordinary
          course of its business, and the Letter of Credit Facility shall be
          automatically and permanently reduced as set forth in Section
          2.05(b)(iii). Upon the drawing of any Letter of Credit for which funds
          are on deposit in the L/C Cash Collateral Account, such


                                       44

          funds shall be applied (without any further action by or notice to or
          from the Borrower or any other Loan Party) to reimburse the Issuing
          Bank or the Revolving Credit Lenders, as applicable.

          (c)  Prepayments to Include Accrued Interest, Etc. All prepayments
               --------------------------------------------
     under this Section 2.06 shall be made together with (i) accrued and unpaid
     interest to the date of such prepayment on the principal amount so prepaid
     and (ii) in the case of any such prepayment of a Eurodollar Rate Advance on
     a date other than the last day of an Interest Period therefor, any amounts
     owing in respect of such Eurodollar Rate Advance pursuant to 8.04(c).

SECTION 2.07. Interest
- ----------------------

          (a)  Scheduled Interest. The Borrower shall pay interest on the unpaid
               ------------------
     principal amount of each Advance owing to each Lender Party from the date
     of such Advance until such principal amount shall be paid in full, at the
     following rates per annum:

               (i)   Base Rate Advances. During such periods as such Advance is
                     ------------------
     a Base Rate Advance, a rate per annum equal at all times to the sum of (A)
     the Base Rate in effect from time to time and (B) the Applicable Margin for
     such Base Rate Advance in effect from time to time, payable in arrears
     quarterly on the last day of each March, June, September and December
     during such periods and on the date such Base Rate Advance shall be
     Converted or paid in full.

               (ii)  Eurodollar Rate Advances. During such periods as such
                     ------------------------
     Advance is a Eurodollar Rate Advance, a rate per annum equal at all times
     during each Interest Period for such Eurodollar Rate Advance to the sum of
     (A) the Eurodollar Rate for such Eurodollar Rate Advance for such Interest
     Period and (B) the Applicable Margin for such Advance in effect on the
     first day of such Interest Period, payable in arrears on the last day of
     such Interest Period and, if such Interest Period has a duration of more
     than three months, on each day that occurs during such Interest Period
     every three months from the first day of such Interest Period and on the
     date such Eurodollar Rate Advance shall be Converted or paid in full.

               (iii) Default Interest. Upon the occurrence and during the
                     ----------------
     continuance of a Default under Section 6.01(a) or 6.01(f) or an Event of
     Default, the Administrative Agent may, and upon the request of the Required
     Lenders shall, require that the Borrower pay interest on (i) the unpaid
     principal amount of each Advance owing to each Lender Party, payable in
     arrears on the dates referred to in clause (i) or (ii) of Section 2.07(a),
     as applicable, and on demand, at a rate per annum equal at all times to 2%
     per annum above the rate per annum required to be paid on such Advance
     pursuant to clause (i) or (ii) of Section 2.07(a), as applicable, and (ii)
     to the fullest extent permitted by applicable law, the amount of any
     interest, fee or other amount payable under this Agreement or any other
     Loan Document to any Agent or any Lender Party that is not paid when due,
     from the date such amount shall be due until such amount shall be paid in
     full, payable in arrears on the date such amount shall be paid in full and
     on demand, at a rate per annum equal at all times to 2% per annum above the
     rate per annum required to be paid, in the case of interest, on the Type of
     Advance on which such interest has accrued pursuant to clause (i) or (ii)
     of Section 2.07(a), as applicable, and, in all other cases, on Base Rate
     Advances pursuant to clause (i) of Section 2.07(a).


                                       45

          (b)  Notice of Interest Rate. Promptly after receipt of a Notice of
               -----------------------
     Borrowing pursuant to Section 2.02(a), a Notice of Conversion pursuant to
     Section 2.09(a) or a notice of selection of an Interest Period pursuant to
     the definition of "Interest Period" set forth in Section 1.01, the
     Administrative Agent shall give notice to the Borrower and each Appropriate
     Lender of the applicable interest rate determined by the Administrative
     Agent for purposes of clause (i) or (ii) of Section 2.07(a), as applicable.

SECTION 2.08. Fees.
- ------------------

          (a)  Commitment Fee. The Borrower shall pay to the Administrative
               --------------
     Agent for the account of the Lenders a commitment fee (the "Commitment
     Fee"), from May 4, 2001 in the case of each Initial Lender and from the
     effective date specified in the Assignment and Acceptance pursuant to which
     it became a Lender in the case of each other Lender until, in each case,
     the Termination Date, payable in arrears on the date of the Initial
     Extension of Credit, thereafter quarterly on the last Business Day of each
     March, June, September and December, commencing June 30, 2001, and on the
     Termination Date, at the Applicable Percentage in effect from time to time
     on the sum of (i) the average daily Unused Revolving Credit Commitment of
     each Revolving Credit Lender plus (ii) such Revolving Credit Lender's Pro
     Rata Share of the average daily outstanding Swing Line Advances during such
     quarter; provided, however, that no Commitment Fee shall accrue on any of
     the Commitments of a Defaulting Lender so long as such Lender shall be a
     Defaulting Lender.

          (b)  Letter of Credit Fees, Etc.
               --------------------------

               (i)  The Borrower shall pay to the Administrative Agent for the
          account of each Revolving Credit Lender a commission, payable in
          arrears quarterly on the last Business Day of each March, June,
          September and December, commencing June 30, 2001, and on the earliest
          to occur of the full drawing, expiration, termination or cancellation
          of any such Letter of Credit and on the Termination Date, on such
          Revolving Credit Lender's Pro Rata Share of the average daily
          aggregate Available Amount of all Letters of Credit outstanding from
          time to time during such quarter at the rate per annum equal to the
          Applicable Margin in effect at such time for Eurodollar Rate Advances
          under the Revolving Credit Facility. Upon the occurrence and during
          the continuance of a Default under Section 6.01(a) or 6.01(f) or an
          Event of Default, the amount of commission payable by the Borrower
          under this clause (b)(i) shall be increased by 2% per annum.

               (ii) The Borrower shall pay to the Issuing Bank, for its own
          account, such commissions, issuance fees, fronting fees, transfer fees
          and other fees and charges in connection with the issuance or
          administration of each Letter of Credit as the Borrower and the
          Issuing Bank shall from time to time agree.

          (c)  Agents' Fees. The Borrower shall pay to the Administrative Agent
               ------------
     for the account of the Agents such fees as may from time to time be agreed
     between the Borrower and the Administrative Agent.

     SECTION 2.09. Conversion of Advances.
     ------------------------------------

          (a)  Optional. The Borrower may on any Business Day, upon notice given
               --------
     to the Administrative Agent not later than (i) 2:00 P.M. (Charlotte, North
     Carolina time) on the third Business Day prior to the date of the proposed
     Conversion in the case of a Conversion of Base


                                       46

     Rate Advances into Eurodollar Rate Advances or of Eurodollar Rate Advances
     of one Interest Period into Eurodollar Rate Advances of another Interest
     Period, or (ii) 2:00 P.M. (Charlotte, North Carolina time) on the Business
     Day immediately preceding the date of the proposed Conversion in the case
     of a Conversion of Eurodollar Rate Advances into Base Rate Advances;
     provided, however, that in each case:

               (A)  any Conversion of Base Rate Advances into Eurodollar Rate
          Advances shall be made only if no Default under Section 6.01(f) or
          Event of Default shall have occurred and be continuing and shall be in
          an amount not less than the minimum amount specified in Section
          2.01(c);

               (B)  no Conversion of any Advances shall result in more separate
          Borrowings than permitted under Section 2.02(c); and

               (C)  each Conversion of Advances comprising part of the same
          Borrowing under any Facility shall be made among the Appropriate
          Lenders in accordance with their respective Pro Rata Shares of such
          Borrowing.

     Each notice of a Conversion (a "Notice of Conversion") shall be delivered
     by telephone, confirmed immediately in writing, or by telecopier, in
     substantially the form of Exhibit B-3 hereto, shall be duly executed by a
     Responsible Officer of the Borrower, and shall, within the restrictions set
     forth in the immediately preceding sentence, specify therein:

          (1)  the requested date of such Conversion (which shall be a Business
               Day);

          (2)  the Advances requested to be Converted; and

          (3)  if such Conversion is into Eurodollar Rate Advances, the
               requested duration of the Interest Period for such Eurodollar
               Rate Advances.

     The Administrative Agent shall give each of the Appropriate Lenders prompt
     notice of each Notice of Conversion received by it, by telecopier. Each
     Notice of Conversion shall be irrevocable and binding on the Borrower.

          (b)  Mandatory.
               ---------

               (i)   On the last day of any Interest Period during which the
          aggregate unpaid principal amount of Eurodollar Rate Advances
          comprising any Borrowing shall be reduced, by payment or prepayment or
          otherwise, to less than $5,000,000, such Advances shall automatically
          Convert into Base Rate Advances.

               (ii)  If the Borrower shall fail to select the duration of any
          Interest Period for any Eurodollar Rate Advances in accordance with
          the provisions contained in the definition of "Interest Period" set
          forth in Section 1.01, the Administrative Agent will forthwith so
          notify the Borrower and the Appropriate Lenders, whereupon each such
          Eurodollar Rate Advance will automatically, on the last day of the
          then existing Interest Period therefor, Convert into a Base Rate
          Advance.

               (iii) Upon the occurrence and during the continuance of any
          Default under Section 6.01(f) or any Event of Default, (A) each
          Eurodollar Rate Advance will automatically, on the last day of the
          then existing Interest Period therefor, Convert into a


                                       47

          Base Rate Advance and (B) the obligation of the Lenders to make, or to
          Convert Advances into, Eurodollar Rate Advances shall be suspended.

     SECTION 2.10. Increased Costs, Etc.
     ----------------------------------

          (a)  If, after the date hereof, the adoption of any applicable
     Requirement of Law, or any change in any applicable Requirement of Law, or
     any change in the interpretation or administration thereof by any
     Governmental Authority, central bank or comparable agency charged with the
     interpretation or administration thereof, or compliance by any Lender (or
     its Applicable Lending Office) with any request or directive (whether or
     not having the force of law) of any such Governmental Authority, central
     bank or comparable agency:

               (i)   subject such Lender (or its Applicable Lending Office) to
          any tax, duty, or other charge with respect to any Eurodollar Rate
          Advances, any of its Notes, or its obligation to make any Eurodollar
          Rate Advances, or change the basis of taxation of any amounts payable
          to such Lender (or its Applicable Lending Office) under this Agreement
          or its Note in respect of any Eurodollar Rate Advances (other than,
          for purposes of this Section 2.10, any such increased costs resulting
          from (A) Taxes or Other Taxes (as to which Section 2.13 shall govern),
          and (B) changes in the basis of taxation of overall net income or
          overall gross income by the United States of America or the
          jurisdiction under the laws of which such Lender Party has its
          principal office or such Applicable Lending Office);

               (ii)  shall impose, modify, or deem applicable any reserve,
          special deposit, assessment, or similar requirement (other than any
          change by way of the imposition of or increase in reserve requirements
          included in the Eurodollar Rate Reserve Percentage) relating to any
          extensions of credit or other assets of, or any deposits with or other
          liabilities or commitments of, such Lender (or its Applicable Lending
          Office), including the Commitments of such Lender hereunder; or

               (iii) shall impose on such Lender (or its Applicable Lending
          Office) or on the United States market for certificates of deposit or
          the London interbank market any other condition affecting this
          Agreement or its Note or any of such extensions of credit or
          liabilities or commitments;

     and the result of any of the foregoing is to increase the cost to such
     Lender (or its Applicable Lending Office) of making, Converting into or
     maintaining any Eurodollar Rate Advances or to reduce any sum received or
     receivable by such Lender (or its Applicable Lending Office) under this
     Agreement or its Note with respect to any Eurodollar Rate Advances, then
     the Borrower shall pay to such Lender on demand such amount or amounts as
     will compensate such Lender for such increased cost or reduction. Each
     Lender shall promptly notify the Borrower and the Administrative Agent of
     any event of which it has knowledge, occurring after the date hereof, which
     will entitle such Lender to compensation pursuant to this Section 2.10(a)
     and will designate a different Applicable Lending Office if such
     designation will avoid the need for, or reduce the amount of, such
     compensation and will not, in the judgment of such Lender, be otherwise
     disadvantageous to it (other than by reason of administrative convenience
     or preference). Any Lender claiming compensation under this Section 2.10(a)
     shall furnish to the Borrower and the Administrative Agent a statement
     setting forth the additional amount or amounts to be paid to it hereunder
     (including the method of calculation), which shall be conclusive and
     binding, absent manifest error. In determining such amount, such Lender may
     use any reasonable averaging and attribution methods. If any Lender
     requests compensation by the


                                       48

     Borrower under this Section 2.10(a), the Borrower may, by notice to such
     Lender (with a copy to the Administrative Agent), suspend the obligation of
     such Lender to make or Convert Eurodollar Rate Advances, or to Convert Base
     Rate Advances into Eurodollar Rate Advances, until the event or condition
     giving rise to such request ceases to be in effect (in which case the
     provisions of Section 2.10(e) shall be applicable); provided that such
     suspension shall not affect the right of such Lender to receive the
     compensation so requested.

          (b)  If, after the date hereof, any Lender shall have determined that
     the adoption of any applicable Requirement of Law regarding capital
     adequacy or any change therein or in the interpretation or administration
     thereof by any Governmental Authority, central bank or comparable agency
     charged with the interpretation or administration thereof, or any request
     or directive regarding capital adequacy (whether or not having the force of
     law) of any such Governmental Authority, central bank or comparable agency,
     has or would have the effect of reducing the rate of return on the capital
     of such Lender or any corporation controlling such Lender as a consequence
     of such Lender's obligations hereunder to a level below that which such
     Lender or such corporation could have achieved but for such adoption,
     change, request or directive (taking into consideration its policies with
     respect to capital adequacy), then from time to time upon demand the
     Borrower shall pay to such Lender such additional amount or amounts as will
     compensate such Lender for such reduction. Each Lender shall promptly
     notify the Borrower and the Administrative Agent of any event of which it
     has knowledge, occurring after the date hereof, which will entitle such
     Lender to compensation pursuant to this Section 2.10(b) and will designate
     a different Applicable Lending Office if such designation will avoid the
     need for, or reduce the amount of, such compensation and will not, in the
     judgment of such Lender, be otherwise disadvantageous to it. Any Lender
     claiming compensation under this Section 2.10(b) shall furnish to the
     Borrower and the Administrative Agent a statement setting forth the
     additional amount or amounts to be paid to it hereunder (including the
     method of calculation), which shall be conclusive and binding, absent
     manifest error. In determining such amount, such Lender may use any
     reasonable averaging and attribution methods.

          (c)  If, on or prior to the first day of any Interest Period for any
     Eurodollar Rate Advance, the Required Lenders at any time notify the
     Administrative Agent that the Eurodollar Rate for any Interest Period for
     such Advances will not adequately and fairly reflect the cost to the
     Appropriate Lenders of funding their Eurodollar Rate Advances for such
     Interest Period, the Administrative Agent shall promptly so notify the
     Borrower and the Appropriate Lenders, whereupon (i) each such Eurodollar
     Rate Advance will automatically, on the last day of the then existing
     Interest Period therefor, Convert into a Base Rate Advance and (ii) the
     obligation of the Appropriate Lenders to make, or to Convert Advances into,
     Eurodollar Rate Advances shall be suspended until the Administrative Agent
     shall notify the Borrower (promptly following notice from the Appropriate
     Lenders) that such Lenders have determined that the circumstances causing
     such suspension no longer exist.

          (d)  Notwithstanding any other provision of this Agreement, in the
     event that it becomes unlawful for any Lender or its Applicable Lending
     Office to make, maintain, or fund Eurodollar Rate Advances hereunder, then
     such Lender shall promptly notify the Borrower thereof and such Lender's
     obligation to make Eurodollar Rate Advances and to Convert Base Rate
     Advances into Eurodollar Rate Advances shall be suspended until such time
     as such Lender may again make, maintain and fund Eurodollar Rate Advances
     (in which case the provisions of Section 2.10(e) shall be applicable).

          (e)  If the obligation of any Lender to make a Eurodollar Rate Advance
     or to Convert Base Rate Advances into Eurodollar Rate Advances shall be
     suspended pursuant to any other


                                      49

     provision of this Section 2.10, such Lender's suspended Eurodollar Rate
     Advances shall be automatically Converted into Base Rate Advances on the
     last day(s) of the then current Interest Period(s) therefor (or, in the
     case of a Conversion required by Section 2.10(d), on such earlier date as
     such Lender may specify to the Borrower with a copy to the Administrative
     Agent) and, unless and until such Lender gives notice as provided below
     that the circumstances specified in such other provision of this Section
     2.10 that gave rise to such Conversion no longer exist:

               (i)   to the extent that such Lender's suspended Eurodollar Rate
          Advances have been so Converted, all payments and prepayments of
          principal that would otherwise be applied to such Lender's suspended
          Eurodollar Rate Advances shall be applied instead to its Base Rate
          Advances; and

               (ii)  all Eurodollar Rate Advances that would otherwise be made
          or Converted by such Lender shall be made instead as (or shall remain
          as) Base Rate Advances.

     If such Lender gives notice to the Borrower (with a copy to the
     Administrative Agent) that the circumstances otherwise specified in this
     Section 2.10 that gave rise to the suspension of the making of Eurodollar
     Rate Advances by such Lender no longer exist (which such Lender agrees to
     do promptly upon such circumstances ceasing to exist) at a time when
     Eurodollar Rate Advances by other Lenders with Commitments under the same
     Facility are outstanding, such Lender's Base Rate Advances shall be
     automatically Converted, on the first day(s) of the next succeeding
     Interest Period(s) therefor, to the extent necessary into Eurodollar Rate
     Advances.

     SECTION 2.11.   Evidence of Debt.
     --------------------------------

          (a)  Each Lender shall maintain in accordance with its usual practice
     an account or accounts evidencing the debt of the Borrower to such Lender
     resulting from each Advance owing to such Lender from time to time,
     including the amounts of principal and interest payable and paid to such
     Lender from time to time hereunder.

          (b)  The Register maintained by the Administrative Agent pursuant to
     Section 8.07(e) shall include accounts for each Lender, in which accounts
     (taken together) shall be recorded (i) the date and amount of each Advance
     made hereunder, (ii) the terms of each Assignment and Acceptance delivered
     to and accepted by it, (iii) the amount of any principal or interest due
     and payable or to become due and payable from the Borrower to each Lender
     hereunder and (iv) the amount of any sum received by the Administrative
     Agent from the Borrower hereunder and each Lender's share thereof.

          (c)  The entries made as provided in this Section 2.11 shall be
     conclusive and binding for all purposes, absent manifest error.

     SECTION 2.12.   Payments and Computations.
     -----------------------------------------

          (a)  The Borrower shall make each payment hereunder and under the
     Notes, irrespective of any right of counterclaim, deduction or set-off
     (except as otherwise provided in Section 2.16), not later than 2:00 P.M.
     (Charlotte, North Carolina time) on the day when due in U.S. dollars to the
     Administrative Agent at the Administrative Agent's Account in same day
     funds, with payments received by the Administrative Agent after such time
     being deemed to have been received on the next succeeding Business Day. The
     Administrative Agent will promptly thereafter cause like funds to be
     distributed (i) if such payment by the Borrower is in respect of


                                      50

     principal, interest, Commitment Fees or any other Obligation then due and
     payable hereunder and under the Notes to more than one Lender Party, to
     such Lender Parties for the accounts of their respective Applicable Lending
     Offices in accordance with their respective Pro Rata Shares of the amounts
     of such respective Obligations due and payable to such Lender Parties at
     such time and (ii) if such payment by the Borrower is in respect of any
     Obligation then due and payable hereunder solely to one Lender Party, to
     such Lender Party for the account of its Applicable Lending Office, in each
     case to be applied in accordance with the terms of this Agreement. Upon its
     acceptance of an Assignment and Acceptance and recording of the information
     contained therein in the Register pursuant to Section 8.07(d), from and
     after the effective date of such Assignment and Acceptance, the
     Administrative Agent shall make all payments hereunder and under the Notes
     in respect of the interest assigned thereby to the Lender Party assignee
     thereunder, and the parties to such Assignment and Acceptance shall make
     all appropriate adjustments in such payments for periods prior to such
     effective date directly between themselves.


          (b)  The Borrower hereby authorizes each Lender Party, if and to the
     extent payment owed to such Lender Party is not made when due hereunder or,
     in the case of a Lender, under the Note held by such Lender, to charge from
     time to time against any or all of the Borrower's accounts with such Lender
     Party any amount so due.

          (c)  All computations of interest based on the Base Rate shall be made
     by the Administrative Agent on the basis of a year of 365 or 366 days, as
     the case may be, and all computations of interest based on the Eurodollar
     Rate or the Federal Funds Rate and of fees and Letter of Credit commissions
     shall be made by the Administrative Agent on the basis of a year of 360
     days, in each case for the actual number of days (including the first day
     but excluding the last day) occurring in the period for which such
     interest, fees or commissions are payable. Each determination by the
     Administrative Agent of an interest rate, fee or commission hereunder shall
     be conclusive and binding for all purposes, absent manifest error.

          (d)  Whenever any payment hereunder or under the Notes shall be stated
     to be due on a day other than a Business Day, such payment shall be made on
     the next succeeding Business Day, and such extension of time shall in such
     case be included in the computation of payment of interest or Commitment
     Fees or Letter of Credit commissions or fees, as the case may be; provided,
     however, that, if such extension would cause payment of interest on or
     principal of Eurodollar Rate Advances to be made in the next succeeding
     calendar month, such payment shall be made on the immediately preceding
     Business Day.

          (e)  Unless the Borrower or any Lender Party has notified the
     Administrative Agent prior to the date any payment is required to be made
     by it to the Administrative Agent hereunder, that the Borrower or such
     Lender Party, as the case may be, will not make such payment, the
     Administrative Agent may assume that the Borrower or such Lender Party, as
     the case may be, has timely made such payment and may (but shall not be so
     required to), in reliance thereon, make available a corresponding amount to
     the Person entitled thereto. If and to the extent that such payment was not
     in fact made to the Administrative Agent in immediately available funds,
     then:

               (i)  if the Borrower failed to make such payment, each Lender
          Party shall forthwith on demand repay to the Administrative Agent the
          portion of such assumed payment that was made available to such Lender
          Party in immediately available funds, together with interest thereon
          in respect of each day from and including the date such amount was
          made available by the Administrative Agent to such Lender Party to the
          date


                                      51

          such amount is repaid to the Administrative Agent in immediately
          available funds, at the Federal Funds Rate from time to time in
          effect; and

               (ii)  if any Lender Party failed to make such payment, such
          Lender Party shall forthwith on demand pay to the Administrative Agent
          the amount thereof in immediately available funds, together with
          interest thereon for the period from the date such amount was made
          available by the Administrative Agent to the Borrower to the date such
          amount is recovered by the Administrative Agent (the "Compensation
          Period") at a rate per annum equal to the Federal Funds Rate from time
          to time in effect. If such Lender Party pays such amount to the
          Administrative Agent, then such amount shall constitute such Lender
          Party's Advance included in the applicable Borrowing. If such Lender
          Party does not pay such amount forthwith upon the Administrative
          Agent's demand therefor, the Administrative Agent may make a demand
          therefor upon the Borrower, and the Borrower shall pay such amount to
          the Administrative Agent, together with interest thereon for the
          Compensation Period at a rate per annum equal to the rate of interest
          applicable to the applicable Borrowing. Nothing herein shall be deemed
          to relieve any Lender Party from its obligation to fulfill its
          applicable Commitment or to prejudice any rights which the
          Administrative Agent or the Borrower may have against any Lender Party
          as a result of any default by such Lender Party hereunder.

     A notice from the Administrative Agent to any Lender Party with respect to
     any amount owing under this subsection (e) shall be conclusive, absent
     manifest error.

          (f)  Whenever any payment received by the Administrative Agent under
     this Agreement or any of the other Loan Documents is insufficient to pay in
     full all amounts due and payable to the Agents and the Lender Parties under
     or in respect of this Agreement and the other Loan Documents on any date,
     such payment shall be distributed by the Administrative Agent and applied
     by the Agents and the Lender Parties in the following order of priority:

               (i)   first, to the payment of all of the fees, indemnification
          payments, costs and expenses that are due and payable to the Agents
          (solely in their respective capacities as Agents) under or in respect
          of this Agreement and the other Loan Documents on such date, ratably
          based upon the respective aggregate amounts of all such fees,
          indemnification payments, costs and expenses owing to the Agents on
          such date;

               (ii)  second, to the payment of all of the fees, indemnification
          payments, costs and expenses that are due and payable to the Issuing
          Bank and the Swing Line Bank (solely in their respective capacities as
          such) under or in respect of this Agreement and the other Loan
          Documents on such date, ratably based upon the respective aggregate
          amounts of all such fees, indemnification payments, costs and expenses
          owing to the Issuing Bank and the Swing Line Bank on such date;

               (iii) third, to the payment of all of the indemnification
          payments, costs and expenses that are due and payable to the Lenders
          under Section 8.04 hereof, Section 12 of the Subsidiary Guaranty,
          Section 23 of the Security Agreement and any similar section of any of
          the other Loan Documents on such date, ratably based upon the
          respective aggregate amounts of all such indemnification payments,
          costs and expenses owing to the Lenders on such date;

               (iv)  fourth, to the payment of all of the amounts that are due
          and payable to the Administrative Agent and the Lender Parties under
          Sections 2.10 and 2.13 hereof and


                                      52

          Section 5 of the Subsidiary Guaranty on such date, ratably based upon
          the respective aggregate amounts thereof owing to the Administrative
          Agent and the Lender Parties on such date;

               (v)   fifth, to the payment of all of the accrued and unpaid
          interest on the Obligations of the Borrower under or in respect of the
          Loan Documents that is due and payable to the Administrative Agent and
          the Lender Parties under Section 2.07(a) on such date and all of the
          fees that are due and payable to the Lenders under Section 2.08(a) on
          such date, ratably based upon the respective aggregate Commitments of
          the Lenders under the Facilities on such date;

               (vi)  sixth, to the payment of the principal amount of all of the
          outstanding Advances that is due and payable to the Administrative
          Agent and the Lender Parties on such date, ratably based upon the
          respective aggregate amounts of all such principal owing to the
          Administrative Agent and the Lender Parties on such date; and

               (vii) seventh, to the payment of all other Obligations of the
          Loan Parties owing under or in respect of the Loan Documents that are
          due and payable to the Administrative Agent and the other Secured
          Parties on such date, ratably based upon the respective aggregate
          amounts of all such Obligations owing to the Administrative Agent and
          the other Secured Parties on such date.

     If the Administrative Agent receives funds for application to the
     Obligations of the Loan Parties under or in respect of the Loan Documents
     under circumstances for which the Loan Documents do not specify the
     Advances or the Facility to which, or the manner in which, such funds are
     to be applied, the Administrative Agent may, but shall not be obligated to,
     elect to distribute such funds to each of the Lender Parties in accordance
     with such Lender Party's Pro Rata Share of the sum of (A) the aggregate
     principal amount of all Advances outstanding at such time and (b) the
     aggregate Available Amount of all Letters of Credit outstanding at such
     time, in repayment or prepayment of such of the outstanding Advances or
     other Obligations then owing to such Lender Party, and, in the case of the
     Term Facility, for application to such principal repayment installments
     thereof, as the Administrative Agent shall direct.

     SECTION 2.13.  Taxes.
     --------------------

          (a)  Any and all payments by the Borrower to or for the account of any
     Lender Party or any Agent hereunder or under any other Loan Document shall
     be made, in accordance with Section 2.12 or the applicable provisions of
     such other Loan Document, if any, free and clear of and without deduction
     for any and all present or future taxes, levies, imposts, deductions,
     charges or withholdings, and all liabilities with respect thereto,
     excluding, in the case of each Lender Party and each Agent, taxes that are
     imposed on its overall net income by the United States and taxes that are
     imposed on its overall net income (and franchise taxes imposed in lieu
     thereof) by the state or foreign jurisdiction under the laws of which such
     Lender Party or such Agent, as the case may be, is organized or is a
     resident, or has a fixed place of business or a permanent establishment, or
     any political subdivision of any of the foregoing, and, in the case of each
     Lender Party, taxes that are imposed on its overall net income (and
     franchise taxes imposed in lieu thereof) by the state or foreign
     jurisdiction of either of its Applicable Lending Offices or any political
     subdivision thereof (all such nonexcluded taxes, levies, imposts,
     deductions, charges, withholdings and liabilities in respect of payments
     hereunder or under the Notes being, collectively, "Taxes"). If the Borrower
     shall be required under applicable Requirements of Law to deduct any Taxes
     from or in respect of any sum payable hereunder or under any other Loan


                                      53

     Document to any Lender Party or any Agent, (i) the sum payable by the
     Borrower shall be increased as necessary so that after the Borrower and the
     Administrative Agent have been made all required deductions (including
     deductions applicable to additional sums payable under this Section 2.13)
     such Lender Party or such Agent, as the case may be, receives an amount
     equal to the sum it would have received had no such deductions been made,
     (ii) the Borrower shall make such deductions, (iii) the Borrower shall pay
     the full amount deducted to the relevant taxation authority or other
     Governmental Authority in accordance with applicable Requirements of Law
     and (iv) within 30 days after the date of any payment of Taxes, the
     Borrower shall furnish to the Administrative Agent, at its address referred
     to in Section 8.02, the original or a certified copy of a receipt
     evidencing payment thereof, to the extent such a receipt is issued
     therefor, or other written proof of payment thereof that is reasonably
     satisfactory to the Administrative Agent.

          (b)  In addition, the Borrower agrees to pay any present or future
     stamp, recording or documentary, excise, property or similar taxes, charges
     or levies that arise from any payment made hereunder or under any other
     Loan Document or from the execution, delivery of, or registration of, any
     performance under, or otherwise with respect to, this Agreement or any
     other Loan Document (collectively, "Other Taxes").

          (c)  The Borrower shall indemnify each of the Lender Parties and each
     of the Agents for, and hold each of them harmless against, the full amount
     of Taxes and Other Taxes, and the full amount of taxes of any kind imposed
     by any jurisdiction on amounts payable under this Section 2.13, imposed on
     or paid by such Lender Party or such Agent, as the case may be, and any
     liability (including penalties, additions to tax, interest and expenses)
     arising therefrom or with respect thereto. The indemnity by the Borrower
     provided for in this subsection (c) shall apply and be made whether or not
     the Taxes or Other Taxes for which indemnification hereunder is sought have
     been correctly or legally asserted; provided, however, that such Lender or
     such Agent seeking such indemnification shall take all reasonable actions
     (consistent with its internal policy and legal and regulatory restrictions)
     requested by the Borrower to assist the Borrower in recovering the amounts
     paid thereby pursuant to this subsection (c) from the relevant taxation
     authority or other Governmental Authority. Amounts payable by the Borrower
     under the indemnity set forth in this subsection (c) shall be paid within
     30 days from the date on which the applicable Lender or Agent, as the case
     may be, makes written demand therefor (including the method of
     calculation).

          (d)  In the case of any payment hereunder or under any other Loan
     Document by or on behalf of the Borrower through an account or branch
     outside the United States, or on behalf of the Borrower by a payor that is
     not a United States person, if the Borrower determines that no Taxes are
     payable in respect thereof, the Borrower shall furnish, or shall cause such
     payor to furnish, to the Administrative Agent, at its address referred to
     in Section 8.02, an opinion of counsel reasonably acceptable to the
     Administrative Agent stating that such payment is exempt from Taxes. For
     purposes of this subsection (d) and subsection (e) of this Section 2.13,
     the terms "United States" and "United States person" shall have the
     meanings specified in Section 7701 of the Internal Revenue Code.

          (e)  Each Lender Party organized under the laws of a jurisdiction
     outside the United States shall, on or prior to the date of its execution
     and delivery of this Agreement in the case of each Initial Lender, the
     Swing Line Bank or the Initial Issuing Bank, as the case may be, and on or
     prior to the date of the Assignment and Acceptance pursuant to which it
     becomes a Lender Party in the case of each other Lender Party, and from
     time to time thereafter as reasonably requested in writing by the Borrower
     (but only so long thereafter as such Lender Party remains lawfully able to
     do so), provide each of the Administrative Agent and the Borrower with two


                                      54

     original Internal Revenue Service forms W-8BEN, W-8ECI or W-8IMY, or in the
     case of a Lender Party that has certified in writing to the Administrative
     Agent that it is claiming exemption from United States withholding tax
     under Section 871(h) or 881(c) of the Internal Revenue Code with respect to
     payments of "portfolio interest" from W-8BEN), (and, if such Lender Party
     delivers a form W-8BEN, a certificate representing that such Lender Party
     is not (i) a "bank" for purposes of Section 881(c) of the Internal Revenue
     Code, (ii) a ten-percent shareholder (within the meaning of Section
     871(h)(3)(B) of the Internal Revenue Code) of the Borrower or (iii) a
     controlled foreign corporation related to the Borrower (within the meaning
     of Section 864(d)(4) of the Internal Revenue Code)), as appropriate, or any
     successor or other form prescribed by the Internal Revenue Service,
     certifying that such Lender Party is exempt from or entitled to a reduced
     rate of United States withholding tax on payments pursuant to this
     Agreement or any other Loan Document or, in the case of a Lender Party
     providing a form W-8BEN, certifying that such Lender Party is a foreign
     corporation, partnership, estate or trust. If any such forms provided by a
     Lender Party at the time such Lender Party first becomes a party to this
     Agreement indicate a United States interest withholding tax rate in excess
     of zero, withholding tax at such rate shall be considered excluded from
     Taxes unless and until such Lender Party provides the appropriate form
     certifying that a lesser rate applies, whereupon withholding tax at such
     lesser rate only shall be considered excluded from Taxes solely for the
     periods governed by such forms. However, if at the date of the Assignment
     and Acceptance pursuant to which a Lender Party becomes a party to this
     Agreement, the Lender Party assignor was entitled to payments under
     subsection (a) of this Section 2.13 in respect of United States withholding
     tax with respect to interest paid at such date, then, to such extent, the
     term Taxes shall include (in addition to withholding taxes that may be
     imposed in the future or other amounts otherwise includable in Taxes)
     United States withholding tax, if any, applicable with respect to the
     Lender Party assignee on such date. None of the Lender Parties shall be
     entitled to payment pursuant to subsection (a) or (c) of this Section 2.13
     with respect to any additional Taxes that result solely and directly from a
     change in either of the Applicable Lending Offices of such Lender Party
     (other than any such additional Taxes that are imposed as a result of a
     change in the applicable Requirements of Law, or in the interpretation of
     application thereof, occurring after the date of such change), unless such
     change is made pursuant to the terms of Section 2.10(e) or subsection (g)
     this Section 2.13 or as a result of a request therefor by the Borrower.

          (f)  For any period with respect to which a Lender Party has failed to
     provide the Borrower with the appropriate form, certificate or other
     document described in subsection (e) of this Section 2.13 (other than if
     such failure is due to a change in the applicable Requirements of Law, or
     in the interpretation or application thereof, occurring after the date on
     which a form, certificate or other document originally was required to be
     provided or if such form, certificate or other document otherwise is not
     required under subsection (e) of this Section 2.13), such Lender Party
     shall not be entitled to indemnification under subsection (a) or (c) of
     this Section 2.13 with respect to Taxes imposed by the United States by
     reason of such failure; provided, however, that should a Lender Party
     become subject to Taxes because of its failure to deliver a form,
     certificate or other document required hereunder, the Borrower shall take
     such steps as such Lender Party shall reasonably request to assist such
     Lender Party in recovering such Taxes.

          (g)  Each of the Lender Parties hereby agrees that, upon the
     occurrence of any circumstances entitling such Lender Party to additional
     amounts pursuant to this Section 2.13, such Lender Party shall use
     reasonable efforts (consistent with its internal policy and legal and
     regulatory restrictions) to designate a different Applicable Lending Office
     if the making of such a change would avoid the need for, or reduce the
     amount of, any such additional amounts that may thereafter accrue and would
     not, in the reasonable judgment of such Lender Party, be otherwise


                                      55

     disadvantageous to such Lender Party (other than by reason of
     administrative convenience or preference).

     SECTION 2.14.  Sharing of Payments, Etc.  If any Lender Party shall obtain
     ---------------------------------------
at any time any payment (whether voluntary, involuntary, through the exercise of
any right of setoff, or otherwise) (a) on account of Obligations due and payable
to such Lender Party under or in respect of this Agreement or any of 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
Party at such time (other than pursuant to Section 2.10, 2.13, 8.04 or 8.07) to
(ii) the aggregate amount of the Obligations due and payable to all Lender
Parties at such time) of payments on account of the Obligations due and payable
to all Lender Parties under or in respect of this Agreement and the other Loan
Documents at such time obtained by all the Lender Parties at such time or (b) on
account of Obligations owing (but not due and payable) to such Lender Party
under or in respect of this Agreement or any of 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 to such Lender Party at such time (other than
pursuant to Section 2.10, 2.13, 8.04 or 8.07) to (ii) the aggregate amount of
the Obligations owing (but not due and payable) to all Lender Parties under or
in respect of this Agreement and the other Loan Documents at such time) of
payments on account of the Obligations owing (but not due and payable) to all
Lender Parties under or in respect of this Agreement and the other Loan
Documents at such time obtained by all of the Lender Parties at such time, such
Lender Party shall forthwith purchase from the other Lender Parties such
interests or participating interests in the Obligations due and payable or owing
to them, as the case may be, as shall be necessary to cause such purchasing
Lender Party to share the excess payment ratably with each of them; provided,
however, that if all or any portion of such excess payment is thereafter
recovered from such purchasing Lender Party, such purchase from each other
Lender Party shall be rescinded and such other Lender Party shall repay to the
purchasing Lender Party the purchase price to the extent of such Lender Party's
ratable share (according to the proportion of (A) the purchase price paid to
such Lender Party to (B) the aggregate purchase price paid to all Lender
Parties) of such recovery, together with an amount equal to such Lender Party's
ratable share (according to the proportion of (1) the amount of such other
Lender Party's required repayment to (2) the total amount so recovered from the
purchasing Lender Party) of any interest or other amount paid or payable by the
purchasing Lender Party in respect of the total amount so recovered; provided
further that, so long as the Obligations under the Loan Documents shall not have
been accelerated, any excess payment received by any Appropriate Lender shall be
shared on a pro rata basis only with other Appropriate Lenders. The Borrower
hereby agrees that any Lender Party so purchasing an interest or participating
interest from another Lender Party pursuant to this Section 2.14 may, to the
fullest extent permitted under applicable law, exercise all its rights of
payment (including the right of setoff) with respect to such an interest or
participating interest, as the case may be, as fully as if such Lender Party
were the direct creditor of the Borrower in the amount of such an interest or
participating interest.

     SECTION 2.15.  Use of Proceeds. The proceeds of the Advances and issuances
     ------------------------------
of Letters of Credit shall be available (and the Borrower agrees that it shall
use such proceeds and Letters of Credit) solely to refinance certain Debt of the
Borrower and its Subsidiaries outstanding on the date of the Initial Extension
of Credit, for acquisitions as permitted herein and for general corporate
purposes of the Borrower and its Subsidiaries, and to pay fees and expenses
incurred in connection with the consummation of the Transaction.

     SECTION 2.16.  Defaulting Lenders.
     ---------------------------------

          (a)  In the event that, at any one time, (i) any Lender Party shall be
     a Defaulting Lender, (ii) such Defaulting Lender shall owe a Defaulted
     Advance to the Borrower and (iii) the Borrower shall be required to make
     any payment hereunder or under any other Loan Document to


                                      56

     or for the account of such Defaulting Lender, then the Borrower may, so
     long as no Default shall occur or be continuing at such time and to the
     fullest extent permitted by applicable law, set off and otherwise apply the
     Obligation of the Borrower to make such payment to or for the account of
     such Defaulting Lender against the obligation of such Defaulting Lender to
     make such Defaulted Advance. In the event that, on any date, the Borrower
     shall so set off and otherwise apply its obligation to make any such
     payment against the obligation of such Defaulting Lender to make any such
     Defaulted Advance on or prior to such date, the amount so set off and
     otherwise applied by the Borrower shall constitute for all purposes of this
     Agreement and the other Loan Documents an Advance by such Defaulting Lender
     made on the date of such setoff under the Facility pursuant to which such
     Defaulted Advance was originally required to have been made pursuant to
     Section 2.01. Such Advance shall be a Base Rate Advance and shall be
     considered, for all purposes of this Agreement, to comprise part of the
     Borrowing in connection with which such Defaulted Advance was originally
     required to have been made pursuant to Section 2.01, even if the other
     Advances comprising such Borrowing shall be Eurodollar Rate Advances on the
     date such Advance is deemed to be made pursuant to this subsection (a). The
     Borrower shall notify the Administrative Agent at any time the Borrower
     exercises its right of set-off pursuant to this subsection (a) and shall
     set forth in such notice (A) the name of the Defaulting Lender and the
     Defaulted Advance required to be made by such Defaulting Lender and (B) the
     amount set off and otherwise applied in respect of such Defaulted Advance
     pursuant to this subsection (a). Any portion of such payment otherwise
     required to be made by the Borrower to or for the account of such
     Defaulting Lender which is paid by the Borrower, after giving effect to the
     amount set off and otherwise applied by the Borrower pursuant to this
     subsection (a), shall be applied by the Administrative Agent as specified
     in subsection (b) or (c) of this Section 2.16.

          (b)  In the event that, at any one time, (i) any Lender Party shall be
     a Defaulting Lender, (ii) such Defaulting Lender shall owe a Defaulted
     Amount to the Administrative Agent or any of the other Lender Parties and
     (iii) the Borrower shall make any payment hereunder or under any other Loan
     Document to the Administrative Agent for the account of such Defaulting
     Lender, then the Administrative Agent may, on its behalf or on behalf of
     such other Lender Parties and to the fullest extent permitted by applicable
     law, apply at such time the amount so paid by the Borrower to or for the
     account of such Defaulting Lender to the payment of each such Defaulted
     Amount to the extent required to pay such Defaulted Amount. In the event
     that the Administrative Agent shall so apply any such amount to the payment
     of any such Defaulted Amount on any date, the amount so applied by the
     Administrative Agent shall constitute for all purposes of this Agreement
     and the other Loan Documents payment, to such extent, of such Defaulted
     Amount on such date. Any such amount so applied by the Administrative Agent
     shall be retained by the Administrative Agent or distributed by the
     Administrative Agent to such other Lender Parties, ratably in accordance
     with the respective portions of such Defaulted Amounts payable at such time
     to the Administrative Agent and such other Lender Parties and, if the
     amount of such payment made by the Borrower shall at such time be
     insufficient to pay all Defaulted Amounts owing at such time to the
     Administrative Agent and the other Lender Parties, in the following order
     of priority:

                    (A)  first, to the Administrative Agent for any Defaulted
               Amount then owing the Administrative Agent;

                    (B)  second, to the Issuing Bank and the Swing Line Bank for
               any Defaulted Amount then owing to them, in their capacities as
               such, ratably in accordance with such respective Defaulted
               Amounts then owing to such Issuing Bank and such Swing Line Bank;
               and


                                      57

                    (C)  third, to any other Lender Parties for any Defaulted
               Amounts then owing to such other Lender Parties, ratably in
               accordance with such respective Default Amounts then owing to
               such other Lender Parties; and

     Any portion of such amount paid by the Borrower for the account of such
     Defaulting Lender remaining, after giving effect to the amount applied by
     the Administrative Agent pursuant to this subsection (b), shall be applied
     by the Administrative Agent as specified in subsection (c) of this Section
     2.16.

          (c)  In the event that, at any one time, (i) any Lender Party shall be
     a Defaulting Lender, (ii) such Defaulting Lender shall not owe a Defaulted
     Advance or a Defaulted Amount and (iii) the Borrower, the Administrative
     Agent or any other Lender Party shall be required to pay or distribute any
     amount hereunder or under any other Loan Document to or for the account of
     such Defaulting Lender, then the Borrower or such other Lender Party shall
     pay such amount to the Administrative Agent to be held by the
     Administrative Agent, to the fullest extent permitted by applicable law, in
     escrow or the Administrative Agent shall, to the fullest extent permitted
     by applicable law, hold in escrow such amount otherwise held by it. Any
     funds held by the Administrative Agent in escrow under this subsection (c)
     shall be deposited by the Administrative Agent in an account with BofA, in
     the name and under the control of the Administrative Agent, but subject to
     the provisions of this subsection (c). The terms applicable to such
     account, including the rate of interest payable with respect to the credit
     balance of such account from time to time, shall be BofA's standard terms
     applicable to escrow accounts maintained with it. Any interest credited to
     such account from time to time shall be held by the Administrative Agent in
     escrow under, and applied by the Administrative Agent from time to time in
     accordance with the provisions of, this subsection (c). The Administrative
     Agent shall, to the fullest extent permitted by applicable law, apply all
     funds so held in escrow from time to time to the extent necessary to make
     any Advances required to be made by such Defaulting Lender and to pay any
     amount payable by such Defaulting Lender hereunder and under the other Loan
     Documents to the Administrative Agent or any other Lender Party, as and
     when such Advances or amounts are required to be made or paid and, if the
     amount so held in escrow shall at any time be insufficient to make and pay
     all such Advances and amounts required to be made or paid at such time, in
     the following order of priority:

               (A)  first, to the Administrative Agent for any amount then due
          and payable by such Defaulting Lender to the Administrative Agent
          hereunder;

               (B)  second, to the Issuing Bank and the Swing Line Bank for any
          amounts then due and payable to them hereunder, in their capacities as
          such, by such Defaulting Lender, ratably in accordance with such
          amounts then due and payable to such Issuing Bank and such Swing Line
          Bank;

               (C)  third, to any other Lender Parties for any amount then due
          and payable by such Defaulting Lender to such other Lender Parties
          hereunder, ratably in accordance with such respective amounts then due
          and payable to such other Lender Parties; and

               (D)  fourth, to the Borrower for any Advance then required to be
          made by such Defaulting Lender pursuant to a Commitment of such
          Defaulting Lender.


                                      58

     In the event that any Lender Party that is a Defaulting Lender shall, at
     any time, cease to be a Defaulting Lender, any funds held by the
     Administrative Agent in escrow at such time with respect to such Lender
     Party shall be distributed by the Administrative Agent to such Lender Party
     and applied by such Lender Party to the Obligations owing to such Lender
     Party at such time under this Agreement and the other Loan Documents
     ratably in accordance with the respective amounts of such Obligations
     outstanding at such time.

          (d)  The rights and remedies against a Defaulting Lender under this
     Section 2.16 are in addition to other rights and remedies that the Borrower
     may have against such Defaulting Lender with respect to any Defaulted
     Advance and that the Administrative Agent or any Lender Party may have
     against such Defaulting Lender with respect to any Defaulted Amount.

                                  ARTICLE III

                           CONDITIONS OF LENDING AND
                        ISSUANCES OF LETTERS OF CREDIT

     SECTION 3.01.  Conditions Precedent to Initial Extension of Credit. The
     ------------------------------------------------------------------
obligation of each Lender to make an Advance or of the Issuing Bank to issue a
Letter of Credit on the occasion of the Initial Extension of Credit hereunder is
subject to the satisfaction of the following conditions precedent before or
concurrently with the Initial Extension of Credit:

          (a)  The Administrative Agent shall have received on or before the day
     of the Initial Extension of Credit the following, each dated such day
     (unless otherwise specified), in form and substance satisfactory to the
     Administrative Agent (unless otherwise specified) and (except for the
     Notes) in sufficient copies for each Lender Party:

               (i)  The Notes payable to the order of each respective Lender (if
          requested by any such Lender).

               (ii) A security agreement, in substantially the form of Exhibit D
          hereto (together with each other security agreement and security
          agreement supplement delivered pursuant to Section 5.01(j), in each
          case as amended, the "Security Agreement"), duly executed by each Loan
          Party, together with:

                    (A)  where applicable, certificates representing the Pledged
               Shares referred to therein accompanied by undated stock powers
               executed in blank and instruments evidencing the Pledged Debt
               referred to therein indorsed in blank,

                    (B)  proper financing statements, in form for filing, under
               the Uniform Commercial Code of all jurisdictions that the
               Administrative Agent may deem necessary or desirable in order to
               perfect and protect the first priority liens and security
               interests created under the Security Agreement, covering the
               Collateral described in the Security Agreement,

                    (C)  all other documents for recording and filing, in proper
               form, for or with respect to the Security Agreement that the
               Administrative Agent may deem necessary or desirable in order to
               perfect and protect the Liens created thereby,


                                       59


                        (D) evidence of the insurance required by the terms of
               the Security Agreement,

                        (E) evidence that all other action that the
               Administrative Agent may deem necessary or desirable in order to
               perfect and protect the first priority liens and security
               interests created under the Security Agreement is ready to be
               taken concurrently with the Initial Extension of Credit
               (including, without limitation, receipt of duly executed payoff
               letters and UCC-3 termination statements with respect to the
               Existing Credit Agreement).

               (iii)    A guaranty, in substantially the form of Exhibit E
          hereto (together with each other guaranty and guaranty supplement
          delivered pursuant to Section 5.01(j), in each case as amended, the
          "Subsidiary Guaranty"), duly executed by each Subsidiary Guarantor.

               (iv)     An intellectual property security agreement, in
          substantially the form annexed to the Security Agreement (together
          with each other intellectual property security agreement and
          intellectual property security agreement supplement delivered pursuant
          to Section 5.01(j), in each case as amended, the "Intellectual
          Property Security Agreement"), duly executed by each Loan Party,
          together with evidence that all action that the Administrative Agent
          may deem necessary or desirable in order to perfect and protect the
          first priority liens and security interests created under the
          Intellectual Property Security Agreement is ready to be taken
          concurrently with the Initial Extension of Credit.

               (v)      Certified copies of the resolutions of the Board of
          Directors of each Loan Party approving the Transaction and each Loan
          Document to which it is or is to be a party, and of all documents
          evidencing other necessary Governmental Authorizations and other
          necessary corporate actions or third party approvals and consents, if
          any, with respect to the Transaction and each Loan Document to which
          it is or is to be a party.

               (vi)     A copy of a certificate of the Secretary of State of the
          jurisdiction of incorporation of each Loan Party, dated reasonably
          near the date of the Initial Extension of Credit, certifying (A) as to
          a true and correct copy of the charter (or comparable Constitutive
          Document) of such Loan Party and each amendment thereto on file in
          such Secretary's office (B) that such amendments are the only
          amendments to such Loan Party's (or comparable Constitutive Document)
          on file in such Secretary's office, and (C) such Loan Party is duly
          incorporated and in good standing or presently subsisting under the
          laws of the State of the jurisdiction of its incorporation.

               (vii)    A certificate of each Loan Party, signed on behalf of
          such Loan Party by its President or a Vice President and its Secretary
          or any Assistant Secretary, dated the date of the Initial Extension of
          Credit (the statements made in which certificate shall be true on and
          as of the date of the Initial Extension of Credit), certifying as to
          (A) the absence of any amendments to the charter (or comparable
          Constitutive Document) of such Loan Party since the date of the
          Secretary of State's certificate referred to in Section 3.01(a)(vi),
          (B) a true and correct copy of the bylaws (or comparable Constitutive
          Document) of such Loan Party as in effect on the date on which the
          resolutions referred to in Section 3.01(a)(v) were adopted and on the
          date of the Initial Extension of Credit, (C) the due incorporation and
          good standing or valid existence of such Loan Party as a corporation
          organized under the laws of the jurisdiction of its incorporation, and
          the absence of any proceeding for the dissolution or liquidation of
          such Loan Party, and (D)


                                       60

          the truth of the representations and warranties contained in the Loan
          Documents as though made on and as of the date of the Initial
          Extension of Credit except for representations and warranties that by
          their terms speak as of another specific date, which shall be true as
          of such specific date.

               (viii)   A certificate of the Secretary or an Assistant Secretary
          of each Loan Party certifying the names and true signatures of the
          officers of such Loan Party authorized to sign each Loan Document to
          which it is or is to be a party and the other documents to be
          delivered hereunder and thereunder.

               (ix)     Such financial, business and other information regarding
          each Loan Party and its Subsidiaries as the Lender Parties shall have
          reasonably requested, including, without limitation, information as to
          possible contingent liabilities, tax matters, environmental matters,
          obligations under Plans, Multiemployer Plans and Welfare Plans,
          collective bargaining agreements and other arrangements with
          employees, audited annual financial statements dated December 31,
          2000, interim financial statements dated the end of the most recent
          fiscal quarter for which financial statements are available, pro forma
          financial statements as to the Borrower and forecasts prepared by
          management of the Company, of balance sheets, income statements and
          cash flow statements on a quarterly basis for the first year following
          the day of the Initial Extension of Credit and on an annual basis for
          five years thereafter.

               (x)      Evidence of insurance naming the Administrative Agent as
          additional insured and loss payee with such responsible and reputable
          insurance companies or associations, and in such amounts and covering
          such risks, as is satisfactory to the Lender Parties, including,
          without limitation, business interruption insurance.

               (xi)     A Notice of Borrowing or Notice of Issuance, as
          applicable.

               (xii)    A favorable opinion of Steven J. Udicious, general
          counsel for the Loan Parties, in substantially the form of Exhibit F
          hereto and as to such other matters as any Lender Party through the
          Administrative Agent may reasonably request.

               (xiii)   A favorable opinion of Riordan & McKinzie, special
          counsel to the Lender Parties, in substantially the form of Exhibit G
          hereto and as to such other matters as any Lender Party through the
          Administrative Agent may reasonably request.

          (b)  All Governmental Authorizations and all third party consents and
     approvals necessary in connection with the Transaction shall have been
     obtained (without the imposition of any conditions that are not acceptable
     to the Lender Parties) and shall remain in effect; and no Requirements of
     Law shall be applicable in the judgment of the Lender Parties that
     restrains, prevents or imposes materially adverse conditions upon the
     Transaction.

          (c)  The Borrower shall have paid all accrued fees of the Agents and
     the Lender Parties and all accrued expenses of the Agents.

          (d)  The Borrower shall have issued the subordinated notes referred to
     in clause (iii) of the definition of "Subordinated Notes."

          (e)  (i) All amounts owing by the Borrower or any of its Subsidiaries
     to the lenders and agents under the Existing Credit Agreement shall have
     been, or concurrently with the Initial


                                       61

     Extension of Credit made on the Closing Date shall be, paid in full and
     evidenced by a payoff letter or payoff letters delivered by such lenders
     and agents to the Administrative Agent, (ii) all commitments of the lenders
     under the Existing Credit Agreement (except for the Existing Letters of
     Credit) shall have been, or concurrently with the Initial Extension of
     Credit made on the Closing Date shall be, terminated in accordance with the
     terms of the Existing Credit Agreement, (iii) the lenders or any collateral
     agent under the Existing Credit Agreement shall have executed such
     instruments (including without limitation Uniform Commercial Code
     termination statements) and agreed to take such other actions as are
     reasonably necessary to terminate or release all security interests granted
     in connection with the Existing Credit Agreement and (iv) adequate
     arrangements shall have been made with the issuer of the Existing Letters
     of Credit concerning the continuation thereof.

     SECTION 3.02. Conditions Precedent to Each Borrowing and Issuance and
     ---------------------------------------------------------------------
Renewal. The obligation of each Appropriate Lender to make an Advance (other
- -------
than a Letter of Credit Advance made by the Issuing Bank or a Revolving Credit
Lender pursuant to Section 2.03(b) and a Swing Line Advance made by a Revolving
Credit Lender pursuant to Section 2.02(b)) on the occasion of each Borrowing
(including the initial Borrowing, but excluding any conversion of Advances
pursuant to Section 2.09 as provided therein), and the obligation of
the Issuing Bank to issue a Letter of Credit (including the initial issuance) or
renew a Letter of Credit and the right of the Borrower to request a Swing Line
Borrowing, shall be subject to the further conditions precedent that on the date
of such Borrowing or issuance or renewal (a) the following statements shall be
true and the Administrative Agent shall have received for the account of such
Lender or the Issuing Bank a certificate signed by a duly authorized officer of
the Borrower, dated the date of such Borrowing or issuance or renewal, stating
that (and each of the giving of the applicable Notice of Borrowing, Notice of
Swing Line Borrowing, Notice of Issuance or Notice of Renewal and the acceptance
by the Borrower of the proceeds of such Borrowing or of such Letter of Credit or
the renewal of such Letter of Credit shall constitute a representation and
warranty by the Borrower that both on the date of such notice and on the date of
such Borrowing or issuance or renewal such statements are true):

               (i)  the representations and warranties contained in each Loan
          Document are correct on and as of such date, before and after giving
          effect to such Borrowing or issuance or renewal and to the application
          of the proceeds therefrom, as though made on and as of such date
          except (A) for any such representations or warranties that, by their
          terms, refer to a specific date other than the date of such Borrowing
          or issuance or renewal, in which case as of such specific date and (B)
          if any Required Financial Information has been delivered to the
          Administrative Agent and the Lender Parties on or prior to the date of
          such Borrowing or issuance or renewal, that the Consolidated financial
          statements of the Borrower and its Subsidiaries referred to in Section
          4.01(g)(i) shall be deemed at any time and from time to time after the
          Closing Date to refer to the Consolidated financial statements of the
          Borrower and its Subsidiaries comprising part of the Required
          Financial Information most recently delivered to the Administrative
          Agent and the Lender Parties pursuant to Sections 5.03(b) and 5.03(c)
          (except that in the case of financial statements delivered pursuant to
          Section 5.03(c), such financial statements may not contain all notes
          and may be subject to year end audit adjustments), respectively, on or
          prior to the date of such Borrowing, issuance or renewal; and

               (ii) no Default has occurred and is continuing, or would result
          from such Borrowing or issuance or renewal or from the application of
          the proceeds therefrom;

and (b) the Administrative Agent shall have received such other approvals,
opinions or documents as any Appropriate Lender Party through the Administrative
Agent may reasonably request.


                                       62

     SECTION 3.03. Determinations Under Section 3.01. For purposes of
     -----------------------------------------------
determining compliance with the conditions specified in Section 3.01, each
Lender Party 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 the Lender Parties unless an
officer of the Administrative Agent responsible for the transactions
contemplated by the Loan Documents shall have received notice from such Lender
Party prior to the Initial Extension of Credit specifying its objection thereto
and, if the Initial Extension of Credit consists of a Borrowing, such Lender
Party shall not have made available to the Administrative Agent such Lender
Party's ratable portion of such Borrowing.

                                  ARTICLE IV

                        REPRESENTATIONS AND WARRANTIES

     SECTION 4.01. Representations and Warranties of the Borrower. The Borrower
     ------------------------------------------------------------
represents and warrants as follows:

          (a) Each Loan Party and each of its Subsidiaries (i) is duly
     organized, validly existing and in good standing (if such concept is
     applicable) under the laws of the jurisdiction of its organization, (ii) is
     duly qualified and in good standing as a foreign business enterprise (if
     such concept is applicable) in each other jurisdiction in which it owns or
     leases property or in which the conduct of its business requires it to so
     qualify or be licensed except where the failure to be so qualified or
     licensed would not result in a Material Adverse Effect and (iii) has all
     requisite power and authority (including, without limitation, all material
     Governmental Authorizations) to own or lease and operate its properties and
     to carry on its business as now conducted and as proposed to be conducted.

          (b) Set forth on Schedule 4.01(b) hereto is a complete and accurate
     list of all Subsidiaries of the Borrower, showing as of the date hereof (as
     to each such Subsidiary) the jurisdiction of its organization, the number
     of shares or other units of each class of its Equity Interests authorized,
     and the number outstanding, on the date hereof and the percentage of each
     such class of its Equity Interests owned (directly or indirectly) by the
     Borrower or any Subsidiary thereof and the number of shares or other units
     covered by all outstanding options, warrants, rights of conversion or
     purchase and similar rights at the date hereof, except for any obligations
     or rights of the Borrower or any of its Subsidiaries to acquire any
     minority interest in any Subsidiary of the Borrower that is a partnership.
     All of the outstanding Equity Interests in each such Subsidiary have (A)
     (in the case of Subsidiaries that are corporations) been validly issued,
     are fully paid and non-assessable and are (B) to the extent owned by the
     Borrower or one or more of its Subsidiaries, free and clear of all Liens,
     except those created under the Collateral Documents or Permitted Liens.

          (c) The execution, delivery and performance by each Loan Party of each
     Loan Document to which it is or is to be a party, and the consummation of
     the Transaction, are within such Loan Party's corporate, partnership or
     limited liability company powers, as applicable, have been duly authorized
     by all necessary corporate, partnership or limited liability company
     action, as applicable, and do not (i) contravene such Loan Party's
     Constitutive Documents, (ii) violate any Requirements of Law, (iii)
     conflict with or result in the breach of, or constitute a default or
     require any payment to be made under, any material contract, loan
     agreement, indenture, mortgage, deed of trust, lease or other instrument
     binding on or affecting any Loan Party or any of its properties or (iv)
     except for the Liens created under the Loan Documents, result in or require
     the creation or imposition of any Lien upon or with respect to any of the
     properties of any Loan Party. No Loan Party is in violation of any such
     Requirements of Law or in breach of any


                                       63

     such contract, loan agreement, indenture, mortgage, deed of trust, lease or
     other instrument, the violation or breach of which would be reasonably
     likely to have a Material Adverse Effect.

          (d) No Governmental Authorization, and no other authorization or
     approval or other action by, and no notice to or filing with, any
     Governmental Authority or any other third party is required for (i) the due
     execution, delivery, recordation, filing or performance by any Loan Party
     of any Loan Document to which it is or is to be a party, or for the
     consummation of the Transaction, (ii) the grant by any Loan Party of the
     Liens granted by it pursuant to the Collateral Documents, (iii) the
     perfection or maintenance of the Liens created under the Collateral
     Documents on such of the Collateral located in the United States in which a
     Lien may be perfected by the filing of financing statements, the
     recordation of security agreements with the U.S. Patent and Trademark
     Office or the U.S. Copyright Office or the delivery of Collateral
     (including the first priority nature thereof) or (iv) the exercise by any
     Agent or any Lender Party of its rights under the Loan Documents or the
     remedies in respect of the Collateral pursuant to the Collateral Documents,
     except for (A) the authorizations, approvals and actions on Schedule
     4.01(d) hereto, all of which have been duly obtained and are in full force
     and effect, (B) filings, notices, recordings and other similar actions
     necessary for the creation or perfection of the Liens and security
     interests contemplated by the Loan Documents and (C) the actions required
     by laws generally with respect to the exercise by secured creditors of
     their rights and remedies. All applicable waiting periods in connection
     with the Transaction have expired without any action having been taken by
     any competent authority restraining, preventing or imposing materially
     adverse conditions upon the Transaction or the rights of the Loan Parties
     or their Subsidiaries freely to transfer or otherwise dispose of, or to
     create any Lien on, any properties now owned or hereafter acquired by any
     of them.

          (e) This Agreement has been, and each other Loan Document when
     delivered hereunder will have been, duly executed and delivered by each
     Loan Party thereto. This Agreement is, and each other Loan Document when
     delivered hereunder will be, the legal, valid and binding obligation of
     each Loan Party thereto, enforceable against such Loan Party in accordance
     with its terms.

          (f) There is no action, suit, investigation, litigation or proceeding
     affecting any Loan Party or any of its Subsidiaries, including any
     Environmental Action, pending or, to the knowledge of the Borrower,
     threatened before any Governmental Authority or arbitrator that (i) could
     be reasonably likely to have a Material Adverse Effect or (ii) purports to
     affect the legality, validity or enforceability of any Loan Document or the
     consummation of the Transaction, except as described on Schedule 4.01(f)
     hereto or disclosed prior to the Closing Date in the Borrower's filings
     made with the Securities and Exchange Commission.

          (g) The Consolidated balance sheet of the Borrower and its
     Subsidiaries as at December 31, 2000, and the related Consolidated
     statement of income and Consolidated statement of cash flows of the
     Borrower and its Subsidiaries for the fiscal year then ended, accompanied
     by an unqualified opinion of KPMG LLP, independent public accountants,
     copies of which have been furnished to each Lender Party, fairly present
     the Consolidated financial condition of the Borrower and its Subsidiaries
     as at such date and the Consolidated results of operations of the Borrower
     and its Subsidiaries for the period ended on such date, all in accordance
     with generally accepted accounting principles applied on a consistent
     basis, and since December 31, 2000, there has been no Material Adverse
     Change.

          (h) The Consolidated forecasted balance sheet, statement of income and
     statement of cash flows of the Borrower and its Subsidiaries delivered to
     the Lender Parties pursuant to



                                       64

     Section 3.01(a)(ix) or Section 5.03 were prepared in good faith on the
     basis of the assumptions stated therein, which assumptions were believed to
     be reasonable in light of the conditions existing at the time of delivery
     of such forecasts, and represented, at the time of delivery, the Borrower's
     best estimate of its future financial performance.

          (i) Neither the Information Memorandum nor any other information,
     exhibit or report furnished by any Loan Party to any Agent or any Lender
     Party in connection with the negotiation and syndication of the Loan
     Documents or pursuant to the terms of the Loan Documents contained any
     untrue statement of a material fact or omitted to state a material fact
     necessary to make the statements made therein not misleading.

          (j) The Borrower is not engaged in the business of extending credit
     for the purpose of purchasing or carrying Margin Stock, and no proceeds of
     any Advance or drawings under any Letter of Credit will be used to purchase
     or carry any Margin Stock or to extend credit to others for the purpose of
     purchasing or carrying any Margin Stock.

          (k) Neither any Loan Party nor any of its Subsidiaries is an
     "investment company", or an "affiliated person" of, or "promoter" or
     "principal underwriter" for, an "investment company", as such terms are
     defined in the Investment Company Act of 1940, as amended. Neither any Loan
     Party nor any of its Subsidiaries is a "holding company", or a "subsidiary
     company" of a "holding company", or an "affiliate" of a "holding company"
     or of a "subsidiary company" of a "holding company", as such terms are
     defined in the Public Utility Holding Company Act of 1935, as amended.
     Neither the making of any Advances, nor the issuance of any Letters of
     Credit, nor the application of the proceeds or repayment thereof by the
     Borrower, nor the consummation of the other transactions contemplated by
     the Loan Documents and Related Documents, will violate any provision of any
     such Act or any rule, regulation or order of the Securities and Exchange
     Commission thereunder.

          (l) Upon making of the filings and taking of the other actions
     necessary to create, perfect and protect the security interest in the
     Collateral created under the Collateral Documents, the Collateral Documents
     create in favor of the Administrative Agent for the benefit of the Secured
     Parties a valid and, together with such filings and other actions,
     perfected first priority security interest in the Collateral, securing the
     payment of the Secured Obligations, subject to Permitted Liens. The Loan
     Parties are the legal and beneficial owners of the Collateral free and
     clear of any Lien, except for the liens and security interests created or
     permitted under the Loan Documents.

          (m) Each Loan Party is, individually and together with its
     Subsidiaries, Solvent.

          (n) No ERISA Event has occurred or is reasonably expected to occur
     with respect to any Plan that has resulted in or is reasonably expected to
     result in a material liability of any Loan Party or any ERISA Affiliate.

              (i)   Schedule B (Actuarial Information) to the most recent annual
          report (Form 5500 Series) for each Plan, copies of which have been
          filed with the Internal Revenue Service and furnished to the Lender
          Parties, is complete and accurate and fairly presents the funding
          status of such Plan, and since the date of such Schedule B there has
          been no material adverse change in such funding status.


                                       65

              (ii)  Neither any Loan Party nor any ERISA Affiliate has incurred
          or is reasonably expected to incur any Withdrawal Liability exceeding
          $100,000 to any Multiemployer Plan.

              (iii) Neither any Loan Party nor any ERISA Affiliate has been
          notified by the sponsor of a Multiemployer Plan that such
          Multiemployer Plan is in reorganization or has been terminated, within
          the meaning of Title IV of ERISA, and no such Multiemployer Plan is
          reasonably expected to be in reorganization or to be terminated,
          within the meaning of Title IV of ERISA.

          (o) Except as described on Schedule 4.01(o) hereto:

              (i)   The operations and properties of each Loan Party comply in
          all material respects with all applicable Environmental Laws and
          Environmental Permits, except where any such failure to comply would
          not be reasonably expected to have a Material Adverse Effect, all past
          non-compliance with such Environmental Laws and Environmental Permits
          has been resolved without ongoing obligations or costs, except where
          any such failure to comply would not be reasonably expected to have a
          Material Adverse Effect and, to Borrower's knowledge, no circumstances
          exist that could be reasonably likely to (A) form the basis of an
          Environmental Action against any Loan Party or any of their properties
          that could have a Material Adverse Effect or (B) cause any such
          property to be subject to any restrictions on ownership, occupancy,
          use or transferability under any Environmental Law.

              (ii)  None of the properties currently or, to Borrower's
          knowledge, formerly owned or operated by any Loan Party is listed or
          proposed for listing on the NPL or on the CERCLIS or any analogous
          foreign, state or local list or, to Borrower's knowledge, is adjacent
          to any such property; and except to the extent that any of the
          following would not have a Material Adverse Effect, (A) there are no
          and, to Borrower's knowledge, never have been any underground or
          aboveground 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, to its knowledge, on any property
          formerly owned or operated by any Loan Party, (B) there is no asbestos
          or asbestos-containing material on any property currently owned or
          operated by any Loan Party, and (C) Hazardous Materials have not been
          released, discharged or disposed of on any property currently or, to
          Borrower's knowledge, formerly owned or operated by any Loan Party
          except in compliance with Environmental Laws.

              (iii) No Loan Party 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; and all Hazardous Materials
          generated, used, treated, handled or stored at, or transported to or
          from, any property currently or formerly owned or operated by any Loan
          Party have been disposed of in a manner not reasonably expected to
          result in liability to any Loan Party that, individually or in the
          aggregate, would have a Material Adverse Effect.


                                       66

          (p) Each Loan Party and each of its Affiliates has filed, has caused
     to be filed or has been included in all tax returns (Federal, state, local
     and foreign) required to be filed and has paid all taxes shown thereon to
     be due, together with applicable interest and penalties. Set forth on
     Schedule 4.01(p) hereto is a complete and accurate list, as of the date
     hereof, of each Open Year of each Loan Party and each of its Affiliates.
     The aggregate unpaid amount, as of the date hereof, of adjustments to the
     Federal income tax liability of each Loan Party and each of its Affiliates
     proposed by the Internal Revenue Service with respect to Open Years does
     not exceed $62,500,000. No issues have been raised by the Internal Revenue
     Service in respect of Open Years that, in the aggregate, could be
     reasonably likely to have a Material Adverse Effect.

          (q) Set forth on Schedule 4.01(q) hereto is a complete and accurate
     list of all Liens (other than Permitted Liens) on the property or assets of
     any Loan Party, 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 subject thereto.

          (r) Set forth on Schedule 4.01(r) hereto is a complete and accurate
     list of all Investments held by any Loan Party on the date hereof, showing
     the amount, obligor or issuer and maturity, if any, thereof.

          (s) Except as set forth on Schedule 4.01(s), the dialysis facilities
     operated by each of the Borrower and its Subsidiaries (the "Dialysis
                                                                 --------
     Facilities") are qualified for participation in the Medicare programs and
     ----------
     the Medicaid programs in which they participate (together with their
     respective intermediaries or carriers, the "Government Reimbursement
                                                 ------------------------
     Programs") and are entitled to reimbursement under the Medicare program for
     --------
     services rendered to qualified Medicare beneficiaries, and comply in all
     material respects with the conditions of participation in all Government
     Reimbursement Programs in which they participate or have participated.
     Except as set forth on Schedule 4.01(s), there is no pending or, to
     Borrower's knowledge, threatened proceeding or investigation by any of the
     Government Reimbursement Programs with respect to (i) the Borrower's or any
     of its Subsidiaries' qualification or right to participate in any
     Government Reimbursement Program in which they participate or have
     participated, (ii) the compliance or non-compliance by the Borrower or any
     of its Subsidiaries with the terms or provisions of any Government
     Reimbursement Program in which they participate or have participated, or
     (iii) the right of the Borrower or any of its Subsidiaries to receive or
     retain amounts received or due or to become due from any Government
     Reimbursement Program in which they participate or have participated, which
     proceeding or investigation, together with all other such proceedings and
     investigations, could reasonably be expected to (x) have a Material Adverse
     Effect or (y) result in Consolidated net operating revenues for any
     (including any future) four fiscal quarter period of the Borrower
     constituting less than 95% of Consolidated net operating revenues for the
     immediately preceding four fiscal quarter period of the Borrower.

          (t) Neither the Borrower nor any of its Subsidiaries, nor any of their
     respective officers or directors has, on behalf of the Borrower or any of
     its Subsidiaries, knowingly or willfully violated the federal Medicare and
     Medicaid statutes, 42 U.S.C. (S)1320a-7b, or the regulations promulgated
     pursuant to such statutes or related state or local statutes or
     regulations, including but not limited to the following:  (i) knowingly and
     willfully making or causing to be made a false statement or representation
     of a material fact in any applications for any benefit or payment; (ii)
     knowingly and willfully making or causing to be made any false statement or
     representation of a material fact for use in determining rights to any
     benefit or payment; (iii) failing to disclose knowledge by a claimant of
     the occurrence of any event affecting the initial or continued right to any
     benefit or payment on its own behalf or on behalf of another, with intent
     to secure such benefit or payment fraudulently; (iv) knowingly and
     willfully soliciting or receiving


                                       67

     any remuneration (including any kickback, bribe or rebate), directly or
     indirectly, overtly or covertly, in cash or in kind or offering to pay such
     remuneration (a) in return for referring an individual to a Person for the
     furnishing or arranging for the furnishing of any item or service for which
     payment may be made in whole or in part by Medicare, Medicaid or other
     applicable government payers, or (b) in return for purchasing, leasing or
     ordering or arranging for or recommending the purchasing, leasing or
     ordering of any good, facility, service or item for which payment may be
     made in whole or in part by Medicare, Medicaid or other applicable
     government payers. With respect to this Section, knowledge of an individual
     director or officer of the Borrower or a Subsidiary of any of the events
     described in this Section shall not be imputed to the Borrower or such
     Subsidiary unless such knowledge was obtained or learned by the director or
     officer in his or her official capacity as a director or officer of the
     Borrower or such Subsidiary.

          (u) The subordination provisions of (i) the Subordinated Notes
     Documents, (ii) the Subordinated Notes, (iii) any Subordinated Debt now
     existing or hereafter incurred or assumed by any Loan Party and (iv) any
     guarantee by any Loan Party of any Subordinated Debt will be enforceable
     against the holders thereof, and the Advances and all other monetary
     obligations hereunder and all monetary obligations under the Subsidiary
     Guaranty will constitute "Senior Indebtedness" and "Designated Senior
     Indebtedness" (or any comparable terms) as defined in such provisions.

                                  ARTICLE IV

                           COVENANTS OF THE BORROWER

     SECTION 5.01. Affirmative Covenants. So long as any Advance or any other
     -----------------------------------
Obligation of any Loan Party under any Loan Document shall remain unpaid, any
Letter of Credit shall be outstanding or any Lender Party shall have any
Commitment hereunder, the Borrower will:

          (a) Compliance with Laws, Etc. Comply, and cause each of its
              -------------------------
     Subsidiaries to comply, in all material respects, with all applicable
     Requirements of Law, such compliance to include, without limitation,
     compliance with ERISA and the Racketeer Influenced and Corrupt
     Organizations Chapter of the Organized Crime Control Act of 1970, except to
     the extent that non-compliance could not be reasonably expected to result
     in a Material Adverse Effect.

          (b) Payment of Taxes, Etc.  Pay and discharge, and cause each of its
              ---------------------
     Subsidiaries to pay and discharge, before the same shall become delinquent,
     (i) all taxes, assessments and governmental charges or levies imposed upon
     it or upon its property and (ii) all lawful claims that, if unpaid, might
     by law become a Lien upon its property; provided, however, that neither the
     Borrower nor any of its Subsidiaries shall be required to pay or discharge
     any such tax, assessment, charge or claim (A) the non-payment or non-
     discharge of which could not be reasonably expected to result in a Material
     Adverse Effect or (B) that is being contested in good faith and by proper
     proceedings and as to which appropriate reserves are being maintained,
     unless and until any Lien resulting therefrom attaches to its property and
     becomes enforceable against its other creditors and subjects the property
     to a substantial risk of forfeiture.

          (c) Compliance with Environmental Laws.  Comply, and cause each of its
              ----------------------------------
     Subsidiaries and 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 and cause
     each of its Subsidiaries to obtain and renew all Environmental Permits
     necessary for its operations and properties; and conduct, and cause each of
     its Subsidiaries to conduct, any investigation, study, sampling and
     testing, and undertake any cleanup, removal,


                                       68

     remedial or other action necessary to remove and clean up all Hazardous
     Materials from any of its properties, in accordance with the requirements
     of all Environmental Laws; provided, however, that neither the Borrower nor
     any of its Subsidiaries shall be required to undertake any such cleanup,
     removal, remedial or other action 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.

          (d) Maintenance of Insurance.  Maintain, and cause each of its
              ------------------------
     Subsidiaries to maintain, insurance with responsible and reputable
     insurance companies or associations in such amounts and covering such risks
     as is usually carried by companies engaged in similar businesses and owning
     similar properties in the same general areas in which the Borrower or such
     Subsidiary operates.

          (e) Preservation of Corporate Existence, Etc. Preserve and maintain,
              ----------------------------------------
     and cause each of its Subsidiaries to preserve and maintain, its existence,
     legal structure, legal name, rights (charter and statutory) and material
     franchises; provided, however, that neither the Borrower nor any of its
     Subsidiaries shall be required to preserve any right, privilege or
     franchise if the Board of Directors of the Borrower or such Subsidiary
     shall determine that the preservation thereof is no longer desirable in the
     conduct of the business of the Borrower or such Subsidiary, as the case may
     be, and that the loss thereof is not disadvantageous in any material
     respect to the Borrower, such Subsidiary or the Lender Parties and any
     Subsidiary may merge with or into or be liquidated into another Subsidiary
     or the Borrower as permitted under Section 5.02(d).

          (f) Visitation Rights.  At any reasonable time and from time to time,
              -----------------
     and, unless a Default or an Event of Default shall have occurred and be
     continuing, upon reasonable notice, permit any of the Agents or any of the
     Lender Parties, or any agents or representatives thereof, to examine and
     make copies of and abstracts from the records and books of account of, and
     visit the properties of, the Borrower and any of its Subsidiaries, and to
     discuss the affairs, finances and accounts of the Borrower and any of its
     Subsidiaries with any of their officers or directors and with their
     independent certified public accountants (provided that representatives of
     the Borrower shall be entitled to notice of and to participate in any such
     discussion).

          (g) Keeping of Books. Keep, and cause each of its Subsidiaries to
              ----------------
     keep, proper books of record and account, in which full and correct entries
     shall be made of all financial transactions and the assets and business of
     the Borrower and each such Subsidiary using sound business practices
     sufficient to permit the preparation of financial statements based thereon
     in accordance with generally accepted accounting principles in effect from
     time to time.

          (h) Maintenance of Properties, Etc.  Maintain and preserve, and cause
              ------------------------------
     each of its Subsidiaries to maintain and preserve, all of its properties
     that are used or useful in the conduct of its business in good working
     order and condition, ordinary wear and tear excepted.

          (i) Transactions with Affiliates.  Conduct, and cause each of its
              ----------------------------
     Subsidiaries to conduct, all transactions otherwise permitted under the
     Loan Documents with any of their Affiliates on terms that are fair and
     reasonable and no less favorable to the Borrower or such Subsidiary than it
     would obtain in a comparable arm's-length transaction with a Person not an
     Affiliate.

          (j) Covenant to Guarantee Obligations and Give Security.  Upon (x) the
              ---------------------------------------------------
     formation or acquisition of any new direct or indirect Subsidiaries by any
     Loan Party or (y) the acquisition of any property by any Loan Party, which,
     in the judgment of the Administrative Agent, shall not


                                       69



         already be 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, in each case at the Borrower's
         expense:

                    (i)    in connection with the formation or acquisition of a
               wholly-owned Domestic Subsidiary, within 30 days after such
               formation or acquisition, cause each such Domestic Subsidiary,
               and cause each direct and indirect parent of such Domestic
               Subsidiary (if it has not already done so), to duly execute and
               deliver to the Administrative Agent a guaranty or guaranty
               supplement, in form and substance satisfactory to the
               Administrative Agent, guaranteeing the other Loan Parties'
               obligations under the Loan Documents, and, in connection with the
               formation or acquisition of a Foreign Subsidiary, within 30 days
               after such formation or acquisition, pledge or, cause its
               respective Subsidiary to pledge, to the Administrative Agent for
               the benefit of the Secured Parties 65% of the Equity Interests in
               such Foreign Subsidiary,

                    (ii)   within 10 days after such formation or acquisition,
               furnish to the Administrative Agent a description of (A) the
               material personal properties of such wholly-owned Domestic
               Subsidiary and (B) such property which was not previously subject
               to such perfected security interest, in each case in detail
               satisfactory to the Administrative Agent,

                    (iii)  within 30 days after such formation or acquisition,
               duly execute and deliver, and cause each such wholly-owned
               Domestic Subsidiary and each direct and indirect parent of such
               wholly-owned Domestic Subsidiary (if it has not already done so)
               to duly execute and deliver, to the Administrative Agent pledges,
               assignments, security agreements and security agreement
               supplements, as specified by and in form and substance
               satisfactory to the Administrative Agent, with respect to the
               Equity Interests in and assets of such wholly-owned Domestic
               Subsidiary,

                    (iv)   within 30 days after such formation or acquisition,
               take, and cause such wholly-owned Subsidiary or such parent to
               take, whatever action (including, without limitation, the filing
               of Uniform Commercial Code financing statements, the giving of
               notices and the endorsement of notices on title documents) may be
               necessary or advisable in the opinion of the Administrative Agent
               to vest in the Administrative Agent (or in any representative of
               the Administrative Agent designated by it) valid and subsisting
               Liens on the properties purported to be subject to the pledges,
               assignments, security agreements and security agreement
               supplements delivered pursuant to this Section 5.01(j),
               enforceable against all third parties in accordance with their
               terms,

                    (v)    within 60 days 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 (subject to customary qualifications,
               limitations and exceptions), addressed to the Administrative
               Agent and the other Secured Parties, of counsel for the Loan
               Parties acceptable to the Administrative Agent as to the matters
               contained in clauses (i), (iii) and (iv) above, as to such
               guaranties, guaranty supplements, pledges, assignments, security
               agreements and security agreement supplements being legal, valid
               and binding obligations of the respective Loan Party thereto
               enforceable in accordance with their terms, as to the matters
               contained in clause (iv) above, as to such recordings, filings,
               notices, endorsements and other actions being sufficient to
               create valid perfected Liens on such properties, and as to such
               other matters as the Administrative Agent may reasonably request,
               and


                                       70

                    (vi)   at any time and from time to time, promptly execute
               and deliver any and all further instruments and documents and
               take all such other action as the Administrative Agent may deem
               necessary or desirable in obtaining the full benefits of, or in
               perfecting and preserving the Liens of, such guaranties, pledges,
               assignments, security agreements and security agreement
               supplements.

               (k)  Further Assurances.
                    ------------------

                    (i)    Promptly upon request by any Agent, or any Lender
               Party through the Administrative Agent, correct, and cause each
               of its Subsidiaries promptly to correct, any material defect or
               error that may be discovered in any Loan Document or in the
               execution, acknowledgment, filing or recordation thereof, and

                    (ii)   Promptly upon request by any Agent, or any Lender
               Party through the Administrative Agent, do, execute, acknowledge,
               deliver, record, re-record, file, re-file, register and re-
               register any and all such further acts, pledge agreements,
               assignments, financing statements and continuations thereof,
               termination statements, notices of assignment, transfers,
               certificates, assurances and other instruments as any Agent, or
               any Lender Party through the Administrative Agent, may reasonably
               require from time to time in order to (A) carry out more
               effectively the purposes of the Loan Documents, (B) to the
               fullest extent permitted by applicable law, subject any Loan
               Party,s properties, assets, rights or interests to the Liens now
               or hereafter intended to be covered by any of the Collateral
               Documents, (C) 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 (D) 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 is or
               is to be a party, and cause each of its Subsidiaries to do so.

     SECTION 5.02. Negative Covenants. So long as any Advance or any other
     --------------------------------
Obligation of any Loan Party under any Loan Document shall remain unpaid, any
Letter of Credit shall be outstanding or any Lender Party shall have any
Commitment hereunder, the Borrower will not, at any time:

               (a)  Liens, Etc. Create, incur, assume or suffer to exist, or
                    ----------
     permit any of its Subsidiaries to create, incur, assume or suffer to exist,
     any Lien on or with respect to any of its properties of any character
     whether now owned or hereafter acquired, or sign or file or suffer to
     exist, or permit any of its Subsidiaries to sign or file or suffer to
     exist, under the Uniform Commercial Code of any jurisdiction, a financing
     statement that names the Borrower or any of its Subsidiaries as debtor, or
     sign or suffer to exist, or permit any of its Subsidiaries to sign or
     suffer to exist, any security agreement authorizing any secured party
     thereunder to file such financing statement, or assign, or permit any of
     its Subsidiaries to assign, any accounts or other right to receive income,
     except:

                    (i)    Liens created under the Loan Documents;

                    (ii)   Permitted Liens;

                    (iii)  Liens existing on the Closing Date and described on
               Schedule 4.01(q) hereto;


                                       71

                    (iv)   Liens upon or in real property or equipment acquired
               or held by the Borrower or any of its Subsidiaries in the
               ordinary course of business to secure the purchase price of such
               property or equipment or to secure Debt incurred solely for the
               purpose of financing the acquisition, construction or improvement
               of any such property or equipment to be subject to such Liens, or
               Liens existing on any such property or equipment at the time of
               acquisition (other than any such Liens created in contemplation
               of such acquisition that do not secure the purchase price), or
               extensions, renewals or replacements of any of the foregoing for
               the same or a lesser amount; provided, however, that (a) such
               Liens shall be created not more than 180 days after the date of
               acquisition or completion of construction or improvement and
               (b) no such Lien shall extend to or cover any property other than
               the property or equipment being acquired, constructed or improved
               and any attachments thereto and proceeds thereof, and no such
               extension, renewal or replacement shall extend to or cover any
               property not theretofore subject to the Lien being extended,
               renewed or replaced; and provided further that the aggregate
               principal amount of the Debt secured by Liens permitted by this
               clause (iv) shall not exceed the amount permitted under Section
               5.02(b)(v) at any time outstanding;

                    (v)    Liens arising in connection with Capitalized Leases
               permitted under Section 5.02(b)(vi); provided that no such Lien
               shall extend to or cover any Collateral or assets other than the
               assets subject to such Capitalized Leases; and

                    (vi)   the replacement, extension or renewal of any Lien
               permitted by clause (iii) above upon or in the same property
               theretofore subject thereto or the replacement, extension or
               renewal (without increase in the amount or change in any direct
               or contingent obligor) of the Debt secured thereby.

               (b)  Debt. Create, incur, assume or suffer to exist, or permit
                    ----
     any of its Subsidiaries to create, incur, assume or suffer to exist, any
     Debt, except:

                    (i)    Debt under the Loan Documents;

                    (ii)   Debt existing on the Closing Date and described on
               Schedule 5.02(b) hereto;

                    (iii)  Debt of the Borrower in respect of Hedge Agreements
               (A) existing on the date of this Agreement and described in
               Schedule 5.02(b) hereto or (B) entered into from time to time
               after the date of this Agreement with counter parties that are
               Lender Parties at the time such Hedge Agreement is entered into
               (or Affiliates of such Lender Party at such time); provided that,
               in all cases under this clause (iii), all such Hedge Agreements
               shall not be speculative in nature (including, without
               limitation, with respect to the term and purpose thereof);

                    (iv)   Debt of (A) the Borrower owing to any other Loan
               Party, and (B) any of the Subsidiaries owing to the Borrower or
               any other Loan Party to the extent permitted under Section
               5.02(f)(viii);

                    (v)    Debt incurred after the date of this Agreement and
               secured by Liens expressly permitted under Section 5.02(a)(iv) in
               an aggregate principal amount not to exceed, when aggregated with
               the principal amount of all Debt incurred under clause (vi) of
               this Section 5.02(b), $50,000,000 any time outstanding;


                                       72

                    (vi)    Capitalized Leases incurred after the date of this
               Agreement which, when aggregated with the principal amount of all
               Debt incurred under clause (v) of this Section 5.02(b), do not
               exceed $50,000,000 at any time outstanding;

                    (vii)   Contingent Obligations of (A) the Borrower
               guaranteeing all or any portion of the outstanding Obligations of
               any of the subsidiaries and (B) any Subsidiary of the Borrower
               guaranteeing any Obligations of the Borrower or another
               subsidiary thereof; provided that each such primary Obligation is
               otherwise permitted under the terms of the Loan Documents ;

                    (viii)  Unsecured Debt not otherwise permitted under this
               Section 5.02(b) in an aggregate amount not to exceed $50,000,000
               at any time outstanding;

                    (ix)    Endorsement of negotiable instruments for deposit or
               collection or similar transactions in the ordinary course of
               business;

                    (x)     Debt comprised of indemnities given by the Borrower
               or any of its Subsidiaries, or guarantees or other similar
               undertakings by the Borrower or any of its Subsidiaries entered
               into in lieu thereof, in favor of the purchaser of property and
               assets of the Borrower and its Subsidiaries being sold, leased,
               transferred or otherwise disposed of in accordance with this
               Agreement and covering liabilities incurred by the Borrower or
               its applicable Subsidiary in respect of such property and assets
               prior to the date of consummation of the sale, lease, transfer or
               other disposition thereof, which indemnities, guarantees or
               undertakings are required under the terms of the documentation
               for such sale, lease, transfer or other disposition;

                    (xi)    Debt comprised of liabilities or other Obligations
               assumed or retained by the Borrower or any of its Subsidiaries
               from Subsidiaries of the Borrower that are, or all or
               substantially all of the property and assets of which are, sold,
               leased, transferred or otherwise disposed of pursuant to Section
               5.02(e)(iii) or (vi); provided that such liabilities or other
               Obligations were not created or incurred in contemplation of the
               related sale, lease, transfer or other disposition;

                    (xii)   Unsecured Subordinated Debt or Redeemable Preferred
               Interests not otherwise permitted under this Section 5.02(b),
               provided that the aggregate amount of the outstanding principal
               amount of such unsecured Subordinated Debt and the maximum amount
               of the purchase price, redemption price or liquidation value
               (whichever is greater) of such Redeemable Preferred Interests
               does not exceed $300,000,000 at any time; provided further, that
               the Net Cash Proceeds thereof are applied to prepay the Advances
               to the extent provided in Section 2.06(b); and

                    (xiii)  Debt extending the maturity of, or refunding,
               refinancing or replacing, in whole or in part, any Debt incurred
               under clause (ii) of this Section 5.02(b); provided, however,
               that (A) the aggregate principal amount of such extended,
               refunding, refinancing or replacement Debt shall not be increased
               above the principal amount thereof and the premium, if any,
               thereon outstanding immediately prior to such extension,
               refunding, refinancing or replacement, (B) the direct and
               contingent obligors therefor shall not be changed as a result of
               or in connection with such extension, refunding, refinancing or
               replacement, (C) such extended, refunding, refinancing or
               replacement Debt shall not mature prior to the stated maturity
               date or mandatory redemption date of the Debt being so extended,
               refunded, refinanced or replaced, and (D) if the Debt being


                                       73

               so extended, refunded, refinanced or replaced is subordinated in
               right of payment or otherwise to the Obligations of the Borrower
               or any of its Subsidiaries under and in respect of the Loan
               Documents, such extended, refunding, refinancing or replacement
               Debt shall be subordinated to such Obligations to at least the
               same extent.

               (c)  Change in Nature of Business. Engage or permit any of its
                    ----------------------------
     Subsidiaries to engage in any business other than the businesses carried on
     at the date hereof and any businesses incidental or related thereto.

               (d)  Mergers, Etc. Merge into or consolidate with any Person or
                    ------------
     permit any Person to merge into it, or permit any of its Subsidiaries to do
     so, except that:

                    (i)    any of the Subsidiaries may merge into or consolidate
               with the Borrower, provided that the Borrower is the surviving
               corporation;

                    (ii)   any Subsidiary of the Borrower may merge into or
               consolidate with any other Subsidiary of the Borrower, provided
               that, in the case of any such merger or consolidation involving a
               wholly-owned Subsidiary, the Person formed by or surviving such
               merger or consolidation shall be a wholly-owned Subsidiary of the
               Borrower, provided further that, in the case of any such merger
               or consolidation to which a Subsidiary Guarantor is a party, the
               Person formed by such merger or consolidation shall be a
               Subsidiary Guarantor;

                    (iii)  in connection with any purchase or other acquisition
               of Equity Interests in, or property and assets of, any Person
               permitted under Section 5.02(f)(v), the Borrower may permit any
               other Person to merge into or consolidate with it (provided that
               the Borrower is the surviving entity), and any of the
               Subsidiaries 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 the Person with which such
               Subsidiary is merging or consolidating (1) shall be engaged in
               substantially the same lines of business as one or more of the
               businesses of the Borrower and the Subsidiaries or in an
               incidental or related business and (2) shall not have any
               contingent liabilities that could reasonably be expected to be
               material and adverse to the Borrower and its Subsidiaries, taken
               as a whole (as determined in good faith by the board of directors
               (or persons performing similar functions) of the Borrower or such
               Subsidiary if the board of directors is otherwise approving such
               transaction, and in each other case, by a Responsible Officer),
               and (3) in the case of any wholly-owned Domestic Subsidiary, such
               Person shall take all actions required under Section 5.01(j); and

                    (iv)   in connection with any sale, transfer or other
               disposition of all or substantially all of the Equity Interests
               in, or the property and assets of, any Person permitted under
               Section 5.02(e)(vi), any of the Subsidiaries of the Borrower may
               merge into or consolidate with any other Person or permit any
               other Person to merge into or consolidate with it; and

     provided, however, that in each case, immediately after giving effect
     thereto, no event shall occur and be continuing that constitutes a Default.

               (e)  Sales, Etc., of Assets. Sell, lease, transfer or otherwise
                    ----------------------
     dispose of, or permit any of its Subsidiaries to sell, lease, transfer or
     otherwise dispose of, any assets, or grant any option or other right to
     purchase, lease or otherwise acquire any assets, except:


                                       74

                    (i)    the Borrower and its Subsidiaries may sell inventory
               in the ordinary course of business;

                    (ii)   (A) the Borrower may sell, lease, transfer or
               otherwise dispose of any of its property or assets to any of the
               Subsidiaries, and (B) any of the Subsidiaries may sell, lease,
               transfer or otherwise dispose of any of its property or assets to
               the Borrower or any of the other Subsidiaries;

                    (iii)  any Subsidiary of the Borrower that is no longer
               actively engaged in any business or activities and does not have
               property and assets with an aggregate book value in excess of
               $1,000,000 may be wound up, liquidated or dissolved so long as
               such winding up, liquidation or dissolution is determined in good
               faith by management of the Borrower to be in the best interests
               of the Borrower and its Subsidiaries;

                    (iv)   the Borrower and its Subsidiaries may sell, lease,
               transfer or otherwise dispose of any obsolete, damaged or worn
               out equipment thereof or any other equipment that is otherwise no
               longer useful in the conduct of their businesses;

                    (v)    the Borrower and its Subsidiaries may lease or
               sublease real property to the extent required for their
               respective businesses and operations in the ordinary course so
               long as such lease or sublease is not otherwise prohibited under
               the terms of the Loan Documents;

                    (vi)   the Borrower and its Subsidiaries may sell, lease,
               transfer or otherwise dispose of property and assets not
               otherwise permitted to be sold, leased, transferred or disposed
               of pursuant to this Section 5.02(e) so long as the aggregate book
               value of all of the property and assets of the Borrower and its
               Subsidiaries sold, leased, transferred or otherwise disposed of
               pursuant to this clause (vi) does not exceed $300,000,000 in the
               aggregate during the term of this Agreement; provided that:

                           (A)   the gross proceeds received from any such sale,
                    lease, transfer or other disposition shall be at least equal
                    to the fair market value of the property and assets so sold,
                    leased, transferred or otherwise disposed of, determined at
                    the time of such sale, lease, transfer or other disposition;

                           (B)   at least 75% of the value of the aggregate
                    consideration received from any such sale, lease, transfer
                    or other disposition shall be in cash, provided, that up to
                    one-third of such 75% may consist of notes or other
                    obligations received by the Borrower or such Subsidiary that
                    are due and payable or otherwise converted by the Borrower
                    or such Subsidiary into cash within 365 days of receipt,
                    which cash (to the extent received) shall constitute Net
                    Cash Proceeds attributable to the original transaction; and
                    provided further that any Debt of the Borrower or any of its
                    Subsidiaries (as shown on the Borrower's or such
                    Subsidiary's most recent balance sheet) that is assumed by
                    the transferee of any such assets shall constitute cash for
                    purposes of this Section 5.02(e)(vi), so long as the
                    Borrower and all of its Subsidiaries are fully and
                    unconditionally released therefrom;

                           (C)   immediately before and immediately after giving
                    pro forma effect to any such sale, lease, transfer or other
                    disposition, no Default shall have occurred and be
                    continuing, and


                                       75

                           (D)   within fifteen Business Days after each
                    disposition under this subsection, the Borrower shall
                    deliver to the Administrative Agent, on behalf of the Lender
                    Parties, a certificate identifying the property disposed of
                    and stating (a) that immediately before and after giving
                    effect thereto, no Default or Event or Default existed, (b)
                    that the consideration received or to be received by the
                    Borrower or such Subsidiary for such property has been
                    determined by the Borrower or the applicable Subsidiary to
                    be not less than the fair market value of such property and
                    (c) the total consideration to be paid in respect of such
                    disposition and (d) the Net Cash Proceeds resulting from
                    such disposition; and

                           (E)   if and to the extent that the Net Cash Proceeds
                    of any transaction effected pursuant to this Section
                    5.02(e)(vi) shall not have been reinvested in assets or
                    property of the Borrower or any of its Subsidiaries with
                    respect to any transaction completed (1) on or prior to
                    December 31, 2001, by December 27, 2002 and (2) thereafter,
                    within 360 days after the date of receipt thereof, then such
                    uninvested Net Cash Proceeds shall be applied on the first
                    Business Day following December 27, 2002 or the applicable
                    360-day period, as the case may be, to prepay Advances in
                    accordance with Section 2.06(b); and

            (vii)   the Borrower and its Subsidiaries may exchange assets and
     properties with another Person; provided that:

                           (A)   the assets or properties received by the
                    Borrower or its Subsidiaries shall be used in the business
                    of the Borrower or such Subsidiary as conducted immediately
                    prior to such transaction, or in an incidental or related
                    business;

                           (B)   the total consideration received by the
                    Borrower or such Subsidiary for such assets or property
                    shall have been determined by the Borrower or such
                    Subsidiary to be not less than the fair market value of the
                    assets or property exchanged;

                           (C)   immediately before and immediately after giving
                    pro forma effect to any such exchange, no Default shall have
                    occurred and be continuing;

                           (D)   any cash received by the Borrower or any such
                    Subsidiary in connection with such exchange shall be treated
                    as Net Cash Proceeds subject to Section 2.06(b) and any cash
                    paid by the Borrower or any Subsidiary in connection with
                    such exchange shall be treated as an acquisition expenditure
                    under Section 5.02(f)(v); and

                           (E)   within fifteen Business Days after each
                    exchange under this Section 5.02(e)(vii), the Borrower shall
                    deliver to the Administrative Agent, on behalf of the Lender
                    Parties, a certificate identifying the assets or property
                    disposed of and acquired in such exchange, and stating (a)
                    that immediately before and after giving effect thereto, no
                    Default or Event or Default existed, (b) that the total
                    consideration received by the Borrower or such Subsidiary
                    for such assets or property has been determined by the
                    Borrower or such Subsidiary to be not less than the fair
                    market value of the assets or property exchanged, and (c)
                    the amount, if any, of the cash paid or Net Cash Proceeds
                    received in connection with such exchange.


                                       76

                    (f)    Investments in Other Persons. Make or hold, or permit
                           ----------------------------
            any of its Subsidiaries to make or hold, any Investment in any
            Person, except:

                           (i)   Investments by the Borrower and its
                    Subsidiaries in Cash Equivalents;

                           (ii)  Investments existing on the Closing Date and
                    described on Schedule 4.01(b) hereto;

                           (iii) Investments by the Borrower in Hedge Agreements
                    permitted under Section 5.02(b) (iii);

                           (iv)  Investments in accounts and notes payable in
                    the ordinary course of business, including notes received in
                    transactions permitted under Section 5.02(e)(vi);

                           (v)   the purchase or other acquisition of (1) Equity
                    Interests in any Domestic Person that, upon the consummation
                    thereof, will be more than 50% owned by the Borrower or one
                    or more of its wholly owned Subsidiaries (including, without
                    limitation, as a result of a merger or consolidation) or
                    (2) all or substantially all the property and assets of a
                    Person or consisting of a line of business or business unit
                    of a Person; provided that, with respect to each purchase or
                    other acquisition made pursuant to this clause (v):

                                 (A)   the lines of business of the Person to be
                           (or the property and assets of which are to be) so
                           purchased or otherwise acquired shall be
                           substantially the same lines of business as one or
                           more of the businesses of the Borrower and its
                           Subsidiaries or a business that is incidental or
                           related thereto;

                                 (B)   such purchase or other acquisition shall
                           not include or result in any contingent liabilities
                           that could reasonably be expected to be material and
                           adverse to the business, financial condition,
                           operations or prospects of the Borrower and its
                           Subsidiaries, taken as a whole (as determined in good
                           faith by the board of directors (or the persons
                           performing similar functions) of the Borrower or such
                           Subsidiary if the board of directors is otherwise
                           approving such transaction and, in each other case,
                           by a Responsible Officer);

                                 (C)   the total cash consideration (excluding
                           all Equity Interests issued or transferred to the
                           sellers thereof but including the aggregate amounts
                           paid or to be paid under deferred purchase price,
                           noncompete, consulting and other similar agreements
                           with the sellers thereof and all assumptions of debt,
                           liabilities and other obligations in connection
                           therewith) paid by or on behalf of the Borrower and
                           its Subsidiaries for any such purchase or other
                           acquisition (or any series of related purchases or
                           acquisitions) shall not exceed $50,000,000 unless
                           such purchase or acquisition has been approved by the
                           Required Lenders, and for all such purchases or
                           acquisitions effected during the term of this
                           Agreement shall not exceed $250,000,000; provided
                           that such amount shall be increased to $450,000,000
                           at all times after the Leverage Ratio is less than or
                           equal to 2.75:1;

                                 (D)   (1) immediately before and immediately
                           after giving pro forma effect to any such purchase or
                           other acquisition, no Default shall have occurred and
                           be continuing and (2) immediately after giving effect
                           to such purchase or other acquisition, the Borrower
                           and its Subsidiaries shall be in pro forma


                                       77

                           compliance with all of the covenants set forth in
                           Section 5.04, such compliance to be determined on the
                           basis of the Required Financial Information most
                           recently delivered to the Administrative Agent and
                           the Lender Parties as though such purchase or other
                           acquisition had been consummated as of the first day
                           of the fiscal period covered thereby; and

                                 (E)   the Borrower shall have delivered to the
                           Administrative Agent, on behalf of the Lender
                           Parties, at least three Business Days prior to the
                           date on which any such purchase or other acquisition
                           in which the total cash consideration is more than
                           $30,000,000 is to be consummated, a certificate of a
                           Responsible Officer, in form and substance reasonably
                           satisfactory to the Administrative Agent, certifying
                           that all of the requirements set forth in this clause
                           (v) have been satisfied or will be satisfied on or
                           prior to the consummation of such purchase or other
                           acquisition;

                           (vi)    Investments by the Borrower or any Subsidiary
                    in 50% or less of the Equity Interests in another Person
                    (the "Minority Investment"), provided that (i) the Borrower
                    or any Subsidiary owns at least 20% (on a fully diluted
                    basis) of the issued and outstanding Equity Interests in
                    such Person, (ii) the aggregate outstanding amount of
                    Minority Investments made by the Borrower and any Subsidiary
                    shall not exceed $60,000,000 at any one time, (iii) the
                    Borrower or any Subsidiary shall have full control over all
                    bank accounts of such Person if the Borrower or any
                    Subsidiary is the largest holder of Equity Interests in such
                    Person, (iv) the Borrower or any Subsidiary shall control or
                    act as the managing general partner of such Person if such
                    Person is a partnership and if the Borrower or any
                    Subsidiary is the largest holder of Equity Interests in such
                    Person, and (v) immediately before and after giving effect
                    thereto, no Default or Event of Default shall exist;

                           (vii)   notes from employees issued to the Borrower
                    representing payment for capital stock of the Borrower or
                    representing payment of the exercise price of options to
                    purchase capital stock of the Borrower, and employee
                    relocation expenses incurred in the ordinary course of
                    business, in an aggregate amount at any time outstanding not
                    to exceed $10,000,000; and

                           (viii)  Investments of the Borrower or any of its
                    Subsidiaries in any Subsidiary of the Borrower; provided
                    that no such Investments in non-wholly-owned Subsidiaries
                    shall be made unless, after giving pro forma effect thereto,
                    the Borrower and its Subsidiaries would be in compliance
                    with Section 5.02(l) and Section 5.04(d).

                    (g)    Restricted Payments. Declare or pay any dividends,
                           -------------------
            purchase, redeem, retire, defease or otherwise acquire for value any
            of its Equity Interests now or hereafter outstanding, return any
            capital to its stockholders, partners or members (or the equivalent
            Persons thereof) as such, make any distribution of assets, Equity
            Interests, obligations or securities to its stockholders, partners
            or members (or the equivalent Persons thereof) as such, or permit
            any of its Subsidiaries to do any of the foregoing, or permit any of
            its Subsidiaries to purchase, redeem, retire, defease or otherwise
            acquire for value any Equity Interests in the Borrower, 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:

                           (i)     the Borrower may (A) declare and pay
                    dividends and distributions payable only in its common
                    Equity Interests, (B) except to the extent the Net Cash


                                       78

                    Proceeds thereof are required to be applied to the
                    prepayment of the Advances pursuant to Section 2.06(b),
                    purchase, redeem, retire, defease or otherwise acquire
                    Equity Interests with the proceeds received
                    contemporaneously from the issue of new Equity Interests
                    with equal or inferior voting powers, designations,
                    preferences and rights, and (C) repurchase its Equity
                    Interests owned by management or employees and physicians
                    under contract with the Borrower or any of its Subsidiaries
                    in an amount not in excess of $10,000,000 in any twelve
                    month period;

                           (ii)    any Subsidiary of the Borrower may (A)
                    declare and pay cash dividends to the Borrower, and (B)
                    declare and pay cash dividends to any other Loan Party of
                    which it is a Subsidiary;

                           (iii)   any of the non-wholly owned Subsidiaries of
                    the Borrower may declare and pay or make dividends and other
                    distributions to its shareholders, partners or members (or
                    the equivalent persons thereof) generally so long as the
                    Borrower and each of the Subsidiaries that own any of the
                    Equity Interests therein receive at least their respective
                    proportionate shares of any such dividend, distribution
                    (based on upon their relative holdings of the Equity
                    Interests therein and taking into account the relative
                    preferences, if any, of the various classes of the Equity
                    Interests therein); and

                           (iv)    the Borrower may purchase, redeem or
                    otherwise acquire for value any of its Equity Interests in
                    an aggregate amount not in excess of (A) $50,000,000 in the
                    aggregate during the term of this Agreement; plus (B)
                    $50,000,000, in the aggregate during the term of this
                    Agreement, provided that (1) the Share Repurchase Ratio is
                    not more than 0.85:1, and (2) for the 60 day period
                    immediately preceding each such purchase the sum of the
                    aggregate outstanding amount of all Revolving Credit
                    Borrowings shall not exceed $75,000,000; plus (C) commencing
                    after the second anniversary of the Closing Date,
                    $50,000,000 in the aggregate during the term of this
                    Agreement; provided that (1) the Share Repurchase Ratio is
                    not more than 0.85:1, and (2) for the 60 day period
                    immediately preceding each such purchase the sum of the
                    aggregate outstanding amount of all Revolving Credit
                    Borrowings shall not exceed $75,000,000.

                    (h)    Accounting Changes. Make or permit, or permit any of
                           ------------------
            its Subsidiaries to make or permit, any change in (i) accounting
            policies or reporting practices, except as allowed by generally
            accepted accounting principles, or (ii) Fiscal Year.

                    (i)    Prepayments, Etc., of Subordinated Debt. Except as
                           ---------------------------------------
            permitted under Section 5.02(g)(iv), (i) 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 of, any Subordinated Debt, or give any notice in respect
            thereof, or (ii) amend, modify or change in any manner any term or
            condition of any of the Subordinated Notes Documents, or permit any
            of its Subsidiaries to do any of the foregoing, except that if such
            Subordinated Debt is convertible into common stock of the Borrower,
            the Borrower, subject to the approval of the Administrative Agent
            (which approval shall not unreasonably be withheld), may give notice
            with respect thereof if the purpose of such notice is to force the
            holders of such Subordinated Debt to convert such Subordinated Debt
            into common stock of the Borrower and thereafter the Borrower may
            exercise any right it may have to so redeem all or any part of such
            Subordinated Debt.

                    (j)    Negative Pledge. Enter into or suffer to exist, or
                           ---------------
            permit any of its Subsidiaries to enter into or suffer to exist, any
            agreement prohibiting or conditioning the creation or assumption of
            any Lien upon any of its property or assets except (i) in favor of
            the Secured Parties or (ii) in


                                       79

     connection with (A) any Debt permitted by Section 5.02(b)(v) solely to the
     extent that the agreement or instrument governing such Debt prohibits a
     Lien on the property acquired with the proceeds of such Debt, or (B) any
     Capitalized Lease permitted by Section 5.02(b)(vi) solely to the extent
     that such Capitalized Lease prohibits a Lien on the property subject
     thereto, or (C) any Debt outstanding on the date any Subsidiary of the
     Borrower becomes such a Subsidiary (so long as such agreement was not
     entered into solely in contemplation of such Subsidiary becoming a
     Subsidiary of the Borrower), or (D)solely with respect to Subsidiaries
     that are not Guarantors, restrictions contained in the Constitutive
     Documents of such Subsidiaries.

          (k)       Payment Restrictions Affecting Subsidiaries. Directly or
                    -------------------------------------------
     indirectly, enter into or suffer to exist, or permit any of its
     Subsidiaries to enter into or suffer to exist, any agreement or arrangement
     limiting the ability of any of its Subsidiaries to declare or pay dividends
     or other distributions in respect of its Equity Interests or repay or
     prepay any Debt owed to, make loans or advances to, or otherwise transfer
     assets to or invest in, the Borrower or any Subsidiary of the Borrower
     (whether through a covenant restricting dividends, loans, asset transfers
     or investments, a financial covenant or otherwise), except (i) the Loan
     Documents, (ii) any agreement in effect at the time such Subsidiary becomes
     a Subsidiary of the Borrower, so long as such agreement was not entered
     into solely in contemplation of such Person becoming a Subsidiary of the
     Borrower, (iii) restrictions on transfer contained in Debt incurred
     pursuant to Sections 5.02(b)(v) and (vi); provided, that such restrictions
     relate only to the transfer of the property financed with such Debt; (iv)
     in connection with and pursuant to refinancing Debt under Section
     5.02(b)(xiii), replacements of restrictions that are not more restrictive
     than those being replaced and do not apply to any other Person or assets
     than those that would have been covered by the restrictions in the Debt so
     refinanced; and (v) solely with respect to Subsidiaries that are not
     Guarantors, restrictions under the Constitutive Documents governing such
     Subsidiary: (A) with respect to existing Subsidiaries, existing on the date
     of this Agreement; and (B) with respect to Subsidiaries created or acquired
     after the date of this Agreement: (1) prohibiting such Subsidiary from
     guaranteeing Debt of the Borrower or another Subsidiary; (2) on dividend
     payments and other distributions solely to permit pro rata dividends and
     other distributions in respect of any Equity Interests of such Subsidiary;
     (3) limiting transactions with the Borrower or another Subsidiary to those
     with terms that are fair and reasonable to such Subsidiary and no less
     favorable to such Subsidiary than could have been obtained in an arm's
     length transaction with an unrelated third party; and (vi) encumbrances or
     restrictions (A) that restrict in a customary manner the subletting,
     assignment or transfer of any property or asset that is subject to a lease,
     license or similar contract entered into in the ordinary course of
     business, or the assignment or transfer of any lease, license or contract
     entered into in the ordinary course of business and (B) arising by virtue
     of any transfer of, agreement to transfer, option or right with respect to,
     or Lien on, any property or assets of the Borrower or any Subsidiary.

          (l)       Non-Wholly-Owned Subsidiaries. Permit at any time (x) the
                    -----------------------------
     aggregate total assets (calculated without duplication) at such time of all
     Subsidiaries of the Borrower formed or acquired after April 30, 1998 that
     are not Guarantors, plus (y) the aggregate total Investments made during
     the period from April 30, 1998 to such time (calculated without duplication
     and excluding Investments made pursuant to Section 5.02(f)(vi) to the
     extent the proceeds thereof were used to acquire Equity Interests or assets
     included in (x) above) by the Loan Parties in all Subsidiaries of the
     Borrower that are not Guarantors, less (z) the aggregate total assets at
     such time of all Subsidiaries of the Borrower existing on April 30, 1998
     that became Guarantors after April 30, 1998, to exceed 10% of the
     Consolidated total assets of the Borrower and its Subsidiaries.


                                       80

          (m)  Issuance of Additional Stock. Permit any of its Subsidiaries to
               ----------------------------
     issue any additional Equity Interests, except as follows:

               (i)    in connection with a permitted Investment or to employees
          or consultants in the ordinary course of business;

               (ii)   the Borrower and any Subsidiary thereof msy organize new
          wholly-owned Subsidiaries and any Subsidiary may issue additional
          Equity Interests to the Borrower or to a wholly-owned Subsidiary of
          the Borrower;

               (iii)  subject to compliance with the provisions this Agreement,
          including Section 5.02(1) and Section 5.04(d), the Borrower and its
          Subsidiaries may (A) organize new non-wholly-owned Subsidiaries, and
          (B) (i) cause Subsidiaries to issue additional Equity Interests or
          (ii) sell outstanding Equity Interests therein, in each case to
          Persons other than Affiliates of the Borrower or its Subsidiaries.

     SECTION 5.03. Reporting Requirements. So long as any Advance or any other
     ------------------------------------
Obligation of any Loan Party under any Loan Document shall remain unpaid, any
Letter of Credit shall be outstanding or any Lender Party shall have any
Commitment hereunder, the Borrower will furnish to the Agents and the Lender
Parties:

          (a)  Default Notice. As soon as possible and in any event within five
               --------------
     days after the Borrower knows or reasonably should have known of the
     occurrence of a Default or any event, development or occurrence reasonably
     likely to have a Material Adverse Effect continuing on the date of such
     statement, a statement of the chief financial officer of the Borrower
     setting forth details of such Default or other event, development or
     occurrence and the action that the Borrower has taken and proposes to take
     with respect thereto.

          (b)  Annual Financials. As soon as available and in any event within
               -----------------
     90 days after the end of each Fiscal Year, a copy of the annual audit
     report for such year for the Borrower and its Subsidiaries, including
     therein Consolidated and consolidating balance sheets of the Borrower and
     its Subsidiaries as of the end of such Fiscal Year and a Consolidated and
     consolidating statements of income and a Consolidated statement of cash
     flows of the Borrower and its Subsidiaries for such Fiscal Year, in each
     case accompanied by an unqualified opinion of KPMG LLP or other independent
     public accountants of recognized national standing, together with (i) a
     certificate of such accounting firm to the Lender Parties stating that in
     the course of the regular audit of the business of the Borrower and its
     Subsidiaries, which audit was conducted by such accounting firm in
     accordance with generally accepted auditing standards, such accounting firm
     has obtained no knowledge that a Default has occurred and is continuing, or
     if, in the opinion of such accounting firm, a Default has occurred and is
     continuing, a statement as to the nature thereof, (ii) a schedule in form
     satisfactory to the Administrative Agent of the computations used by such
     accountants in determining, as of the end of such Fiscal Year, compliance
     with the covenants contained in Section 5.04, provided that in the event of
     any change in generally accepted accounting principles used in the
     preparation of such financial statements, the Borrower shall also provide,
     if necessary for the determination of compliance with Section 5.04 from
     GAAP, a statement of reconciliation conforming such financial statements to
     GAAP and (iii) a certificate of the Chief Financial Officer of the Borrower
     stating that to the best of such officer's knowledge, no Default has
     occurred and is continuing or, if a Default has occurred and is continuing,
     a statement as to the nature thereof and the action that the Borrower has
     taken and proposes to take with respect thereto.


                                       81


          (c)  Quarterly Financials. As soon as available and in any event
               --------------------
     within 45 days after the end of each of the first three quarters of each
     Fiscal Year, Consolidated and consolidating balance sheets of the Borrower
     and its Subsidiaries as of the end of such quarter and Consolidated and
     consolidating statements of income for the period commencing at the end of
     the previous fiscal quarter and ending with the end of such fiscal quarter
     and Consolidated and consolidating statements of income and a Consolidated
     statement of cash flows of the Borrower and its Subsidiaries for the period
     commencing at the end of the previous Fiscal Year and ending with the end
     of such quarter, setting forth in each case in comparative form the
     corresponding figures for the corresponding date or period of the preceding
     Fiscal Year, all in reasonable detail and duly certified (subject to normal
     year-end audit adjustments) by the Chief Financial Officer of the Borrower
     as having been prepared in accordance with generally accepted accounting
     principles (except that such financial statements may not contain all
     required notes and may be subject to year end audit adjustments), together
     with (i) a certificate of said officer stating that to the best of such
     officer's knowledge, no Default has occurred and is continuing or, if a
     Default has occurred and is continuing, a statement as to the nature
     thereof and the action that the Borrower has taken and proposes to take
     with respect thereto, (ii) a schedule in form satisfactory to the
     Administrative Agent of the computations used by the Borrower in
     determining compliance with the covenants contained in Section 5.04,
     provided that in the event of any change in generally accepted accounting
     principles used in the preparation of such financial statements as compared
     to GAAP, the Borrower shall also provide, if necessary for the
     determination of compliance with Section 5.04, a statement of
     reconciliation conforming such financial statements to GAAP, and (iii) a
     report (in a form satisfactory to the Administrative Agent) specifying all
     permitted Investments made during such quarter and during the period from
     the date hereof to the end of such quarter and specifying the total
     consideration paid with respect to each such Investment.

          (d)  Annual Forecasts. As soon as available and in any event no later
               ----------------
     than 30 days after the end of each Fiscal Year, forecasts prepared by
     management of the Borrower, in form satisfactory to the Administrative
     Agent, of Consolidated balance sheets, income statements and cash flow
     statements of the Borrower and its Subsidiaries on a quarterly basis for
     the Fiscal Year following such Fiscal Year and on an annual basis for each
     Fiscal Year thereafter until the Termination Date.

          (e)  Litigation. (i) Promptly after the commencement thereof, notice
               ----------
     of all actions, suits, investigations, litigation and proceedings before
     any Governmental Authority or arbitrator, affecting any Loan Party or any
     of its Subsidiaries of the type described in Section 4.01(f), and promptly
     after the occurrence thereof, notice of any material adverse change in the
     status or the financial effect on any Loan Party or any of its Subsidiaries
     of the litigation from that described on Schedule 4.01(f) hereto, and (ii)
     prompt written notice of: (A) any citation, summons, subpoena, order to
     show cause or other document naming the Borrower or any of its Subsidiaries
     a party to any proceeding before any Governmental Authority that could
     reasonably be expected to have a Material Adverse Effect or that expressly
     calls into question the validity or enforceability of any of the Loan
     Documents, and include with such notice a copy of such citation, summons,
     subpoena, order to show cause or other document, (B) any lapse or other
     termination of any material intellectual property, license, permit,
     franchise or other authorization issued to the Borrower or any of its
     Subsidiaries by any Person or Governmental Authority, or (C) any refusal by
     any Person or Governmental Authority to renew or extend such material
     intellectual property, license, permit, franchise or other authorization,
     which lapse, termination, refusal or dispute could reasonably be expected
     to have a Material Adverse Effect.

          (f)  Securities Reports. Promptly after the sending or filing thereof,
               ------------------
     copies of all proxy statements, financial statements and reports that any
     Loan Party or any of its Subsidiaries


                                       82


     sends to its stockholders, and copies of all regular, periodic and special
     reports, and all registration statements, that any Loan Party or any of its
     Subsidiaries files with the Securities and Exchange Commission or any
     governmental authority that may be substituted therefor, or with any
     national securities exchange.

          (g)  ERISA.
               -----

               (i)    ERISA Events and ERISA Reports. (A) Promptly and in any
                      ------------------------------
          event within 10 days after any Loan Party or any ERISA Affiliate knows
          or has reason to know that any ERISA Event has occurred, a statement
          of the Chief Financial Officer of the Borrower describing such ERISA
          Event and the action, if any, that such Loan Party or such ERISA
          Affiliate has taken and proposes to take with respect thereto and (B)
          on the date any records, documents or other information must be
          furnished to the PBGC with respect to any Plan pursuant to Section
          4010 of ERISA, a copy of such records, documents and information.

               (ii)   Plan Terminations. Promptly and in any event within two
                      -----------------
          Business Days after receipt thereof by any Loan Party or any ERISA
          Affiliate, copies of each notice from the PBGC stating its intention
          to terminate any Plan or to have a trustee appointed to administer any
          Plan.

               (iii)  Plan Annual Reports. Promptly and in any event within 30
                      -------------------
          days after the filing thereof with the Internal Revenue Service,
          copies of each Schedule B (Actuarial Information) to the annual report
          (Form 5500 Series) with respect to each Plan.

               (iv)   Multiemployer Plan Notices. Promptly and in any event
                      --------------------------
          within five Business Days after receipt thereof by any Loan Party or
          any ERISA Affiliate from the sponsor of a Multiemployer Plan, copies
          of each notice concerning (A) the imposition of Withdrawal Liability
          by any such Multiemployer Plan, (B) the reorganization or termination,
          within the meaning of Title IV of ERISA, of any such Multiemployer
          Plan or (C) the amount of liability incurred, or that may be incurred,
          by such Loan Party or any ERISA Affiliate in connection with any event
          described in clause (A) or (B).

          (h)  Environmental Conditions. Promptly after the assertion or
               ------------------------
     occurrence thereof, notice of any Environmental Action against or of any
     noncompliance by any Loan Party or any of its Subsidiaries with any
     Environmental Law or Environmental Permit that could reasonably be expected
     to have a Material Adverse Effect.

          (i)  Other Information. Such other information respecting the
               -----------------
     business, condition (financial or otherwise), operations, performance,
     properties or prospects of any Loan Party or any of its Subsidiaries as any
     Agent or any Lender Party, through the Administrative Agent, may from time
     to time reasonably request.

     SECTION 5.04.  Financial Covenants. So long as any Advance or any other
     ----------------------------------
Obligation of any Loan Party under any Loan Document shall remain unpaid, any
Letter of Credit shall be outstanding or any Lender Party shall have any
Commitment hereunder, the Borrower will:


                                       83


     (a)  Leverage Ratio. Maintain a Leverage Ratio at all times during each
          --------------
period set forth below of not more than the amount set forth below opposite such
period:

       ===================================================================
                           Period                               Ratio
       ===================================================================
        June 30, 2001 through                                  4.00:1
        September 30, 2001
       ===================================================================
        From and including October 1, 2001 through             3.75:1
        September 30, 2002
       ===================================================================
        From and including October 1, 2002 through             3.50:1
        September 30, 2003
       ===================================================================
        From and including October 1, 2003 and                 3.25:1
        thereafter
       ===================================================================


     (b)  Fixed Charge Coverage Ratio. Maintain a Fixed Charge Coverage Ratio as
          ---------------------------
of the last day of each Measurement Period set forth below of not less than the
amount set forth below opposite such Measurement Period:

       ==================================================================
        Measurement Period Ending In                        Ratio
       ==================================================================
        March 31, 2001                                      1.25:1
       ==================================================================
        June 30, 2001                                       1.25:1
       ==================================================================
        September 30, 2001                                  1.25:1
       ==================================================================
        December 31, 2001                                   1.25:1
       ==================================================================
        March 31, 2002                                      1.375:1
       ==================================================================
        June 30, 2002                                       1.375:1
       ==================================================================
        September 30, 2002                                  1.375:1
       ==================================================================
        December 31, 2002                                   1.375:1
       ==================================================================
        March 31, 2003                                      1.375:1
       ==================================================================
        June 30, 2003                                       1.375:1
       ==================================================================
        September 30, 2003                                  1.375:1
       ==================================================================
        December 31, 2003 and thereafter                    1.50:1
       ==================================================================


     (c)  Minimum Net Worth. Maintain at all times a Consolidated net worth of
          -----------------
the Borrower and its Subsidiari of not less than $250,000,000, plus the sum of
75% of Consolidated Net Income of the Borrower and its Subsidiaries (determined
as of the end of each Fiscal Quarter, but excluding net losses in any Fiscal
Quarter) and 100% of the Net Cash Proceeds received by the Borrower from its
issuance of Equity Interests, in each case determined


                                       84


     on a cumulative basis for the period commencing April 1, 2001, minus non-
     recurring charges incurred not exceeding in the aggregate $45,000,000
     resulting from the write-off of accounts receivable and other related
     charges as a result of the pending third party carrier review of claims for
     Medicare reimbursement submitted by the Subsidiary of the Borrower
     operating the Borrower's Florida laboratory or other Governmental
     Reimbursement Program Costs.

          (d)       Minimum Consolidated EBITDA Ratio. Maintain at all times a
                    ---------------------------------
     ratio of Consolidated EBITDA to Consolidated Pre-Minority EBITDA of not
     less than 0.8:1.00.

                                  ARTICLE II

                               EVENTS OF DEFAULT

     SECTION 6.01. Events of Default. If any of the following events ("Events of
     -------------------------------
Default") shall occur and be continuing:

          (a)       the Borrower shall fail to pay (i) any principal of any
     Advance when the same shall become due and payable, or (ii) within three
     Business Days after the date due and payable, any interest on any Advance;
     or any of the Loan Parties shall fail to make any other payment under or in
     respect of any of the Loan Documents required to have been made by it,
     within three Business Days after the same shall become due and payable, in
     each case whether by scheduled maturity or at a date fixed for prepayment
     or by acceleration, demand or otherwise; or

          (b)       any representation or warranty made by any of the Loan
     Parties (or any of their respective officers) under or in connection with
     any of the Loan Documents (including, without limitation, in any
     certificate, report, statement or other writing at any time furnished (or
     deemed to have been furnished) to the Administrative Agent or any of the
     Lender Parties by or on behalf of any of the Loan Parties) shall prove to
     have been incorrect in any material respect on the date as of which it was
     made or deemed made; or

          (c)       (i) the Borrower shall fail to perform or observe any term,
     covenant or agreement contained in Section 5.01(e) or Section 5.02, 5.03 or
     5.04 or (ii) any of the other Loan Parties shall fail to perform or observe
     any term, covenant or agreement contained in Section 4 or 7 of the
     Subsidiaries Guarantee on its part to be performed or observed; or

          (d)       any of the Loan Parties shall fail to perform or observe any
     term, covenant or agreement contained in any of the Loan Documents on its
     part to be performed or observed that is not otherwise referred to in
     Section 6.01(c) if such failure shall remain unremedied for at least 30
     consecutive days after the earlier of the date on which (i) a Responsible
     Officer of the Borrower or any of its Subsidiaries first becomes aware of
     such failure and (ii) written notice thereof shall have been given to the
     Borrower by the Administrative Agent or any of the Lender Parties; or

          (e)       (i) the Borrower or any of its Subsidiaries shall fail to
     pay any principal of, premium or interest on, or any other amount payable
     in respect of, one or more items of Debt of the Borrower and its
     Subsidiaries (excluding Debt outstanding hereunder) that is outstanding (or
     under which one or more Persons have a commitment to extend credit) in an
     aggregate principal amount (or, in the case of any Hedge Agreement, having
     an Agreement Value) of at least $10,000,000 at the time of such failure,
     when the same becomes due and payable (whether by scheduled maturity,
     required prepayment, acceleration, demand or otherwise), and such failure
     shall continue after the applicable grace period, if any, specified in the
     agreements or instruments relating to all such Debt; or (ii) any other
     event shall occur or condition shall exist under the


                                       85

     agreements or instruments relating to one or more items of Debt of the
     Borrower and its Subsidiaries (excluding Debt outstanding hereunder) that
     is outstanding (or under which one or more Persons have a commitment to
     extend credit) in an aggregate principal amount (or, in the case of any
     Hedge Agreement, having an Agreement Value) of at least $10,000,000 at the
     time of such other event or condition, and shall continue after the
     applicable grace period, if any, specified in all such agreements or
     instruments, if the effect of such event or condition is to accelerate, or
     to permit the acceleration of, the maturity of such Debt or otherwise to
     cause, or to permit the holder thereof to cause, such Debt to mature; or
     (iii) one or more items of Debt of the Borrower and its Subsidiaries
     (excluding Debt outstanding hereunder) that is outstanding (or under which
     one or more Persons have a commitment to extend credit) in an aggregate
     principal amount (or, in the case of any Hedge Agreement, having an
     Agreement Value) of at least $10,000,000 shall be declared to be due and
     payable or required to be prepaid or redeemed (other than by a regularly
     scheduled or required prepayment or redemption), purchased or defeased, or
     an offer to prepay, redeem, purchase or defease such Debt shall be required
     to be made, in each case prior to the stated maturity thereof; or

          (f)    the Borrower or any Material Subsidiary or Subsidiaries shall
     generally not pay its debts as such debts become due, or shall admit in
     writing its inability to pay its debts generally, or shall make a general
     assignment for the benefit of creditors; or any proceeding shall be
     instituted by or against the Borrower or any Material Subsidiary or
     Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking
     liquidation, winding up, reorganization, arrangement, adjustment,
     protection, relief, or composition of it or its debts under any law
     relating to bankruptcy, insolvency or reorganization or relief of debtors,
     or seeking the entry of an order for relief or the appointment of a
     receiver, trustee, administrator or other similar official for it or for
     any substantial part of its property and assets and, in the case of any
     such proceeding instituted against it (but not instituted by it) that is
     being diligently contested by it in good faith, either such proceeding
     shall remain undismissed or unstayed for a period of at least 60
     consecutive days or any of the actions sought in such proceeding
     (including, without limitation, the entry of an order for relief against,
     or the appointment of a receiver, trustee, custodian or other similar
     official for, it or any substantial part of its property and assets) shall
     occur; or any event or action analogous to or having a substantially
     similar effect to any of the events or actions set forth above in this
     Section 6.01(f) (other than a solvent reorganization) shall occur under the
     Requirements of Law of any jurisdiction applicable to the Borrower or any
     Material Subsidiary or Subsidiaries; or the Borrower or any Material
     Subsidiary or Subsidiaries shall take any corporate, partnership, limited
     liability company or other similar action to authorize any of the actions
     set forth above in this Section 6.01(f); provided that any action or
     circumstance permitted under Section 5.01(h) shall not be deemed to result
     in an Event of Default under this Section 6.01(f); or

          (g)    one or more judgments or orders for the payment of money in
     excess of $10,000,000 in the aggregate shall be rendered against one or
     more of the Borrower and its Subsidiaries and shall remain unsatisfied and
     there shall be any period of at least 30 consecutive Business Days during
     which a stay of enforcement of any such judgment or order, by reason of a
     pending appeal or otherwise, shall not be in effect; provided, however,
     that any such judgment or order shall not give rise to an Event of Default
     under this Section 6.01(g) if and for so long as (A) the amount of such
     judgment or order which remains unsatisfied is covered by a valid and
     binding policy of insurance between the defendant and the insurer covering
     full payment thereof and (B) such insurer has been notified, and has not
     disputed the claim made for payment, of the amount of such judgment or
     order; or

          (h)    one or more nonmonetary judgments or orders (including, without
     limitation, writs or warrants of attachment, garnishment, execution,
     distraint or similar process) shall be


                                       86

rendered against the Borrower or any of its Subsidiaries that, either
individually or in the aggregate, is reasonably expected to have a Material
Adverse Effect and there shall be any period of at least 30 consecutive Business
Days during which a stay of enforcement of any such judgment or order, by reason
of a pending appeal or otherwise, shall not be in effect; or

     (i)  any provision of any of the Loan Documents after delivery thereof
pursuant to Sections 3.01, 5.01(j) or 5.01(k) shall for any reason (other than
pursuant to the terms thereof) cease to be valid and binding on or enforceable
against any of the Loan Parties intended to be a party to it, or any such Loan
Party shall so state in writing;

     (j)  any Collateral Document or financing statement after delivery thereof
pursuant to Sections 3.01, 5.01(j) or 5.01(k) shall for any reason (other than
pursuant to the terms thereof) cease to create a valid and perfected Lien on any
material portion of the Collateral purported to be covered thereby subject only
to Liens permitted thereby; or

     (k)  any of the following events or conditions shall have occurred and such
event or condition, when aggregated with any and all other such events or
conditions set forth in this subsection (k), has resulted or is reasonably
expected to result in liabilities of the Loan Parties and/or the ERISA
Affiliates in an aggregate amount exceeding $10,000,000 at any time:

          (i)    any ERISA Event shall have occurred with respect to a Plan; or

          (ii)   any of the Loan Parties or any of the ERISA Affiliates shall
     have been notified by the sponsor of a Multiemployer Plan that it has
     incurred Withdrawal Liability to such Multiemployer Plan; or

          (iii)  any of the Loan Parties or any of the ERISA Affiliates shall
     have been notified by the sponsor of a Multiemployer Plan that such
     Multiemployer Plan is in reorganization, is insolvent or is being
     terminated, within the meaning of Title IV of ERISA, and, as a result of
     such reorganization, insolvency or termination, the aggregate annual
     contributions of the Loan Parties and the ERISA Affiliates to all of the
     Multiemployer Plans that are in reorganization, are insolvent or being
     terminated at such time have been or will be increased over the amounts
     contributed to such Multiemployer Plans for the plan years of such
     Multiemployer Plans immediately preceding the plan year in which such
     reorganization, insolvency or termination occurs; or

          (iv)   any "accumulated funding deficiency" (as defined in Section 302
     of ERISA and Section 412 of the Internal Revenue Code), whether or not
     waived, shall exist with respect to one or more of the Plans, or any Lien
     shall exist on the property and assets of any of the Loan Parties or any of
     the ERISA Affiliates in favor of the PBGC or any Plan; or

     (l)  the Borrower or any of its Subsidiaries shall suspend or discontinue
all or any part of its businesses and operations other than in the ordinary
course of business and such suspension or discontinuance, in the aggregate, is
reasonably expected to have a Material Adverse Effect; or

     (m)  a Change of Control shall occur;

     (n)  an "Event of Default" (as defined in any of the Subordinated Notes
Documents) shall have occurred and be continuing under the respective
Subordinated Notes Documents; or


                                       87

          (o)  The Borrower or any Subsidiary, in each case to the extent it is
     engaged in the business of providing services for which Medicare or
     Medicaid reimbursement is sought, shall for any reason, including, without
     limitation, as the result of any finding, designation or decertification,
     lose its right or authorization, or otherwise fail to be eligible, to
     participate in Medicaid or Medicare programs or to accept assignments or
     rights to reimbursements under Medicaid regulations or Medicare
     regulations, or the Borrower or any Subsidiary has, for any reason, had its
     right to receive reimbursements under Medicaid or Medicare regulations
     suspended, and such loss, failure or suspension (together with all such
     other losses, failures and suspensions continuing at such time) shall have
     resulted in (x) a Material Adverse Effect or (y) Consolidated net operating
     revenues for the immediately preceding four fiscal quarter period of the
     Borrower constituting less than 95% of Consolidated net operating revenues
     for any preceding four fiscal quarter period of the Borrower;

then, and in any such event, the Administrative Agent (i) shall at the request,
or may with the consent, of the Required Lenders, by notice to the Borrower,
declare the Commitments of each of the Lender Parties and the obligation of each
of the Lender Parties to make Advances (other than Letter of Credit Advances by
the Issuing Bank or any of the Revolving Credit Lenders pursuant to Section
2.03(c)(i) and Swing Line Advances by any of the Revolving Credit Lenders
pursuant to Section 2.02(b)(ii)) and of the Issuing Bank to issue Letters of
Credit to be terminated, whereupon the same shall forthwith terminate, and (ii)
shall at the request, or may with the consent, of the Required Lenders, (A) by
notice to the Borrower, declare the Notes, all interest thereon and all other
amounts payable under or in respect of this Agreement and the other Loan
Documents to be forthwith due and payable, whereupon the Notes, all such
interest and all such other amounts shall become and be forthwith due and
payable, without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Borrower and (B) by notice to each
party required under the terms of any agreement in support of which a Letter of
Credit is issued, request that all of the Obligations under such agreement be
declared to be due and payable; provided, however, that in the event of an
actual or deemed entry of an order for relief with respect to any Loan Party
under the United States Federal Bankruptcy Code or a similar order or action
under any other Requirements of Law covering the protection of creditors' rights
or the relief of debtors applicable to any Loan Party, (1) the Commitments of
each of the Lender Parties and the obligation of each of the Lender Parties to
make Advances (other than Letter of Credit Advances by the Issuing Bank or any
of the Revolving Credit Lenders pursuant to Section 2.03(c)(i) and Swing Line
Advances by any of the Revolving Credit Lenders pursuant to Section 2.02(b)(ii))
and of the Issuing Bank to issue Letters of Credit shall automatically be
terminated and (2) the Notes, all such interest and all such amounts shall
automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
the Borrower.

     SECTION 6.02. Actions in Respect of the Letters of Credit upon Default. If
     ----------------------------------------------------------------------
any Event of Default shall have occurred and be continuing, the Administrative
Agent may, or shall at the request of the Required Lenders, irrespective of
whether it is taking any of the actions described in Section 6.01 or otherwise,
make demand upon the Borrower to, and forthwith upon such demand the Borrower
will, pay to the Administrative Agent in same day funds at the Administrative
Agent's office designated in such demand, for deposit in the L/C Cash Collateral
Account, an amount equal to the aggregate Available Amount of all Letters of
Credit then outstanding; provided, however, that in the event of an actual or
deemed entry of an order for relief with respect to any Loan Party under the
United States Federal Bankruptcy Code or a similar order or action under any
other Requirements of Law covering the protection of creditors' rights or the
relief of debtors applicable to any Loan Party, the Borrower, without
requirement of demand by the Administrative Agent or any other Person, will
forthwith pay to the Administrative Agent in same day funds at the
Administrative Agent's office for deposit in the L/C Cash Collateral Account an
amount equal to such aggregate Available Amount. If at any time the
Administrative Agent determines that any funds held in the L/C Cash Collateral
Account are subject to


                                       88

any right or claim of any Person other than the Secured Parties or that the
total amount of such funds is less than the aggregate Available Amount of all
Letters of Credit, the Borrower will, forthwith upon demand by the
Administrative Agent, pay to the Administrative Agent, as additional funds to be
deposited and held in the L/C Cash Collateral Account, an amount equal to the
excess of (a) such aggregate Available Amount over (b) the total amount of
funds, if any, then held in the L/C Cash Collateral Account 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
in the L/C Cash Collateral Account, such funds shall be applied to reimburse the
Issuing Bank or Revolving Credit Lenders, as applicable, in the manner provided
for in the Security Agreement and to the extent permitted by applicable law.

                                  ARTICLE VII

                                  THE AGENTS

     SECTION 7.01.   Appointment, Powers and Immunity.
     ------------------------------------------------

          (a)  Each Lender Party (in its capacities as a Lender, the Swing Line
     Bank (if applicable), the Issuing Bank (if applicable) and on behalf of
     itself and its Affiliates as potential Hedge Banks) hereby appoints and
     authorizes the Administrative Agent to act as its agent under this
     Agreement and the other Loan Documents with such powers and discretion as
     are specifically delegated to the Administrative Agent by the terms of this
     Agreement and the other Loan Documents, together with such other powers as
     are reasonably incidental thereto. The Administrative Agent (which term as
     used in this sentence and in Section 7.05(a) and the first sentence of
     Section 7.06 shall include its affiliates and its own and its affiliates'
     officers, directors, employees, and agents): (i) shall not have any duties
     or responsibilities except those expressly set forth in this Agreement and
     shall not be a trustee or fiduciary for any Lender Party; (ii) shall not be
     responsible to the Lender Parties for any recital, statement,
     representation, or warranty (whether written or oral) made in or in
     connection with any Loan Document or any certificate or other document
     referred to or provided for in, or received by any of them under, any Loan
     Document, or for the value, validity, effectiveness, genuineness,
     enforceability, or sufficiency of, or the perfection or priority of any
     lien or security interest created or purported to be created under or in
     connection with, any Loan Document, or any other document referred to or
     provided for therein or for any failure by any Loan Party or any other
     Person to perform any of its obligations thereunder; (iii) shall not be
     responsible for or have any duty to ascertain, inquire into, or verify the
     performance or observance of any covenants or agreements by any Loan Party
     or the satisfaction of any condition or to inspect the property (including
     the books and records) of any Loan Party or any of its Subsidiaries or
     Affiliates; (iv) shall not be required to initiate or conduct any
     litigation or collection proceedings under any Loan Document; and (v) shall
     not be responsible for any action taken or omitted to be taken by it or any
     of its directors, officers, agents or employees under or in connection with
     any Loan Document, except for its or their own gross negligence or willful
     misconduct.

          (b) The Administrative Agent shall also act as the "collateral agent"
     under the Loan Documents, and each of the Lender Parties (in its capacities
     as a Lender, the Swing Line Bank (if applicable), Issuing Bank (if
     applicable) hereby appoints and authorizes the Administrative Agent to act
     as the agent of such Lender Party 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 Secured Obligations, together with such powers
     and discretion as are reasonably incidental thereto. The Administrative
     Agent may from time to time in its discretion appoint any of the other
     Lender Parties or any of the affiliates of a Lender Party to act as its co-
     agent or sub-agent or its attorney-


                                      89

          in-fact for any purpose, including for purposes of holding or
          enforcing any Lien on the Collateral (or any portion thereof) granted
          under the Collateral Documents or of exercising any rights and
          remedies thereunder at the direction of the Administrative Agent, and
          the Administrative Agent shall not be responsible for the negligence
          or misconduct of any such co-agents, sub-agents or attorneys-in-fact
          selected by it with reasonable care. In this connection, the
          Administrative Agent, as "collateral agent", and such co-agents, sub-
          agents and attorneys-in-fact shall be entitled to the benefits of all
          provisions of this Article VII (including, without limitation, Section
          7.05, as though such co-agents, sub-agents and attorneys-in-fact were
          the "collateral agent" under the Loan Documents) as if set forth in
          full herein with respect thereto.

               (c)   The Book Managers, the Syndication Agent and the
          Documentation Agents shall not have any powers or discretion under
          this Agreement or any of the other Loan Documents other than those
          bestowed upon it as a co-agent or sub-agent from time to time by the
          Administrative Agent pursuant to subsection (b) of this Section 7.01,
          and each of the Lender Parties hereby acknowledges that the Book
          Managers, the Syndication Agent and the Documentation Agents shall not
          have any liability under this Agreement or any of the other Loan
          Documents.

          SECTION 7.02. Reliance by Agent. The Administrative Agent shall be
          -------------------------------
entitled to rely upon any certification, notice, instrument, writing, or other
communication (including, without limitation, any thereof by telephone or
telecopy) believed by it to be genuine and correct and to have been signed, sent
or made by or on behalf of the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel for any Loan Party), independent
accountants, and other experts selected by the Administrative Agent. The
Administrative Agent may deem and treat the payee of any Note as the holder
thereof for all purposes hereof unless and until the Administrative Agent
receives and accepts an Assignment and Acceptance executed in accordance with
Section 8.07. As to any matters not expressly provided for by this Agreement,
the Administrative Agent shall not be required to exercise any discretion or
take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the
instructions of the Required Lenders or, to the extent any action requires the
consent of all Lenders as specifically provided in Section 8.01, upon the
instructions of all Lenders, and such instructions shall be binding on all of
the Lender Parties; provided, however, that the Administrative Agent shall not
be required to take any action that exposes the Administrative Agent to personal
liability or that is contrary to any Loan Document or applicable Requirements of
Law or unless it shall first be indemnified to its satisfaction by the Lender
Parties against any and all liability and expense which may be incurred by it by
reason of taking any such action.

          SECTION 7.03. Defaults. The Administrative Agent shall not be deemed
          ----------------------
to have knowledge or notice of the occurrence of a Default or Event of Default
unless the Administrative Agent has received written notice from a Lender Party
or the Borrower specifying such Default or Event of Default and stating that
such notice is a "Notice of Default". In the event that the Administrative Agent
receives such a notice of the occurrence of a Default or Event of Default, the
Administrative Agent shall give prompt notice thereof to the Lender Parties. The
Administrative Agent shall (subject to Section 7.02) take such action with
respect to such Default or Event of Default as shall reasonably be directed by
the Required Lenders or, to the extent any action requires the consent of all
Lenders as specifically provided in Section 8.01, then as directed by all
Lenders; provided that, unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interest of the Lender Parties.

          SECTION 7.04. BofA, BAS and Affiliates. With respect to its
          --------------------------------------
Commitments, the Advances made by it and the Note or Notes issued to it, BofA
(and any successor acting as the Administrative


                                      90

Agent) in its capacity as a Lender Party hereunder shall have the same rights
and powers under the Loan Documents as any other Lender Party and may exercise
the same as though it were not acting as the Administrative Agent; and the
term"Lender Party" or"Lender Parties" shall, unless otherwise expressly
indicated, include BofA in its individual capacity. BofA (and any successor
acting as the Administrative Agent), BAS and their respective affiliates may
(without having to account therefor to any Lender Party) accept deposits from,
lend money to, make investments in, provide services to, and generally engage in
any kind of lending, trust, or other business with any Loan Party or any of its
Subsidiaries or Affiliates as if it were not acting as an Agent, and BofA (and
any successor acting as the Administrative Agent), BAS and their respective
affiliates may accept fees and other consideration from any Loan Party or any of
its Subsidiaries or Affiliates, or any Person that may do business with or own
securities of any Loan Party or any such Subsidiary or Affiliate, for services
in connection with this Agreement or otherwise without having to account for the
same to the Lender Parties.

          SECTION 7.05. Indemnification.
          -----------------------------

               (a)   The Lenders severally agree to indemnify the Administrative
          Agent (to the extent not promptly reimbursed under Section 8.04, but
          without limiting the obligations of the Borrower under such Section)
          ratably in accordance with their respective Commitments, for any and
          all liabilities, obligations, losses, damages, penalties, actions,
          judgments, suits, costs, expenses (including attorneys' fees), or
          disbursements of any kind and nature whatsoever that may be imposed
          on, incurred by or asserted against the Administrative Agent in any
          way relating to or arising out of any Loan Document or the
          transactions contemplated thereby or any action taken or omitted by
          the Administrative Agent under any Loan Document (collectively, the
          "Indemnified Costs"); provided that no Lender shall be liable for any
          of the foregoing to the extent they arise from the gross negligence or
          willful misconduct of the Person to be indemnified. In the case of any
          claim, investigation, litigation or proceeding for which indemnity
          under this Section 7.05(a) applies, such indemnity shall apply whether
          or not such claim, investigation, litigation or proceeding is brought
          by the Administrative Agent, any of the other Agents, any of the
          Lender Parties or a third party. Without limitation of the foregoing,
          each Lender severally agrees to reimburse the Administrative Agent
          promptly upon demand for its ratable share of any costs or expenses
          payable by the Borrower under Section 8.04, to the extent that the
          Administrative Agent is not promptly reimbursed for such costs and
          expenses (including, without limitation, fees and expenses of counsel)
          by the Borrower. In the case of any investigation, litigation or
          proceeding giving rise to any Indemnified Costs, this Section 7.05
          applies whether any such investigation, litigation or proceeding is
          brought by any Lender Party or any other Person. The failure of any
          Lender Party to reimburse the Administrative Agent promptly upon
          demand for its ratable share of any amount required to be paid by the
          Lender Party to the Administrative Agent as provided herein shall not
          relieve any other Lender Party of its obligation hereunder to
          reimburse the Administrative Agent for its ratable share of such
          amount, but no Lender Party shall be responsible for the failure of
          any other Lender Party to reimburse the Administrative Agent for such
          other Lender Party's ratable share of such amount. Without prejudice
          to the survival of any other agreement of any Lender Party hereunder,
          the agreement and obligations of each Lender contained in this Section
          7.05(a) shall survive the payment in full of principal, interest and
          all other amounts payable hereunder and under the other Loan
          Documents.

               (b)   The Revolving Credit Lenders severally agree to indemnify
          the Issuing Bank (to the extent not promptly reimbursed under Section
          8.04, but without limiting the obligations of the Borrower under such
          Section) for such Revolving Credit Lender's Pro Rata Share of any and
          all liabilities, obligations, losses, damages, penalties, actions,
          judgments, suits, costs, expenses or disbursements of any kind or
          nature whatsoever that may be imposed on, incurred by, or asserted
          against the Issuing Bank in any way relating to or arising out of the
          Loan Documents or the


                                      91

          transactions contemplated thereby or any action taken or omitted by
          the Issuing Bank under the Loan Documents; provided, however, that no
          Revolving Credit Lender shall be liable for any portion of such
          liabilities, obligations, losses, damages, penalties, actions,
          judgments, suits, costs, expenses or disbursements resulting from the
          Issuing Bank's gross negligence or willful misconduct. In the case of
          any claim, investigation, litigation or proceeding for which indemnity
          under this Section 7.05(b) applies, such indemnity shall apply whether
          or not such claim, investigation, litigation or proceeding is brought
          by the Issuing Bank, any of the other Lender Parties or a third party.
          Without limitation of the foregoing, each Revolving Credit Lender
          severally agrees to reimburse the Issuing Bank promptly upon demand
          for its Pro Rata Share of any costs and expenses (including, without
          limitation, fees and expenses of counsel) payable by the Borrower
          under Section 8.04, to the extent that the Issuing Bank is not
          promptly reimbursed for such costs and expenses by the Borrower. The
          failure of any Revolving Credit Lender to reimburse the Issuing Bank
          promptly upon demand for its Pro Rata Share of any amount required to
          be paid by the Revolving Credit Lenders to the Issuing Bank as
          provided herein shall not relieve any other Revolving Credit Lender of
          its obligation hereunder to reimburse the Issuing Bank for its Pro
          Rata Share of such amount, but no Revolving Credit Lender shall be
          responsible for the failure of any other Revolving Credit Lender to
          reimburse the Issuing Bank for such other Revolving Credit Lender's
          Pro Rata Share of such amount. Without prejudice to the survival of
          any other agreement of any Revolving Credit Lender hereunder, the
          agreement and obligations of each Revolving Credit Lender contained in
          this Section 7.05(b) shall survive the payment in full of principal,
          interest and all other amounts payable hereunder and under the other
          Loan Documents.

          SECTION 7.06. Non-Reliance on Agent and Other Lender Parties. Each
          ------------------------------------------------------------
Lender Party agrees that it has, independently and without reliance on any Agent
or any other Lender Party, and based on such documents and information as it has
deemed appropriate, made its own credit analysis of the Loan Parties and their
Subsidiaries and decision to enter into this Agreement and that it will,
independently and without reliance upon any Agent or any other Lender Party, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own analysis and decisions in taking or not taking
action under the Loan Documents. Except for notices, reports, and other
documents and information expressly required to be furnished to the Lender
Parties by the Administrative Agent hereunder, the Administrative Agent shall
not have any duty or responsibility to provide any Lender Party with any credit
or other information concerning the affairs, financial condition, or business of
any Loan Party or any of its Subsidiaries or Affiliates that may come into the
possession of the Administrative Agent or any of its affiliates.

          SECTION 7.07. Resignation of Administrative Agent. The Administrative
          -------------------------------------------------
Agent may resign at any time by giving notice thereof to the Lender Parties and
the Borrower. Upon any such resignation, the Required Lenders shall have the
right to appoint a successor Administrative Agent. If no successor Agent shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent's giving of
notice of resignation, then the retiring Administrative Agent may, on behalf of
the Lender Parties, appoint a successor Administrative Agent which shall be a
commercial bank organized under the laws of the United States of America or of
any state thereof and having combined capital and surplus of at least
$100,000,000. If within 45 days after written notice is given of the retiring
Administrative Agent's resignation under this Section 7.07 no successor
Administrative Agent shall have been appointed and shall have accepted such
appointment, then on such 45th day (a) the retiring Administrative Agent's
resignation shall become effective, (b) the retiring Administrative Agent shall
thereupon be discharged from its duties and obligations under the Loan Documents
and (c) the Required Lenders shall thereafter perform all duties and obligations
of the retiring Administrative Agent under the Loan Documents until such time,
if any, as the Required Lenders appoint a successor Administrative Agent as
provided above in this Section 7.07. Upon the acceptance of


                                      92

any appointment as Administrative Agent hereunder by a successor and upon the
execution and filing or recording of such financing statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, or as the Required Lenders may request, in order to continue the
perfection of the Liens granted or purported to be granted by the Collateral
Documents, such successor Administrative Agent shall thereupon succeed to and
become vested with all the rights, powers, discretion, privileges, and duties of
the retiring Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations under the Loan Documents. After any retiring
Agent's resignation hereunder as Administrative Agent, the provisions of this
Article VII shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as Administrative Agent.

     SECTION 7.08. Release of Collateral. Upon the payment of all Notes and all
     -----------------------------------
other amounts payable under the Loan Documents, the termination of all Letters
of Credit and the termination of all commitments of the Lender Parties
hereunder, the Lender Parties hereby agree that all Collateral is released from
the security interest granted under the respective Collateral Documents, and
upon (i) the sale, lease, transfer or other disposition of any item of
Collateral of any Loan Party, (ii) the issuance or sale pursuant to Section
5.02(m)(iii) of any Equity Interests causing a Subsidiary of the Borrower to
cease to be wholly-owned by the Borrower or any of its Subsidiaries, in each
case in accordance with the terms of the Loan Documents, the Lender Parties
hereby agree that such item of Collateral in the case of clause (i), or all
Collateral owned by such Subsidiary in the case of clause (ii), shall be
released from the security interest granted under the respective Collateral
Documents. In connection therewith, the Lender Parties hereby irrevocably
authorize the Administrative Agent to release any such Collateral. The
Administrative Agent will, at the Borrower's expense, execute and deliver to the
respective Loan Party such documents as such Loan Party may reasonably request
to evidence the release of such item of Collateral from the security interest
granted under the Collateral Documents.

     SECTION 7.09. Release of Guarantor. Upon the sale of outstanding shares of
     ----------------------------------
capital stock and other equity, ownership and profit interests in any Guarantor
in a transaction which is permitted under Section 5.02(e) and, if applicable,
5.02(m)(iii), then upon request by the Borrower, the Administrative Agent, on
behalf of each Lender Party, shall confirm in writing that the liability of such
Guarantor under the Subsidiary Guaranty is released and discharged effective
when such transaction is consummated and all requirements hereunder in
connection therewith are satisfied, including with respect to the application of
the proceeds of such sale. Such confirmation from the Administrative Agent (a)
shall establish conclusively that the liability of such Guarantor under the
Subsidiaries Guarantee is released and discharged and (b) may be relied on,
without further inquiry, by the purchaser in such transaction and each of its
transferees. Each Lender Party hereby irrevocably authorizes the Administrative
Agent to release any Guarantor from time to time to the extent provided for
herein and to execute any document reasonably required in connection therewith.

                                 ARTICLE VIII

                                 MISCELLANEOUS

     SECTION 8.01. Amendments, Etc. No amendment or waiver of any provision of
     -----------------------------
this Agreement, the Notes, or any of the other Loan Documents (except to the
extent otherwise expressly provided for therein), nor consent to any departure
by any of the Loan Parties therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Required Lenders, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that:


                                      93

          (a)  no amendment, waiver or consent shall, unless in writing and
signed by all of the Lenders (other than any of the Lenders that is, at such
time, a Defaulting Lender), do any of the following at any time:

               (i)    waive any of the conditions specified in Section 3.01 or,
          in the case of the Initial Extensions of Credit, Section 3.02;

               (ii)   change the number of Lenders or the percentage of the
          Commitments or the aggregate outstanding principal amount of Advances
          or the aggregate Available Amount of outstanding Letters of Credit
          that, in each case, shall be required for the Lender Parties or any of
          them to take any action hereunder;

               (iii)  except to the extent contemplated herein, release all or
          substantially all of the Guarantors that are a party to the Subsidiary
          Guarantee from their Obligations thereunder in any transaction or
          series of related transactions;

               (iv)   release all or substantially all of the Collateral in any
          transaction or series of related transactions;

               (v)    amend Section 2.13 or this Section 8.01; or

               (vi)   amend the definition of Interest Period to include
          additional monthly periods for setting the duration of an Interest
          Period.

          (b)  no amendment, waiver or consent shall, unless in writing and
     signed by the Required Lenders and each of the Lenders (other than any of
     the Lenders that is, at such time, a Defaulting Lender) that has a
     Commitment under the Term Facilities or the Revolving Credit Facility or is
     owed any amounts under or in respect thereof, if such Lender is directly
     affected by such amendment, waiver or consent:

               (i)    increase the Commitments of such Lender or subject such
          Lender to any additional Obligations;

               (ii)   reduce the principal or interest rate of, or interest on,
          the Notes held by such Lender or any fees or other amounts payable
          hereunder to such Lender;

               (iii)  postpone any date scheduled for any payment of principal
          of, or interest on, the Notes held by such Lender or any fees or other
          amounts payable to such Lender; or

               (iv)   change the order of application of any prepayment set
          forth in Section 2.06 in any manner that materially affects such
          Lender; and

     provided further that no amendment, waiver or consent shall, unless in
     writing and signed by the Swing Line Bank or the Issuing Bank, as the case
     may be, in addition to the Lenders required above to take such action,
     affect the rights or duties of the Swing Line Bank or the Issuing Bank,
     respectively, under this Agreement or any of the other Loan Documents; and
     provided further that no amendment, waiver or consent shall, unless in
     writing and signed by the Administrative Agent in addition to the Lenders
     required above to take such action, affect the rights or duties of the
     Administrative Agent under this Agreement or any of the other Loan
     Documents. Notwithstanding any of the foregoing provisions of this Section
     8.01, none of the defined terms


                                      94

     set forth in Section 1.01 shall be amended, supplemented or otherwise
     modified hereafter in any manner that would change the meaning, purpose or
     effect of this Section 8.01 or any Section referred to herein unless such
     amendment, supplement or modification is agreed to in writing by the number
     and percentage of Lenders (and the Issuing Bank, the Swing Line Bank and
     Administrative Agent, in each case if applicable) otherwise required to
     amend such Section under the terms of this Section 8.01.

     SECTION 8.02. Notices, Etc.
     --------------------------

          (a)  All notices and other communications provided for hereunder shall
     be in writing (including telecopy communication) and mailed, telecopied or
     delivered, if to the Borrower, at its address at 21250 Hawthorne Blvd.,
     Suite 800, Torrance, California 90503 (Telecopier (310) 792-9281),
     Attention: Chief Financial Officer with a copy to Borrower's general
     counsel at the same address (Telecopier (310) 792-0044); if to any Initial
     Lender, the Swing Line Bank or the Initial Issuing Bank, at its Base Rate
     Lending Office specified opposite its name on Schedule I hereto; if to any
     other Lender Party, at its Base Rate Lending Office specified in the
     Assignment and Acceptance pursuant to which it became a Lender Party; and
     if to the Administrative Agent, at its address at Independence Center, 101
     North Tryon Street, 15th Floor, Charlotte, North Carolina 28255 (Telecopier
     (704) 386-9923), Attention: Corporate Credit Services; or, as to the
     Borrower or the Administrative Agent, at such other address as shall be
     designated by such party in a written notice to the other parties and, as
     to each other party, at such other address as shall be designated by such
     party in a written notice to the Borrower and the Administrative Agent. All
     such notices and other communications shall, when mailed or telecopied, be
     effective when deposited in the mails, or transmitted by telecopier,
     respectively, except that notices and communications to any Agent pursuant
     to Article II, III or VII shall not be effective until received by such
     Agent. Delivery by telecopier of an executed counterpart of a signature
     page to any amendment or waiver of any provision of this Agreement or the
     Notes or of any Exhibit hereto to be executed and delivered hereunder shall
     be effective as delivery of an original executed counterpart thereof.

          (b)  If any notice required under this Agreement is permitted to be
     made, and is made, by telephone, actions taken or omitted to be taken in
     reliance thereon by the Administrative Agent or any of the Lender Parties
     shall be binding upon the Borrower and the other Loan Parties
     notwithstanding any inconsistency between the notice provided by telephone
     and any subsequent writing in confirmation thereof provided to the
     Administrative Agent or such Lender Party; provided that any such action
     taken or omitted to be taken by the Administrative Agent or such Lender
     Party shall have been in good faith and in accordance with the terms of
     this Agreement.

     SECTION 8.03. No Waiver; Remedies. No failure on the part of any Lender
     ---------------------------------
Party or any Agent to exercise, and no delay in exercising, any right, power or
privilege hereunder or under any Note or any other Loan Document shall operate
as a waiver thereof or consent thereto; nor shall any single or partial exercise
of any such right, power or privilege preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
applicable law.

     SECTION 8.04. Costs and Expenses.
     --------------------------------

          (a)  The Borrower agrees to pay on demand (i) all costs and expenses
     of each Agent in connection with the syndication, preparation, execution,
     delivery, administration, modification and amendment of, or any consent or
     waiver under, the Loan Documents and the other documents to be delivered
     thereunder (including, without limitation, (A) all due diligence,
     collateral review,


                                      95

     syndication, transportation, computer, duplication, appraisal, audit,
     insurance, consultant, search, filing and recording fees and expenses and
     (B) the reasonable fees and expenses of counsel for the Administrative
     Agent (including the cost of internal counsel) with respect thereto, with
     respect to advising such Agent as to its rights and responsibilities, or
     the perfection, protection or preservation of rights or interests, under
     the Loan Documents), and (ii) all costs and expenses of each Agent and each
     Lender Party in connection with the enforcement of the Loan Documents and
     the other documents to be delivered thereunder, whether in any action, suit
     or litigation, or any bankruptcy, insolvency or other similar proceeding
     affecting creditors' rights generally (including, without limitation, the
     reasonable fees and expenses of counsel (including the cost of internal
     counsel) for the Administrative Agent and each Lender Party with respect
     thereto).

          (b)  The Borrower agrees to indemnify, defend and save and hold
     harmless each Agent, each Lender Party and each of their affiliates and
     their respective affiliates, officers, directors, trustees, employees,
     agents and advisors (each, an"Indemnified Party") from and against, and
     shall pay on demand, any and all claims, damages, losses, liabilities and
     expenses (including, without limitation, reasonable fees and expenses of
     counsel) that may be incurred by or asserted or awarded against any
     Indemnified Party, in each case arising out of or in connection with or by
     reason of (including, without limitation, in connection with any
     investigation, litigation or proceeding or preparation of a defense in
     connection therewith) (i) the Transaction (or any aspect thereof),
     Facilities, the actual or proposed use of the proceeds of the Advances or
     the Letters of Credit, the Loan Documents, or any of the transactions
     contemplated thereby; (ii) any acquisition or proposed acquisition by the
     Borrower or any of its Subsidiaries or Affiliates of all or any portion of
     the Equity Interests in or Debt securities or substantially all of the
     property and assets of any other Person; or (iii) the actual or alleged
     presence of Hazardous Materials on any property of any Loan Party or any of
     its Subsidiaries or any Environmental Action relating in any way to any
     Loan Party or any of its Subsidiaries, except to the extent such claim,
     damage, loss, liability or expense is found in a final, non-appealable
     judgment by a court of competent jurisdiction to have resulted from such
     Indemnified Party's gross negligence or willful misconduct or have arisen
     after such Loan Party or Subsidiary is dispossessed of or relinquishes its
     interest in such property. In the case of an investigation, litigation or
     other proceeding to which the indemnity in this Section 8.04(b) applies,
     such indemnity shall be effective whether or not such investigation,
     litigation or proceeding is brought by any Loan Party, its directors,
     shareholders or creditors or an Indemnified Party or any other Person,
     whether or not any Indemnified Party is otherwise a party thereto and
     whether or not the Transaction or any of the other transactions
     contemplated hereby is consummated. If and to the extent that the indemnity
     in this subsection (b) is unenforceable for any reason other than by
     operation of the last clause of the first sentence of this
     subsection 8.04(b), the Borrower hereby agrees to make to each applicable
     Indemnified Party the maximum contribution to the payment of the claims,
     damages, losses, liabilities and expenses (including, without limitation,
     reasonable fees and expenses of counsel) for which the indemnity in this
     subsection (b) has been determined to be unenforceable that is permitted
     under applicable law. The Borrower also agrees not to assert any claim
     against any Agent, any Lender Party or any of their respective affiliates,
     officers, directors, trustees, employees, agents and advisors, on any
     theory of liability, for special, indirect, consequential or punitive
     damages arising out of or otherwise relating to the Transaction (or any
     aspect thereof) Facilities, the actual or proposed use of the proceeds of
     the Advances or the Letters of Credit, the Loan Documents, or any of the
     other transactions contemplated hereby.

          (c)  If any payment of principal of, or Conversion of, any Eurodollar
     Rate Advance is made by the Borrower to or for the account of a Lender
     Party other than on the last day of the Interest Period for such Advance,
     as a result of a payment or Conversion pursuant to Section 2.05(d), 2.06,
     2.09(b)(i) or 2.10(d), acceleration of the maturity of the Notes pursuant
     to Section


                                      96

     6.01 or for any other reason, or by an Eligible Assignee to a Lender Party
     other than on the last day of the Interest Period for such Advance upon an
     assignment of rights and obligations under this Agreement pursuant to
     Section 8.07 as a result of a demand by the Borrower pursuant to Section
     8.07(a), or if the Borrower fails to make any payment or prepayment of an
     Advance for which a notice of prepayment has been given or that is
     otherwise required to be made, whether pursuant to Section 2.04, 2.06 or
     6.01 or otherwise, the Borrower shall, upon demand by such Lender Party
     (with a copy of such demand to the Administrative Agent), pay to the
     Administrative Agent for the account of such Lender Party any amounts
     required to compensate such Lender Party for any additional losses, costs
     or expenses that it may reasonably incur as a result of such payment or
     Conversion or such failure to pay or prepay, as the case may be, including,
     without limitation, any loss, cost or expense incurred by reason of the
     liquidation or reemployment of deposits or other funds acquired by any
     Lender Party to fund or maintain such Advance.

          (d)  If any Loan Party fails to pay when due, after the expiration of
     any grace period, if applicable, any costs, expenses or other amounts
     payable by it under any Loan Document, including, without limitation, fees
     and expenses of counsel and indemnification payments, such amount may be
     paid on behalf of such Loan Party by the Administrative Agent or any Lender
     Party, in its sole discretion.

          (e)  Without prejudice to the survival of any other agreement of any
     Loan Party hereunder or under any other Loan Document, the agreements and
     obligations of the Borrower contained in Sections 2.10 and 2.13 and this
     Section 8.04 shall survive the payment in full of principal, interest and
     all other amounts payable hereunder and under any of the other Loan
     Documents.

     SECTION 8.05. Right of Set-off. Upon (a) the occurrence and during the
     ------------------------------
continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 6.01 to authorize the
Administrative Agent to declare the Notes due and payable pursuant to the
provisions of Section 6.01, each Agent and each Lender Party and each of their
respective Affiliates is hereby authorized at any time and from time to time, to
the fullest extent permitted by law, to set off and otherwise apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Agent, such Lender Party
or such Affiliate to or for the credit or the account of the Borrower against
any and all of the Obligations of the Borrower now or hereafter existing under
the Loan Documents, irrespective of whether such Agent or such Lender Party
shall have made any demand under this Agreement or such Note or Notes and
although such Obligations may be unmatured. Each Agent and each Lender Party
agrees promptly to notify the Borrower after any such set-off and application;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Agent and each
Lender Party and their respective Affiliates under this Section are in addition
to other rights and remedies (including, without limitation, other rights of
set-off) that such Agent, such Lender Party and their respective Affiliates may
have.

     SECTION 8.06. Binding Effect. This Agreement shall become effective when it
     ----------------------------
shall have been executed by the Borrower and each Agent and the Administrative
Agent shall have been notified by each Initial Lender, the Swing Line Bank and
the Initial Issuing Bank that such Initial Lender, the Swing Line Bank or the
Initial Issuing bank has executed it and thereafter shall be binding upon and
inure to the benefit of the Borrower, each Agent and each Lender Party and their
respective successors and assigns, except that the Borrower shall not have the
right to assign its rights hereunder or any interest herein without the prior
written consent of all the Lender Parties.




                                      97

     SECTION 8.07. Assignments and Participations.
     --------------------------------------------

          (a)  With the consent of the Administrative Agent (which consent shall
     not be unreasonably withheld or delayed) and, in the case of any assignment
     of a Revolving Credit Commitment, each Issuing Bank (which consent shall be
     granted in its sole discretion), each Lender may assign to one or more
     Eligible Assignees all or a portion of its rights and obligations under
     this Agreement (including, without limitation, all or a portion of its
     Commitment or Commitments, the Advances owing to it and the Note or Notes
     held by it); provided, however, that (i) each such assignment shall be of a
     uniform, and not a varying, percentage of all rights and obligations under
     and in respect of any or all Facilities, (ii) except in the case of an
     assignment to a Person that, immediately prior to such assignment, was a
     Lender, an Affiliate of any Lender or an Approved Fund of any Lender or an
     assignment of all of a Lender's rights and obligations under this
     Agreement, the aggregate amount of the Commitments being assigned to such
     Eligible Assignee pursuant to such assignment (determined as of the date of
     the Assignment and Acceptance with respect to such assignment) shall in no
     event be less than $1,000,000 (or such lesser amount as shall be approved
     by the Administrative Agent and, so long as no Default shall have occurred
     and be continuing at the time of effectiveness of such assignment, the
     Borrower (in each case, such approval not to be unreasonably withheld or
     delayed)) under each Facility for which a Commitment is being assigned,
     (iii) each such assignment shall be to an Eligible Assignee, (iv) each such
     assignment made as a result of a demand by the Borrower pursuant to Section
     8.07(l) shall be arranged by the Borrower after consultation with the
     Administrative Agent and shall be either an assignment of all of the rights
     and obligations of the assigning Lender under this Agreement or an
     assignment of a portion of such rights and obligations made concurrently
     with another such assignment or other such assignments that together cover
     all of the rights and obligations of the assigning Lender under this
     Agreement, (v) no Lender shall be obligated to make any such assignment as
     a result of a demand by the Borrower pursuant to Section 8.07(l) unless and
     until such Lender shall have received one or more payments from either the
     Borrower or one or more Eligible Assignees in an aggregate amount at least
     equal to the aggregate outstanding principal amount of the Advances owing
     to such Lender, together with accrued interest thereon to the date of
     payment of such principal amount and all other amounts payable to such
     Lender under this Agreement and (vi) the parties to each such assignment
     shall execute and deliver to the Administrative Agent, for its acceptance
     and recording in the Register, an Assignment and Acceptance, together with
     any Note or Notes subject to such assignment, provided further however,
     that the consent of the Administrative Agent will not be required for an
     assignment from any Lender to another Lender, an Affiliate of such other
     Lender or an Approved Fund of such other Lender.

          (b)  Upon such execution, delivery, acceptance and recording, from and
     after the effective date specified in such Assignment and Acceptance, (i)
     the assignee thereunder shall be a party hereto and, to the extent that
     rights and obligations hereunder have been assigned to it pursuant to such
     Assignment and Acceptance, have the rights and obligations of a Lender or
     Issuing Bank, as the case may be, hereunder and (ii) the Lender or Issuing
     Bank assignor thereunder shall, to the extent that rights and obligations
     hereunder have been assigned by it pursuant to such Assignment and
     Acceptance, relinquish its rights (other than its rights under Sections
     2.10, 2.13 and 8.04 (and other similar provisions of the Loan Documents
     that are specified under the terms of such other Loan Documents to survive
     the payment in full of the Obligations of the Loan Parties under or in
     respect of the Loan Documents) to the extent any claim thereunder relates
     to an event arising prior to such assignment) and be released from its
     obligations (other than its obligations under Section 7.05 to the extent
     any claim thereunder relates to an event arising prior to such assignment)
     under this Agreement (and, in the case of an Assignment and Acceptance
     covering all of the remaining portion of an assigning Lender's or


                                      98

     Issuing Bank's rights and obligations under this Agreement, such Lender or
     Issuing Bank shall cease to be a party hereto). If the assignee is not
     incorporated under the laws of the United States of America or a state
     thereof, it shall deliver to the Borrower and the Administrative Agent
     certification as to exemption from deduction or withholding of Taxes in
     accordance with Section 2.13.

          (c)  By executing and delivering an Assignment and Acceptance, each
     Lender Party assignor thereunder and each assignee thereunder confirm to
     and agree with each other and the other parties thereto and hereto as
     follows: (i) other than as provided in such Assignment and Acceptance, such
     assigning Lender Party makes no representation or warranty and assumes no
     responsibility with respect to any statements, warranties or
     representations made in or in connection with any Loan Document or the
     execution, legality, validity, enforceability, genuineness, sufficiency or
     value of, or the perfection or priority of any lien or security interest
     created or purported to be created under or in connection with, any Loan
     Document or any other instrument or document furnished pursuant thereto;
     (ii) such assigning Lender Party makes no representation or warranty and
     assumes no responsibility with respect to the financial condition of any
     Loan Party or the performance or observance by any Loan Party of any of its
     obligations under any Loan Document or any other instrument or document
     furnished pursuant thereto; (iii) such assignee confirms that it has
     received a copy of this Agreement, together with copies of such documents
     and information as it has deemed appropriate to make its own credit
     analysis and decision to enter into such Assignment and Acceptance; (iv)
     such assignee will, independently and without reliance upon any Agent, such
     assigning Lender Party or any other Lender Party and based on such
     documents and information as it shall deem appropriate at the time,
     continue to make its own credit decisions in taking or not taking action
     under this Agreement; (v) such assignee confirms that it is an Eligible
     Assignee; (vi) such assignee appoints and authorizes each Agent to take
     such action as agent on its behalf and to exercise such powers and
     discretion under the Loan Documents as are delegated to such Agent by the
     terms hereof and thereof, together with such powers and discretion as are
     reasonably incidental thereto; and (vii) such assignee agrees that it will
     perform in accordance with their terms all of the obligations that by the
     terms of this Agreement are required to be performed by it as a Lender or
     Issuing Bank, as the case may be.

          (d)  The Administrative Agent, acting for this purpose (but only for
     this purpose) as the agent of the Borrower, shall maintain at its address
     referred to in Section 8.02 a copy of each Assignment and Acceptance
     delivered to and accepted by it and a register for the recordation of the
     names and addresses of the Lender Parties and the Commitment under each
     Facility of, and principal amount of the Advances owing under each Facility
     to, each Lender Party from time to time (the "Register"). The entries in
     the Register shall be conclusive and binding for all purposes, absent
     manifest error, and the Borrower, the Agents and the Lender Parties shall
     treat each Person whose name is recorded in the Register as a Lender Party
     hereunder for all purposes of this Agreement. The Register shall be
     available for inspection by the Borrower or any Agent or any Lender Party
     at any reasonable time and from time to time upon reasonable prior notice.

          (e)  Upon its receipt of an Assignment and Acceptance executed by an
     assigning Lender Party and an assignee, together with any Note or Notes
     subject to such assignment, the Administrative Agent shall, subject, if
     applicable, to the approvals specified in Section 8.07(a), if such
     Assignment and Acceptance has been completed and is in substantially the
     form of Exhibit C hereto, (i) accept such Assignment and Acceptance, (ii)
     record the information contained therein in the Register and (iii) give
     prompt notice thereof to the Borrower and each other Agent. In the case of
     any assignment by a Lender, promptly after its receipt of such notice, the
     Borrower, at its own expense, shall execute and deliver to the
     Administrative Agent in exchange for the


                                      99

     surrendered Note or Notes a new Note to the order of such Eligible Assignee
     in an amount equal to the Commitment assumed by it under each Facility
     pursuant to such Assignment and Acceptance and, if any assigning Lender has
     retained a Commitment hereunder under such Facility, a new Note to the
     order of such assigning Lender in an amount equal to the Commitment
     retained by it hereunder. Such new Note or Notes shall be in an aggregate
     principal amount equal to the aggregate principal amount of such
     surrendered Note or Notes, shall be dated the effective date of such
     Assignment and Acceptance and shall otherwise be in substantially the form
     of Exhibit A-1, A-2 or A-3 hereto, as the case may be.

          (f)  Each Issuing Bank may assign to one or more Eligible Assignees
     all or a portion of its rights and obligations under the undrawn portion of
     its Letter of Credit Commitment at any time; provided, however, that (i)
     except in the case of an assignment to a Person that immediately prior to
     such assignment was an Issuing Bank or an assignment of all of an Issuing
     Bank's rights and obligations under this Agreement, the amount of the
     Letter of Credit Commitment of the assigning Issuing Bank being assigned
     pursuant to each such assignment (determined as of the date of the
     Assignment and Acceptance with respect to such assignment) shall in no
     event be less than $10,000,000 and shall be in an integral multiple of
     $1,000,000 in excess thereof, (ii) each such assignment shall be to an
     Eligible Assignee and (iii) the parties to each such assignment shall
     execute and deliver to the Administrative Agent, for its acceptance and
     recording in the Register, an Assignment and Acceptance.

          (g)  Each Lender Party may sell participations to one or more Persons
     (other than any Loan Party or any of its Affiliates) in or to all or a
     portion of its rights, obligations or rights and obligations under this
     Agreement (including, without limitation, all or a portion of its
     Commitments, the Advances owing to it and the Note or Notes (if any) held
     by it); provided, however, that (i) such Lender Party's obligations under
     this Agreement (including, without limitation, its Commitments) shall
     remain unchanged, (ii) such Lender Party shall remain solely responsible to
     the other parties hereto for the performance of such obligations, (iii)
     such Lender Party shall remain the holder of any such Note for all purposes
     of this Agreement, (iv) the Borrower, the Agents and the other Lender
     Parties shall continue to deal solely and directly with such Lender Party
     in connection with such Lender Party's rights and obligations under this
     Agreement, (v) the participant shall be entitled to the benefit of the
     yield protection provisions contained in Sections 2.10, 2.13 and 8.04 and
     the right of set-off contained in Section 8.05 and (vi) no participant
     under any such participation shall have any right to approve any amendment
     or waiver of any provision of any Loan Document, or any consent to any
     departure by any Loan Party therefrom, except to the extent that such
     amendment, waiver or consent would reduce the principal of, or stated rate
     of interest on, the Notes or any fees or other amounts payable hereunder,
     in each case to the extent subject to such participation, postpone any date
     scheduled for any payment of principal of, or interest on, the Notes
     pursuant to Section 2.04 or 2.07 or any date fixed for any payment of fees
     hereunder or any Guaranteed Obligations payable under the Subsidiary
     Guaranty, in each case to the extent subject to such participation, or
     release all or substantially all of the Collateral.

          (h)  Any Lender Party may, in connection with any assignment or
     participation or proposed assignment or participation pursuant to this
     Section 8.07, disclose to the assignee or participant or proposed assignee
     or participant any information relating to the Borrower furnished to such
     Lender Party by or on behalf of the Borrower; provided, however, that,
     prior to any such disclosure, the assignee or participant or proposed
     assignee or participant shall agree to preserve the confidentiality of any
     Confidential Information received by it from such Lender Party.


                                      100

          (i)  Notwithstanding any other provision set forth in this Agreement,
     any Lender Party may at any time create a security interest in all or any
     portion of its rights under this Agreement (including, without limitation,
     the Advances owing to it and the Note or Notes held by it) in favor of any
     Federal Reserve Bank in accordance with Regulation A of the Board of
     Governors of the Federal Reserve System and any Operating Circular issued
     by such Federal Reserve Bank. No such assignment shall release the
     assigning Lender from its obligations hereunder.

          (j)  Notwithstanding anything to the contrary contained herein, any
     Lender that is a fund that invests in bank loans may create a security
     interest in all or any portion of the Advances owing to it and the Note or
     Notes held by it to its creditors the trustee or agent or other
     representative for holders of obligations owed, or securities issued, by
     such fund as security for such obligations or securities, provided, that
     unless and until such creditors, trustee or agent or other representative
     actually becomes a Lender in compliance with the other provisions of this
     Section 8.07, (i) no such pledge shall release the pledging Lender from any
     of its obligations under the Loan Documents and (ii) such creditors,
     trustee or agent or other representative shall not be entitled to exercise
     any of the rights of a Lender under the Loan Documents even though such
     creditors, trustee or agent or other representative may have acquired
     ownership rights with respect to the pledged interest through foreclosure
     or otherwise.

          (k)  Notwithstanding anything to the contrary contained herein, any
     Lender Party (a"Granting Lender") may grant to a special purpose funding
     vehicle identified as such in writing from time to time by the Granting
     Lender to the Administrative Agent and the Borrower (an"SPC") the option to
     provide all or any part of any Advance that such Granting Lender would
     otherwise be obligated to make pursuant to this Agreement, provided that
     (i) nothing herein shall constitute a commitment by any SPC to fund any
     Advance, and (ii) if an SPC elects not to exercise such option or otherwise
     fails to make all or any part of such Advance, the Granting Lender shall be
     obligated to make such Advance pursuant to the terms hereof. The making of
     an Advance by an SPC hereunder shall utilize the Commitment of the Granting
     Lender to the same extent, and as if, such Advance were made by such
     Granting Lender. Each party hereto hereby agrees that (i) no SPC shall be
     liable for any indemnity or similar payment obligation under this Agreement
     for which a Lender Party would be liable, (ii) no SPC shall be entitled to
     the benefits of Sections 2.10 and 2.13 (or any other increased costs
     protection provision) and (iii) the Granting Lender shall for all purposes,
     including, without limitation, the approval of any amendment or waiver of
     any provision of any Loan Document, remain the Lender Party of record
     hereunder. In furtherance of the foregoing, each party hereto hereby agrees
     (which agreement shall survive the termination of this Agreement) that,
     prior to the date that is one year and one day after the payment in full of
     all outstanding commercial paper or other senior Debt of any SPC, it will
     not institute against, or join any other person in instituting against,
     such SPC any bankruptcy, reorganization, arrangement, insolvency, or
     liquidation proceeding under the laws of the United States or any State
     thereof. Notwithstanding anything to the contrary contained in this
     Agreement, any SPC may (i) with notice to, but without prior consent of,
     the Borrower and the Administrative Agent and without paying any processing
     fee therefor, assign all or any portion of its interest in any Advance to
     the Granting Lender and (ii) disclose on a confidential basis any non-
     public information relating to its funding of Advances to any rating
     agency, commercial paper dealer or provider of any surety or guarantee or
     credit or liquidity enhancement to such SPC. This subsection (k) may not be
     amended without the prior written consent of each Granting Lender, all or
     any part of whose Advances are being funded by the SPC at the time of such
     amendment.


                                      101

          (l)  In the event that the Borrower shall request that the Lender
     Parties enter into any amendment, modification, consent or waiver with
     respect to this Agreement or any other Loan Document, and any Lender Party
     elects not to enter into such amendment, modification, consent or waiver
     (each such Lender Party being a "Dissenting Lender"), then the Borrower
     shall have the right upon 10 days' written notice to the Administrative
     Agent and such Dissenting Lender, to require each such Dissenting Lender to
     assign 100% of the rights and obligations of the Dissenting Lender at par
     to any Lender or any other financial institution which satisfies the
     requirements of Section 8.07(a) and has been consented to by the
     Administrative Agent, the Swing Line Lender and in the case of any
     assignment of a Revolving Credit Commitment each Issuing Bank (which
     consents in the case of the Administrative Agent and the Swing Line Lender
     shall not be unreasonably withheld or delayed). Each such assignment shall
     be made pursuant to an Assignment and Acceptance and shall comply with the
     other terms of this Section 8.07. The Borrower shall pay to such Dissenting
     Lender, concurrently with the effectiveness of such assignment, any amounts
     payable under this Agreement that would have been payable if the Borrower
     had voluntarily prepaid such Advances. The Dissenting Lender shall not be
     required to pay any fee relating to such assignment.

     SECTION 8.08. Execution in Counterparts. This Agreement may be executed in
     ---------------------------------------
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery by telecopier of an executed counterpart of a signature page to this
Agreement shall be effective as delivery of an original executed counterpart of
this Agreement.

     SECTION 8.09. No Liability of the Issuing Bank. The Borrower assumes all
     ----------------------------------------------
risks of the acts or omissions of any beneficiary or transferee of any Letter of
Credit with respect to its use of such Letter of Credit. Neither the Issuing
Bank nor any of its officers or directors shall be liable or responsible for:
(a) the use that may be made of any Letter of Credit or any acts or omissions of
any beneficiary or transferee in connection therewith; (b) the validity,
sufficiency or genuineness of documents, or of any endorsement thereon, even if
such documents should prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (c) payment by the Issuing Bank against presentation of
documents that do not comply with the terms of a Letter of Credit, including
failure of any documents to bear any reference or adequate reference to the
Letter of Credit; or (d) any other circumstances whatsoever in making or failing
to make payment under any Letter of Credit, except that the Borrower shall have
a claim against the Issuing Bank, and the Issuing Bank shall be liable to the
Borrower, to the extent of any direct, but not consequential, damages suffered
by the Borrower that the Borrower proves were caused by (i) the Issuing Bank's
willful misconduct or gross negligence, or failure to conform with the standards
specified in Section 5-108 of the UCC, as determined in a final, non-appealable
judgment by a court of competent jurisdiction in determining whether documents
presented under any Letter of Credit comply with the terms of the Letter of
Credit or (ii) the Issuing Bank's willful failure to make lawful payment under a
Letter of Credit after the presentation to it of a draft and certificates
strictly complying with the terms and conditions of the Letter of Credit. In
furtherance and not in limitation of the foregoing, but subject to Section
5-109(a) of the UCC, the Issuing Bank 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.

     SECTION 8.10. Confidentiality. Neither any Agent nor any Lender Party shall
     -----------------------------
disclose any Confidential Information to any Person without the consent of the
Borrower, other than (a) to such Agent's or such Lender Party's Affiliates and
their officers, directors, employees, agents and advisors, to other Lender
Parties and to actual or prospective Eligible Assignees and participants, and
then only on a confidential basis, (b) as required by any law, rule or
regulation or judicial process, (c) as requested or required by any state,
Federal or foreign authority or examiner (including the National Association of
Insurance Commissioners or any similar organization or quasi-regulatory
authority) regulating such


                                      102

Lender Party, (d) to any rating agency when required by it, provided that, prior
to any such disclosure, such rating agency shall undertake to preserve the
confidentiality of any Confidential Information relating to the Loan Parties
received by it from such Lender Party in accordance with such rating agency's
internal procedures generally applicable to information of the same type, (e) in
connection with any litigation or proceeding to which such Agent or such Lender
Party or any of its Affiliates may be a party, (f) in connection with the
exercise of any remedy under this Agreement or any other Loan Document, or (g)
to any direct or indirect contractual counterparty in swap agreements or such
contractual counterparty's professional advisor (so long as such contractual
counterparty or professional advisor to such contractual counterparty agrees to
be bound by the provisions of this Section 8.10).

     SECTION 8.11. Execution in Counterparts. This Agreement may be executed in
     ---------------------------------------
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of a manually executed counterpart of
this Agreement.

     SECTION 8.12. Governing Law, Jurisdiction, Etc.
     ----------------------------------------------

          (a)  This Agreement and the Notes shall be governed by, and construed
     in accordance with, the laws of the State of New York.

          (b)  Each of the parties hereto hereby irrevocably and unconditionally
     submits, for itself and its property and assets, to the nonexclusive
     jurisdiction of any New York State court or any federal court of the United
     States of America sitting in New York City, New York, and any appellate
     court from any thereof, in any action or proceeding arising out of or
     relating to this Agreement or any of the other Loan Documents to which it
     is a party, or for recognition or enforcement of any judgment in respect
     thereof, 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 any such New York State court or,
     to the fullest extent permitted under applicable law, in any such federal
     court. Each of the parties hereto hereby irrevocably consents to the
     service of copies of any summons and complaint and any other process which
     may be served in any such action or proceeding by certified mail, return
     receipt requested, or by delivering a copy of such process to such party,
     at its address specified in Section 8.02, or by any other method permitted
     under applicable law. Each of the parties hereto hereby 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 applicable law. Nothing in this Agreement shall affect
     any right that any of the parties hereto may otherwise have to bring any
     action or proceeding relating to this Agreement or any of the other Loan
     Documents in the courts of any jurisdiction.

          (c)  Each of the parties hereto irrevocably and unconditionally
     waives, to the fullest extent it may legally and effectively do so, any
     objection that 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 or
     any of the other Loan Documents to which it is a party in any New York
     State or federal court. Each of the parties hereto hereby 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.

     SECTION 8.13. Designation as Designated Senior Debt. This Agreement, the
     ---------------------------------------------------
Subsidiary Guaranty, the Loan Documents and all monetary obligations hereunder
or thereunder are hereby expressly


                                      103

designated as "Designated Senior Indebtedness" as that term (or any comparable
term) is defined in the Subordinated Notes Documents.


     SECTION 8.14. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE AGENTS AND
     ----------------------------------
THE LENDER PARTIES IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS, THE ADVANCES, THE
LETTERS OF CREDIT OR THE ACTIONS OF ANY AGENT OR ANY LENDER PARTY IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.


                                                  DAVITA INC., as Borrower


                                                  By ___________________________
                                                     Name:
                                                     Title:


                                  BANK OF AMERICA, N.A., as Administrative
                                    Agent, Initial Issuing Bank, Swing Line
                                    Bank, and an Initial Lender



                                  By _________________________________________
                                     Name:
                                     Title:


                                  BANC OF AMERICA SECURITIES LLC, as
                                    Joint Lead Arranger and Joint Book
                                    Manager



                                  By _________________________________________
                                     Name:
                                     Title:


                                   CREDIT SUISSE FIRST BOSTON, as Joint
                                      Lead Arranger and Joint Bank Manager, and
                                      an Initial Lender


                                   By ________________________________________
                                      Name:
                                      Title:


                                   THE BANK OF NEW YORK, as an Issuing
                                      Bank under the Existing Credit Agreement,
                                      a Documentation Agent and an Initial
                                      Lender




                                   By __________________________________________
                                      Name:
                                      Title:


                                   SUNTRUST BANK, as a Documentation Agent
                                      and an Initial Lender



                                   By __________________________________________
                                      Name:
                                      Title:


                                   THE BANK OF NOVA SCOTIA, as a
                                      Documentation Agent and an Initial Lender



                                   By _________________________________________
                                      Name:
                                      Title:


                                   U.S. BANK NATIONAL ASSOCIATION, as
                                      an Initial Lender


                                   By _______________________________
                                      Name:
                                      Title:


                                   CREDIT LYONNAIS NEW YORK BRANCH,
                                      as an Initial Lender



                                   By _______________________________
                                      Name:
                                      Title:


                                   KZH CNC LLC, as an Initial Lender


                                   By _____________________________________
                                      Name:
                                      Title:


                                    KZH STERLING LLC, as an Initial
                                      Lender


                                    By ____________________________________
                                       Name:
                                       Title:


                                    KZH CYPRESSTREE-1 LLC, as an Initial
                                      Lender


                                    By  ________________________________________
                                        Name:
                                        Title:



                                    KZH SHOSHONE LLC, as an Initial Lender


                                    By  ____________________________________
                                        Name:
                                        Title:



                                    KZH SOLEIL LLC, as an Initial Lender


                                    By  ____________________________________
                                        Name:
                                        Title:



                                    WINGED FOOT FUNDING TRUST, as an
                                      Initial Lender



                                    By  ____________________________________
                                        Name:
                                        Title:




                                    OPPENHEIMER SENIOR FLOATING RATE
                                      FUND, as an Initial Lender



                                    By  ____________________________________
                                        Name:
                                        Title:


                                    PPM SPYGLASS FUNDING TRUST, as an
                                       Initial Lender


                                    By  ____________________________________
                                        Name:
                                        Title:


                                  SCHEDULE I
                  COMMITMENTS AND APPLICABLE LENDING OFFICES



====================================================================================================================================
                                                                                                              Letter
                                              Term A               Term B          Revolving Credit         of Credit
   Name of Initial Lender Party             Commitment           Commitment           Commitment           Commitment/1/
====================================================================================================================================
                                                                                               
Bank of America, N.A.                      $ 10,000,000         $ 175,500,000         $ 30,000,000         $ 50,000,000
101 North Tryon Street, 15/th/ Floor
Charlotte, NC 28255


- ------------------------------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston                 $ 10,000,000                               $ 30,000,000
11 Madison  Avenue
New York, NY 10010-3629


- ------------------------------------------------------------------------------------------------------------------------------------
SunTrust Bank                              $  8,750,000                               $ 26,250,000
201 4th Avenue North
Nashville, TN 37219


- ------------------------------------------------------------------------------------------------------------------------------------
The Bank of New York                       $ 6,250,000                                $ 18,750,000         $ 15,261,813
10990 WilshiBlvd., Suite 1125
Los Angeles, CA 90024


- ------------------------------------------------------------------------------------------------------------------------------------
                                                   Base Rate                               Eurodollar
                                                    Lending                                 Lending
   Name of Initial Lender Party                      Office                                  Office
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                             
Bank of America, N.A.                      Independence Centre, 15/th/ Fl.         Independence Centre, 15/th/ Fl.
101 North Tryon Street, 15/th/ Floor       NC1-001-15-04                           NC1-001-15-04
Charlotte, NC 28255                        Charlotte, NC 28255                     Charlotte, NC 28255
                                           Attention: Elizabeth Garver             Attention: Elizabeth Garver
                                           Phone: (704) 388-1107                   Phone: (704) 388-1107
                                           Fax: (704) 386-9923                     Fax: (704) 386-9923
- ------------------------------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston                 11 Madison Avenue                       Five World Trade Center
11 Madison  Avenue                         New York, NY 10010-3629                 8/th/ Floor
New York, NY 10010-3629                    Contact: William Lutkins                New York, NY 10048-0928
                                           Phone: (212) 325-9705                   Contact: Nilsa Ware
                                           Fax: (212) 325-8319                     Phone: (212) 322-5094
                                                                                   Fax: (212) 335-0593
- ------------------------------------------------------------------------------------------------------------------------------------
SunTrust Bank                              201 4/th/ Avenue, North                 201 4/th/ Avenue, North
201 4th Avenue North                       3/rd/ Floor                             5th Floor
Nashville, TN 37219                        Nashville, TN 37219                     Nashville, TN 37219
                                           Contact: Brooks Hubbard                 Contact: Leigh Anne Gregory
                                           Phone: (615) 748-4465                   Phone: (615) 748-5461
                                           Fax: (615) 748-5269                     Fax: (615) 748-4611
- ------------------------------------------------------------------------------------------------------------------------------------
The Bank of New York                       10990 Wilshire Blvd.                    1 Wall Street
10990 WilshiBlvd., Suite 1125              Los Angeles, CA 90024                   New York, NY 10286
Los Angeles, CA 90024                      Contact: Rebecca K. Levine              Contact: Rosa Leonard
                                           Phone: (310) 996-8650                   Phone: (212) 635-6787
                                           Fax: (310) 996-8667                     Fax: (212) 635-6397-6426
- ------------------------------------------------------------------------------------------------------------------------------------


- -------------------------------
/1/  Less the aggregate amount of Existing Letters of Credit pursuant to Section
     2.01(e) in the amount of $15,261,813 as of the date hereof.




====================================================================================================================================
                                                                                                                    Letter of
                                                 Term A                  Term B           Revolving Credit           Credit
   Name of Initial Lender Party                Commitment              Commitment            Commitment            Commitment/1/
====================================================================================================================================
                                                                                                     
 The Bank of Nova Scotia                       $6,250,000                                   $18,750,000
 580 California Street, Suite 2100
 San Francisco, CA  94104




- ------------------------------------------------------------------------------------------------------------------------------------
 U.S. Bank National Association                $5,000,000                                   $15,000,000
 555 S.W. Oak Street
 Portland, OR  97204



- ------------------------------------------------------------------------------------------------------------------------------------
 Credit Lyonnais New York Branch               $3,750,000              $5,000,000           $11,250,000
 1301 Avenue of the Americas
 New York, NY  10019


- ------------------------------------------------------------------------------------------------------------------------------------
 KZH CNC LLC                                                           $2,500,000
 c/o The Chase Manhattan Bank
 140 East 45/th/ Street, 11/th/ Floor
 New York, NY  10017


- ------------------------------------------------------------------------------------------------------------------------------------
 KZH Sterling, LLC                                                     $1,000,000
 c/o The Chase Manhattan Bank
 140 East 45/th/ Street, 11/th/ Floor
 New York, NY  10017


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

====================================================================================================================================
                                                      Base Rate                           Eurodollar
                                                       Lending                             Lending
    Name of Initial Lender Party                       Office                              Office
====================================================================================================================================
                                                                          
 The Bank of Nova Scotia                     Atlanta Agency, Suite 2700          Atlanta Agency, Suite 2700
 580 California Street, Suite 2100           600 Peachtree Street, NE            600 Peachtree Street, NE
 San Francisco, CA  94104                    Atlanta, GA 30308                   Atlanta, GA 30308
                                             Contact: San Francisco Loan         Contact: San Francisco Loan
                                             Servicing, Lily Hsieh               Servicing, Lily Hsieh
                                             Phone: (404) 877-1523               Phone: (404) 877-1523
                                             Fax:   (404) 888-8998               Fax:   (404) 888-8998
- ------------------------------------------------------------------------------------------------------------------------------------
 U.S. Bank National Association              555 S.W. Oak Street                 555 S.W. Oak Street
 555 S.W. Oak Street                         PL-0631                             PL-0631
 Portland, OR  97204                         Portland, OR  97204                 Portland, OR  97204
                                             Contact: Lily Blank                 Contact: Lily Blank
                                             Phone:  (503) 275-6559              Phone:  (503) 275-6559
                                             Fax:    (503) 275-4600              Fax:    (503) 275-4600
- ------------------------------------------------------------------------------------------------------------------------------------
 Credit Lyonnais New York Branch             1301 Avenue of the Americas         1301 Avenue of the Americas
 1301 Avenue of the Americas                 New York, NY  10019                 New York, NY  10019
 New York, NY  10019                         Contact: Gener David                Contact: Gener David
                                             Phone:  (212) 261-7741              Phone:  (212) 261-7741
                                             Fax:    (212) 459-3181              Fax:    (212) 459-3181
- ------------------------------------------------------------------------------------------------------------------------------------
 KZH CNC LLC                                 140 East 45/th/ Street               140 East 45/th/ Street
 c/o The Chase Manhattan                     11/th/ Floor                         11/th/ Floor
 140 East 45/th/ Street, 11/th/ Floor        New York, NY  10017                  New York, NY  10017
 New York, NY  10017                         Contact: Virginia Conway             Contact: Virginia Conway
                                             Phone:  (212) 622-9353               Phone:  (212) 622-9353
                                             Fax:    (212) 622-0123               Fax:    (212) 622-0123
- ------------------------------------------------------------------------------------------------------------------------------------
 KZH Sterling, LLC                           140 East 45/th/ Street               140 East 45/th/ Street
 c/o The Chase Manhattan Bank                11/th/ Floor                         11/th/ Floor
 140 East 45/th/ Street, 11/th/ Floor        New York, NY  10017                  New York, NY  10017
 New York, NY  10017                         Contact: Virginia Conway             Contact: Virginia Conway
                                             Phone:  (212) 622-9353               Phone:  (212) 622-9353
                                             Fax:    (2120 622-0123               Fax:    (2120 622-0123
- ------------------------------------------------------------------------------------------------------------------------------------





==================================================================================================================================
                                                                                                                  Letter of
                                                         Term A            Term B         Revolving Credit          Credit
   Name of Initial Lender Party                         Commitment        Commitment          Commitment         Commitment /1/
==================================================================================================================================
                                                                                                    
KZH Cypress Tree-1, LLC                                               $     2,000,000
c/o The Chase Manhattan Bank
140 East 45/th/ Street, 11/th/ Floor
New York, NY 10017

- ----------------------------------------------------------------------------------------------------------------------------------
KZH Shoshone LLC                                                      $     2,500,000
c/o The Chase Manhattan Bank
140 East 45/th/ Street, 11/th/ Floor
New York, NY 10017

- ----------------------------------------------------------------------------------------------------------------------------------
KZH Soleil LLC                                                        $     2,000,000
c/o The Chase Manhattan Bank
140 East 45/th/ Street, 11/th/ Floor
New York, NY 10017

- ----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Senior Floating Rate Fund                                 $     3,000,000
c/o Oppenheimer Funds, Inc.
6803 South Tucson Way
Englewood, CO 80112-3924

- ----------------------------------------------------------------------------------------------------------------------------------
PPM Spyglass Funding Trust                                            $     4,000,000
c/o Banc of America Securities LLC
100 North Tryon Street
NC1-007-06-07
Charlotte, NC 28255

- ----------------------------------------------------------------------------------------------------------------------------------
Winged Foot Funding Trust                                             $     2,500,000
c/o Conseco Capital Management, Inc.
11825 N. Pennsylvania Street
Carmel, IN 46032

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


==================================================================================================================================
                                                        Base Rate Lending                         Eurodollar Lending
Name of Initial Lender Party                            Office                                    Office
==================================================================================================================================
                                                                                            
KZH Cypress Tree-1, LLC                                 140 East 45/th/ Street                    140 East 45/th/ Street
c/o The Chase Manhattan Bank                            11/th/ Floor                              11/th/ Floor
140 East 45th Street, 11/th/ Floor                      New York, NY 10017                        New York, NY 10017
New York, NY 10017                                      Contact: Virginia Conway                  Contact: Virginia Co
                                                        Phone: (212) 622-9353                     Phone: (212) 622-9353
                                                        Fax: (212) 622-0123                       Fax: (212) 622-0123
- ----------------------------------------------------------------------------------------------------------------------------------
KZH Shoshone LLC                                        140 East 45/th/ Street                    140 East 45/th/ Street
c/o The Chase Manhattan Bank                            11/th/ Floor                              11/th/ Floor
140 East 45/th/ Street, 11/th/ Floor                    New York, NY 10017                        New York, NY 10017
New York, NY 10017                                      Contact: Virginia Conway                  Contact: Virginia Co
                                                        Phone: (212) 622-9353                     Phone: (212) 622-935
                                                        Fax: (212) 622-0123                       Fax: (212) 622-0123
- ----------------------------------------------------------------------------------------------------------------------------------
KZH Soleil LLC                                          140 East 45/th/ Street                    140 East 45/th/ Street
c/o The Chase Manhattan Bank                            11/th/ Floor                              11/th/ Floor
140 East 45/th/ Street, 11/th/ Floor                    New York, NY 10017                        New York, NY 10017
New York, NY 10017                                      Contact: Virginia Conway                  Contact: Virginia Conway
                                                        Phone: (212) 622-9353                     Phone: (212) 622-9353
                                                        Fax: (212) 622-0123                       Fax: (212) 622-0123
- ----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Senior Floating Rate Fund                   6803 South Tucson Way                     6803 South Tucson Way
c/o Oppenheimer Funds, Inc.                             Englewood, CO 80112-3924                  Englewood, CO 80112-3924
6803 South Tucson Way                                   Contact: Myk Pleet                        Contact: Myk Pleet
Englewood, CO 80112-3924                                Phone: (303) 768-2260                     Phone: (303) 768-2260
                                                        Fax: (303) 645-0933                       Fax: (303) 645-0933
- ----------------------------------------------------------------------------------------------------------------------------------
PPM Spyglass Funding Trust                              100 North Tryon Street                    100 North Tryon Street
c/o Banc of America Securities LLC                      NC1-007-06-07                             NC1-007-06-07
100 North Tryon Street                                  Charlotte, NC 28255                       Charlotte, NC 28255
NC1-007-06-07                                           Contact: Annabet Morris                   Contact: Annabet Morris
Charlotte, NC 28255                                     Phone: (704) 387-1939                     Phone: (704) 387-1939
                                                        Fax: (704) 388-0648                       Fax: (704) 388-0648
- ----------------------------------------------------------------------------------------------------------------------------------
Winged Foot Funding Trust                               100 North Tryon Street                    100 North Tryon Street
c/o Conseco Capital Management, Inc.                    NC1-007-06-07                             NC1-007-06-07
11825 N. Pennsylvania Street                            Charlotte, NC 28255                       Charlotte, NC 28255
Carmel, IN 46032                                        Contact: Annabet Morris                   Contact: Annabet Morris
                                                        Phone: (704) 387-1939                     Phone: (704) 387-193
                                                        Fax: (704) 388-0648                       Fax: (704) 388-0648
- ----------------------------------------------------------------------------------------------------------------------------------





====================================================================================================================================
                                                                                                       Base Rate     Eurodollar
                                     Term A         Term B     Revolving Credit   Letter of Credit      Lending       Lending
  Name of Initial Lender Party     Commitment     Commitment      Commitment        Commitment/1/       Office         Office
====================================================================================================================================
                                                                                                   
  TOTAL:                          $50,000,000    $200,000,000    $150,000,000        $50,000,000
====================================================================================================================================

EX-10.20

                                                                   Exhibit 10.20

                              SECURITY AGREEMENT

                               Dated May 3, 2001

                                     From

                        The Grantors referred to herein

                                  as Grantors
                                  -----------

                                      to

                             BANK OF AMERICA, N.A.

                              as Collateral Agent
                              -------------------


                       T A B L E  O F  C O N T E N T S
                       - - - - -  - -  - - - - - - - -



Section                                                                    Page
                                                                        
Section 1.    Grant of Security..........................................    2
- ----------    -----------------

Section 2.    Security for Obligations...................................    7
- ----------    ------------------------

Section 3.    Grantors Remain Liable.....................................    7
- ----------    ----------------------

Section 4.    Delivery and Control of Security Collateral................    7
- ----------    -------------------------------------------

Section 5.    Maintaining the L/C Collateral Account.....................    7
- ----------    --------------------------------------

Section 6.    Investing of Amounts in the L/C Collateral Account.........    8
- ----------    --------------------------------------------------

Section 7.    Release of Amounts.........................................    8
- ----------    ------------------

Section 8.    Representations and Warranties.............................    8
- ----------    ------------------------------

Section 9.    Further Assurances.........................................   11
- ----------    ------------------

Section 10.   As to Equipment and Inventory..............................   12
- -----------   -----------------------------

Section 11.   Insurance..................................................   12
- -----------   ---------

Section 12.   Place of Perfection; Records; Collection of
- -----------   -------------------------------------------
              Receivables................................................   13
              -----------

Section 13.   As to Intellectual Property Collateral.....................   14
- -----------   --------------------------------------

Section 14.   Voting Rights; Dividends; Etc..............................   15
- -----------   ------------------------------

Section 15.   As to the Assigned Agreements..............................   17
- -----------   -----------------------------

Section 16.   Transfers and Other Liens; Additional Shares...............   17
- -----------   --------------------------------------------

Section 17.   Collateral Agent Appointed Attorney-in-Fact................   17
- -----------   -------------------------------------------

Section 18.   Collateral Agent May Perform...............................   18
- -----------   ----------------------------

Section 19.   The Collateral Agent's Duties..............................   18
- -----------   -----------------------------

Section 20.   Remedies...................................................   19
- -----------   --------

Section 21.   Indemnity and Expenses.....................................   21
- -----------   ----------------------

Section 22.   Amendments; Waivers; Additional Grantors; Etc..............   21
- -----------   ----------------------------------------------

Section 23.   Notices; Etc...............................................   22
- -----------   -------------



                                                                        
Section 24.   Continuing Security Interest; Assignments under the
- -----------   ---------------------------------------------------
              Credit Agreement...........................................   22
              ----------------

Section 25.   Release; Termination.......................................   22
- -----------   --------------------

Section 26.   Security Interest Absolute.................................   23
- -----------   --------------------------

Section 27.   Execution in Counterparts..................................   24
- -----------   -------------------------

Section 28.   Governing Law..............................................    1
- -----------   -------------



Schedules
- ---------

Schedule I      -  Pledged Shares and Pledged Debt
Schedule II     -  Locations of Equipment and Inventory
Schedule III    -  Chief Executive Office and Federal Tax Identification Number
Schedule IV     -  Patents, Trademarks and Trade Names, Copyrights and Licenses
Schedule V      -  Assets Subject to Existing Contracts of Sale
Schedule VI     -  Receivables Evidenced by Chattel Paper
Schedule VII    -  Notices of Termination or Cancellation of Licenses

Exhibits
- --------

Exhibit A       -  Form of Security Agreement Supplement
Exhibit B       -  Form of Intellectual Property Security Agreement
Exhibit C       -  Form of Intellectual Property Security Agreement Supplement

Appendices
- ----------

Appendix A
Appendix B


                              SECURITY AGREEMENT

          SECURITY AGREEMENT dated May 3, 2001 made by DAVITA INC., a Delaware
corporation (the "Borrower"), the subsidiaries of the Borrower listed on the
signature pages hereof and the Additional Grantors (as hereinafter defined) (the
Borrower, the Persons so listed and the Additional Grantors being, collectively,
the "Grantors"), to Bank of America, N.A., as collateral agent (together with
any successor collateral agent appointed pursuant to Article VII of the Credit
Agreement (as hereinafter defined), the "Collateral Agent") for the Secured
Parties (as defined in the Credit Agreement).

          PRELIMINARY STATEMENTS.

          (1)  The Borrower has entered into a Credit Agreement dated as of May
3, 2001 (said Agreement, as it may hereafter be amended, amended and restated,
supplemented or otherwise modified from time to time, being the "Credit
Agreement") with the Lender Parties and the Agents (each as defined therein).
Each Grantor (other than the Borrower) has entered into a Subsidiary Guarantee
dated May 3, 2001, pursuant to which such Grantor has guaranteed the Obligations
of the Borrower under the Credit Agreement. Capitalized terms used herein
without definition shall have the meanings assigned thereto in the Credit
Agreement.

          (2)  Pursuant to the Credit Agreement, the Borrower, from time to
time, may enter into interest with Hedge Agreements with counterparties that are
Lender Parties at the time such Hedge Agreements are entered into (or Affiliates
of such Lender Parties at such time) (all such Hedge Agreements being the
"Secured Hedge Agreements").

          (3)  Pursuant to the Credit Agreement, the Grantors are entering into
this Agreement in order to grant to the Collateral Agent for the ratable benefit
of the Secured Parties a security interest in all of their personal property and
fixtures now owned or hereafter acquired.

          (4)  Each Grantor is the owner of the shares (the "Initial Pledged
Shares") of stock set forth opposite such Grantor's name on and as otherwise
described in Part I of Schedule I hereto and issued by the corporations named
therein and of the indebtedness (the "Initial Pledged Debt") set forth opposite
such Grantor's name on and as otherwise described in Part II of Schedule I
hereto and issued by the obligors named therein.

          (5)  The Borrower has opened a collateral securities account, Account
No. ____ (the "L/C Collateral Account"), with the Collateral Agent at its office
at Charlotte, North Carolina, in the name of the Collateral Agent and under the
sole dominion of the Collateral Agent and subject to the terms of this
Agreement.

          (6)  It is a condition precedent to the making of Advances and the
issuance of Letters of Credit by the Lender Parties under the Credit Agreement
that the Grantors shall have granted the assignment and security interest and
made the pledge and assignment contemplated by this Agreement.

          (7)  Each Grantor will derive substantial direct and indirect benefit
from the transactions contemplated by the Loan Documents.


                                       2




          (8)  Terms defined in the Credit Agreement and not otherwise defined
in this Agreement are used in this Agreement as defined in the Credit Agreement.
Further, unless otherwise defined in this Agreement or in the Credit Agreement,
terms defined in Article 8 or 9 of the Uniform Commercial Code in effect in the
State of New York ("N.Y. Uniform Commercial Code") are used in this Agreement as
so defined.

          NOW, THEREFORE, in consideration of the premises and in order to
induce the Lender Parties to make Advances and issue Letters of Credit under the
Credit Agreement, each Grantor hereby agrees with the Collateral Agent for the
ratable benefit of the Secured Parties as follows:

          Section 1.  Grant of Security.  Each Grantor hereby pledges to the
                      -----------------
Collateral Agent for the ratable benefit of the Secured Parties, and hereby
grants to the Collateral Agent for the ratable benefit of the Secured Parties a
security interest in, such Grantor's right, title and interest in and to the
following, in each case, as to each type of property described below, whether
now owned or hereafter acquired by such Grantor, wherever located, and whether
now or hereafter existing or arising (collectively, the "Collateral"):

          (a)  all equipment in all of its forms, all fixtures and all parts
     thereof and all accessions thereto (any and all such equipment, fixtures,
     parts and accessions being the "Equipment");

          (b)  all inventory in all of its forms and all accessions thereto and
     products thereof and documents therefor (any and all such inventory,
     accessions, products and documents being the "Inventory");

          (c)  all accounts, chattel paper, instruments, general intangibles
     (other than general intangibles consisting of Security Collateral,
     Intellectual Property Collateral or Agreement Collateral which are included
     as "Collateral" in the applicable provisions of this Section 1) and other
     obligations of any kind, whether or not arising out of or in connection
     with the sale or lease of goods or the rendering of services and whether or
     not earned by performance, and all rights now or hereafter existing in and
     to all security agreements, leases and other contracts securing or
     otherwise relating to any such accounts, chattel paper, instruments,
     general intangibles or obligations (any and all such accounts, chattel
     paper, instruments, general intangibles and obligations, to the extent not
     referred to in clause (d), (e) or (f) below, being the "Receivables", and
     any and all such security agreements, leases and other contracts being the
     "Related Contracts"). "Receivables" shall include, but not be limited to,
     any accounts, contract rights, notes, drafts and other obligations or
     rights to payment of every kind or description now or any time hereafter
     arising, directly or indirectly, out of the provision of Dialysis Services
     and/or the provision of Ancillary Services specifically including, but not
     limited to, all accounts receivable and rights to payment through federal,
     state or local governmental programs, including without limitation, all
     Governmental Health Receivables, all other third-party payer programs and
     health care insurance receivables and other private pay receivables. As
     used herein, (i) "Governmental Health Receivables" means Medicaid
     Receivables, Medicare Receivables or VA Receivables, (ii) "Medicaid
     Receivable"


                                       3


     means any Receivable with respect to which the obligor is a state
     governmental authority (or agent thereof) obligated to pay, pursuant to
     federal or state Medicaid program statutes or regulations, for services
     rendered to eligible beneficiaries thereunder; (iii) "Medicare Receivable"
     means any Receivable with respect to which the obligor is a federal
     governmental authority (or agent thereof) obligated to pay, pursuant to
     federal Medicare Program statutes or regulations, for services rendered to
     eligible beneficiaries thereunder and (iv) "VA Receivable" means any
     Receivable with respect to which the obligor is the Veterans'
     Administration or any successor thereto (or any agent thereof);

          (d)  the following (the "Security Collateral"):

               (i)  the Initial Pledged Shares and the certificates, if any,
          representing the Initial Pledged Shares, and all dividends, cash,
          instruments and other property from time to time received, receivable
          or otherwise distributed in respect of or in exchange for any or all
          of the Initial Pledged Shares;

              (ii)  the Initial Pledged Debt and the instruments, if any,
          evidencing the Initial Pledged Debt, and all interest, cash,
          instruments and other property from time to time received, receivable
          or otherwise distributed in respect of or in exchange for any or all
          of the Initial Pledged Debt;

             (iii)  all additional shares of stock from time to time acquired
          by such Grantor in any manner (such shares, together with the Initial
          Pledged Shares, being the "Pledged Shares"), and the certificates, if
          any, representing such additional shares, and all dividends, cash,
          instruments and other property from time to time received, receivable
          or otherwise distributed in respect of or in exchange for any or all
          of such shares; provided, that if the issuer of any of such Pledged
          Shares is a controlled foreign corporation (used hereinafter as such
          term is defined in Section 975(a) or a successor provision of the
          Internal Revenue Code), the Pledged Shares shall not include any
          shares of stock of such issuer in excess of the number of shares of
          such issuer possessing up to but not exceeding 65% of the voting power
          of all classes of capital stock entitled to vote of such issuer, and
          all dividends, cash, warrants, rights, instruments and other property
          or proceeds from time to time received, receivable or otherwise
          distributed in respect of or in exchange for any or all of such
          Pledged Shares;

              (iv)  all additional indebtedness from time to time owed to such
          Grantor (such indebtedness, together with the Initial Pledged Debt,
          being the "Pledged Debt") and the instruments, if any, evidencing such
          indebtedness, and all interest, cash, instruments and other property
          from time to time received, receivable or otherwise distributed in
          respect of or in exchange for any or all of such indebtedness; and

               (v)  all other investment property in which such Grantor has now,
          or acquires from time to time hereafter, any right, title or interest
          in any manner, and the certificates or instruments, if any,
          representing or evidencing such investment property, and all
          dividends, interest, distributions, value, cash, instruments and


                                       4


          other property from time to time received, receivable or otherwise
          distributed in respect of or in exchange for any or all of such
          investment property;

          (e) each of the agreements to which such Grantor is now or may
     hereafter become a party, in each case as such agreements may be amended,
     amended and restated, supplemented or otherwise modified from time to time
     (collectively, the "Assigned Agreements"), including, without limitation,
     (i) all rights of such Grantor to receive moneys due and to become due
     under or pursuant to the Assigned Agreements, (ii) all rights of such
     Grantor to receive proceeds of any insurance, indemnity, warranty or
     guaranty with respect to the Assigned Agreements, (iii) claims of such
     Grantor for damages arising out of or for breach of or default under the
     Assigned Agreements and (iv) the right of such Grantor to terminate the
     Assigned Agreements, to perform thereunder and to compel performance and
     otherwise exercise all remedies thereunder (all such Collateral being the
     "Agreement Collateral");

          (f)  the following (collectively, the "Account Collateral"):

               (i)  the L/C Collateral Account, all financial assets from time
          to time credited to the L/C Collateral Account (including, without
          limitation, all Cash Equivalents from time to time credited to the L/C
          Collateral Account), and all dividends, interest, cash, instruments
          and other property from time to time received, receivable or otherwise
          distributed in respect of or in exchange for any or all of such
          financial assets;

              (ii)  all other deposit accounts of such Grantor from time to
          time, all funds held therein and all certificates and instruments, if
          any, from time to time representing or evidencing such deposit
          accounts;

             (iii)  all notes, certificates of deposit, deposit accounts, checks
          and other instruments from time to time delivered to or otherwise
          possessed by the Collateral Agent for or on behalf of such Grantor,
          including, without limitation, those delivered or possessed in
          substitution for or in addition to any or all of the then existing
          Account Collateral; and

              (iv)  all interest, dividends, cash, instruments and other
          property from time to time received, receivable or otherwise
          distributed in respect of or in exchange for any or all of the then
          existing Account Collateral; and

          (g)  the following (collectively, the "Intellectual Property
     Collateral"):

               (i)  all United States, international and foreign patents, patent
          applications and statutory invention registrations, including, without
          limitation, the patents and patent applications set forth in Schedule
          IV hereto (as such Schedule IV may be supplemented from time to time
          by supplements to this Agreement, each such supplement being in
          substantially the form of Exhibit C hereto (an "IP Security Agreement
          Supplement"), executed and delivered by such Grantor to the Collateral
          Agent from time to time), together with all reissues, divisions,
          continuations, continuations-in-part, extensions and reexaminations


                                       5

          thereof, all inventions therein, all rights therein provided by
          international treaties or conventions and all improvements thereto,
          and all other rights of any kind whatsoever of such Grantor accruing
          thereunder or pertaining thereto (the "Patents");

              (ii)  all trademarks (including, without limitation, service
          marks), certification marks, collective marks, trade dress, logos,
          domain names, product configurations, trade names, business names,
          corporate names and other source identifiers, whether or not
          registered, whether currently in use or not, including, without
          limitation, all common law rights and registrations and applications
          for registration thereof, including, without limitation, the trademark
          registrations and trademark applications set forth in Schedule IV
          hereto (as such Schedule IV may be supplemented from time to time by
          IP Security Agreement Supplements executed and delivered by such
          Grantor to the Collateral Agent from time to time), and all other
          marks registered in the U.S. Patent and Trademark Office or in any
          office or agency of any State or Territory of the United States or any
          foreign country (but excluding any United States intent-to-use
          trademark application prior to the filing and acceptance of a
          Statement of Use or an Amendment to allege use in connection therewith
          to the extent that a valid security interest may not be taken in such
          an intent-to-use trademark application under applicable law), and all
          rights therein provided by international treaties or conventions, all
          reissues, extensions and renewals of any of the foregoing, together in
          each case with the goodwill of the business connected therewith and
          symbolized thereby, and all rights corresponding thereto throughout
          the world and all other rights of any kind whatsoever of such Grantor
          accruing thereunder or pertaining thereto (the "Trademarks");

             (iii)  all copyrights, copyright applications, copyright
          registrations and like protections in each work of authorship, whether
          statutory or common law, whether published or unpublished, any
          renewals or extensions thereof, all copyrights of works based on,
          incorporated in, derived from, or relating to works covered by such
          copyrights, including, without limitation, the copyright registrations
          and copyright applications set forth in Schedule IV hereto including,
          without limitation, the trademark registrations and trademark
          applications set forth in Schedule IV hereto (as such Schedule IV may
          be supplemented from time to time by IP Security Agreement Supplements
          executed and delivered by such Grantor to the Collateral Agent from
          time to time), together with all rights corresponding thereto
          throughout the world and all other rights of any kind whatsoever of
          such Grantor accruing thereunder or pertaining thereto (the
          "Copyrights");

              (iv)  all confidential and proprietary information, including,
          without limitation, know-how, trade secrets, manufacturing and
          production processes and techniques, inventions, research and
          development information, technical data, financial, marketing and
          business data, pricing and cost information, business and marketing
          plans and customer and supplier lists and information (the "Trade
          Secrets");


                                       6


               (v)  all computer software programs and databases (including,
          without limitation, source code, object code and all related
          applications and data files), firmware, and documentation and
          materials relating thereto, and all rights with respect to the
          foregoing, together with any and all options, warranties, service
          contracts, program services, test rights, maintenance rights,
          improvement rights, renewal rights and indemnifications and any
          substitutions, replacements, additions or model conversions of any of
          the foregoing (the "Computer Software");

              (vi)  all license agreements, permits, authorizations and
          franchises, whether with respect to the Patents, Trademarks,
          Copyrights, Trade Secrets or Computer Software, or with respect to the
          patents, trademarks, copyrights, trade secrets, computer software or
          other proprietary right of any other Person, including, without
          limitation, the license agreements set forth in Schedule IV hereto (as
          such Schedule IV may be supplemented from time to time by IP Security
          Agreement Supplements executed and delivered by such Grantor to the
          Collateral Agent from time to time), and all income, royalties and
          other payments now or hereafter due and/or payable with respect
          thereto, subject, in each case, to the terms of such license
          agreements, permits, authorizations and franchises, (the "Licenses");
          and

             (vii)  any and all claims for damages for past, present and
          future infringement, misappropriation or breach with respect to the
          Patents, Trademarks, Copyrights, Trade Secrets, Computer Software or
          Licenses, with the right, but not the obligation, to sue for and
          collect, or otherwise recover, such damages; and

          (h)  all proceeds of any and all of the Collateral (including, without
     limitation, proceeds that constitute property of the types described in
     clauses (a) through (g) of this Section 1 and this clause (h)) and, to the
     extent not otherwise included, all (i) payments under insurance (whether or
     not the Collateral Agent is the loss payee thereof), or any indemnity,
     warranty or guaranty, payable by reason of loss or damage to or otherwise
     with respect to any of the foregoing Collateral and (ii) cash.

          Notwithstanding anything herein to the contrary, in no event shall the
Collateral include, and no Grantor shall be deemed to have granted a security
interest in or pledged (i) the assets subject to existing contracts of sale
specified in Schedule V, or (ii) any of such Grantor's rights or interests in
any license, contract, or agreement to which such Grantor is a party or any
Security Collateral (other than stock issued by wholly owned Subsidiaries of the
Borrower) owned by such Grantor or any of its rights or interests thereunder to
the extent, but only to the extent, that such a grant would, under the terms of
such license, contract or agreement or otherwise, result in a breach of the
terms of, or constitute a default under any license, contract, or agreement to
which such Grantor is a party or any Security Collateral (other than stock
issued by wholly owned Subsidiaries of the Borrower) owned by such Grantor
(other than to the extent that any such term would be rendered ineffective
pursuant to Section 9-318(4) of the UCC or any other applicable law (including
the Bankruptcy Code) or principles of equity); provided, that immediately upon
the ineffectiveness, lapse or termination of any such provision, the Collateral
shall include, and such Grantor shall be deemed to have granted a security
interest in, all such rights and interests as if such provision had never been
in effect.


                                       7


          In the event that any asset of a Grantor is excluded from the
Collateral by virtue of clause (ii) of the foregoing paragraph, upon request of
the Collateral Agent such Grantor agrees to use all reasonable efforts to obtain
all requisite consents to enable such Grantor to provide a security interest in
such asset pursuant hereto as promptly as practicable.

          Section 2.  Security for Obligations.  This Agreement secures, in the
                      ------------------------
case of each Grantor, the payment of all Obligations of such Grantor now or
hereafter existing under the Loan Documents and the secured Hedge Agreements,
whether direct or indirect, absolute or contingent, and whether for principal,
reimbursement obligations, interest, fees, premiums, penalties,
indemnifications, contract causes of action, costs, expenses or otherwise (all
such Obligations being the "Secured Obligations"). Without limiting the
generality of the foregoing, this Agreement secures, as to each Grantor, the
payment of all amounts that constitute part of the Secured Obligations and would
be owed by such Grantor to any Secured Party under the Loan Documents but for
the fact that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving a Loan Party.

          Section 3.  Grantors Remain Liable.  Anything herein to the contrary
                      ----------------------
notwithstanding, (a) each Grantor shall remain liable under the contracts and
agreements included in such Grantor's Collateral to the extent set forth therein
to perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Collateral Agent
of any of the rights hereunder shall not release any Grantor from any of its
duties or obligations under the contracts and agreements included in the
Collateral and (c) no Secured Party shall have any obligation or liability under
the contracts and agreements included in the Collateral by reason of this
Agreement or any other Loan Document, nor shall any Secured Party be obligated
to perform any of the obligations or duties of any Grantor thereunder or to take
any action to collect or enforce any claim for payment assigned hereunder.

          Section 4.  Delivery and Control of Security Collateral. All
                      -------------------------------------------
certificates or instruments representing or evidencing Security Collateral shall
be delivered to and held by or on behalf of the Collateral Agent pursuant hereto
and 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 satisfactory to the Collateral Agent. The Collateral Agent shall have
the right, at any time in its discretion and without notice to any Grantor, to
transfer to or to register in the name of the Collateral Agent or any of its
nominees any or all of the Security Collateral, subject only to the revocable
rights specified in Section 14(a).

          (a)  With respect to any Security Collateral in which any Grantor has
any right, title or interest and that constitutes an uncertificated security, at
the request of the Collateral Agent such Grantor will cause the issuer thereof
either (i) to register the Collateral Agent as the registered owner of such
security or (ii) to agree in writing with such Grantor and the Collateral Agent
that such issuer will comply with instructions with respect to such security
originated by the Collateral Agent without further consent of such Grantor, such
agreement to be in form and substance satisfactory to the Collateral Agent.

          Section 5.  Maintaining the L/C Collateral Account.  So long as any
          --------------------------------------------------
Advance or any other Obligation of any Loan Party under any Loan Document shall
remain unpaid, any Letter of Credit shall be outstanding or any Lender shall
have any Commitment under the Credit


                                       8


Agreement the Borrower will maintain the L/C Collateral Account with the
Collateral Agent. It shall be a term and condition of the L/C Collateral
Account, notwithstanding any term or condition to the contrary in any other
agreement relating to the L/C Collateral Account, and except as otherwise
provided by the provisions of Sections 7 and 20, that no amount (including
interest on Cash Equivalents credited thereto) will be paid or released to or
for the account of, or withdrawn by or for the account of, the Borrower or any
other Person from the L/C Collateral Account.

          Section 6. Investing of Amounts in the L/C Collateral Account. The
          --------------------------------------------------------------
Collateral Agent will, subject to the provisions of Sections 7 and 20, (a)
invest amounts received with respect to the L/C Collateral Account in such Cash
Equivalents credited to the L/C Collateral Account as the Borrower may select
and (b) invest interest paid on the Cash Equivalents referred to in clause (a)
above, and reinvest other proceeds of any such Cash Equivalents that may mature
or be sold, in each case in such Cash Equivalents credited to the L/C Collateral
Account as the Borrower may select. Interest and proceeds that are not invested
or reinvested in Cash Equivalents as provided above shall be deposited and held
in a deposit account with the Collateral Agent and under the sole control and
dominion of the Collateral Agent, such deposit account to be deemed to
constitute part of the L/C Collateral Account. In addition, the Collateral Agent
shall have the right to exchange such Cash Equivalents for similar Cash
Equivalents of smaller or larger determinations, or for other Cash Equivalents,
credited to the L/C Collateral Account.

          Section 7.  Release of Amounts. So long as no Default shall have
          ------------------------------
occurred and be continuing and there are no unpaid Obligations under the Loan
Documents, the Collateral Agent will pay and release to the Borrower or at its
order such amount, if any, as is then on deposit in the L/C Collateral Account
to the extent permitted to be released under the terms of the Credit Agreement.

          Section 8.  Representations and Warranties. Each Grantor represents
                      ------------------------------
and warrants as follows:

          (a)  All of the Equipment and Inventory of such Grantor are located at
     the places specified therefor in Schedule II hereto, as such Schedule II
     may be amended from time to time pursuant to Section 10(a). The chief
     executive office of such Grantor is located at the address specified
     therefor in Schedule III hereto, as such Schedule III may be amended from
     time to time pursuant to Section 12(a). Such Grantor's federal tax
     identification number is set forth opposite such Grantor's name in Schedule
     III hereto. All Security Collateral consisting of certificated securities
     and instruments have been delivered to the Collateral Agent. Except as
     disclosed on Schedule VI hereto, none of the Receivables is evidenced by
     any chattel paper.

          (b)  Such Grantor is the legal and beneficial owner of the Collateral
     of such Grantor free and clear of any Lien, claim, option or right of
     others, except for Permitted Liens and the security interest created under
     this Agreement.  No effective financing statement or other instrument
     similar in effect covering all or any part of such Collateral or listing
     such Grantor or any trade name of such Grantor as debtor is on file in any
     recording office, except such as may have been filed in favor of the
     Collateral Agent


                                       9

     relating to the Loan Documents and except for Permitted Liens. Except as
     disclosed on Schedule IV hereto, no Grantor has any trade names.

          (c)  Such Grantor has exclusive possession and control of the
     Equipment and Inventory, except as disclosed on Schedule II hereto.

          (d)  The Pledged Shares have been duly authorized and validly issued
     and are fully paid and non-assessable.  The Pledged Debt pledged by each
     Grantor hereunder (i) has been duly authorized, authenticated or issued,
     and (ii) is the legal, valid and binding obligation of the issuers thereof.

          (e)  The Initial Pledged Shares constitute the percentage of the
     issued and outstanding shares of stock of the issuers thereof indicated on
     Schedule I hereto as of the Closing Date. The Initial Pledged Debt
     constitutes all of the outstanding indebtedness owed to such Grantor by the
     issuers thereof and is outstanding, as of the Closing Date, in the
     principal amount indicated on Schedule I hereto as of the Closing Date.

          (f)  All of the investment property owned by such Grantor as of the
     Closing Date is listed on Schedule I hereto.

          (g)  Upon the making of the filings and other actions necessary to
     perfect the security interest in the Collateral of such Grantor created
     under this Agreement, this Agreement will create in favor of the Collateral
     Agent for the benefit of the Secured Parties a valid perfected first
     priority security interest in the Collateral of such Grantor (subject to
     Permitted Liens to the extent such Liens have priority to the security
     interests created hereunder), securing the payment of the Secured
     Obligations.

          (h)  No authorization or approval or other action by, and no notice to
     or filing with, any governmental authority or regulatory body or any other
     third party is required for (i) the grant by such Grantor of the
     assignment, pledge and security interest granted hereunder or for the
     execution, delivery or performance of this Agreement by such Grantor, (ii)
     the perfection or maintenance of the pledge and security interest created
     hereunder on such of the Collateral located in the United States in which a
     Lien may be perfected by the filing of financing statements, the
     recordation of security agreements with the U.S. Patent and Trademark
     Office or the U.S. Copyright Office or the delivery of Collateral
     (including the first priority nature of such pledge or security interest),
     except for the filing of financing and continuation statements under the
     Uniform Commercial Code, the recordation of the Intellectual Property
     Security Agreements referred to in Section 14(f) with the U.S. Patent and
     Trademark Office and the U.S. Copyright Office (in the case of copyrights,
     limited to copyrights that are recorded in the U.S. Copyright Office) and
     the actions described in Section 4 with respect to Security Collateral, or
     (iii) for the exercise by the Collateral Agent of its voting or other
     rights provided for in this Agreement or the remedies in respect of the
     Collateral pursuant to this Agreement, except as may be required in
     connection with the exercise of the rights of a secured creditor by laws
     affecting such rights generally, or the disposition of any portion of the
     Security Collateral by laws affecting the offering and sale of securities
     generally.


                                       10

          (i)  As to itself and its Intellectual Property Collateral:

               (i) To such Grantor's knowledge, no claim has been asserted that
          the use of such Intellectual Property Collateral does or may infringe
          upon the intellectual property rights of any third party.

              (ii) (A) With respect to Collateral owned by such Grantor, such
          Grantor is the exclusive owner of the entire and unencumbered right,
          title and interest in and to such Intellectual Property Collateral and
          is entitled to use all such Intellectual Property Collateral, subject
          to the license terms of the Licenses and (B) with respect to
          Collateral consisting of licenses of Intellectual Property in favor of
          such Grantor, such Grantor has the valid right to use the Collateral,
          subject to the terms of the applicable License.

             (iii) The Intellectual Property Collateral set forth on Schedule
          IV hereto includes all of the patents, patent applications, trademark
          registrations and applications, copyright registrations and
          applications and Licenses owned by such Grantor.

              (iv) The Intellectual Property Collateral is subsisting, and has
          not been adjudged invalid or unenforceable in whole or part, and to
          the best of such Grantor's knowledge, is valid and enforceable.

               (v) Such Grantor has made or performed all filings, recordings
          and other acts and has paid all required fees and taxes to maintain
          and protect its interest in such items of Intellectual Property
          Collateral in full force and effect in such jurisdictions, in each
          case, as such Grantor deems necessary in its reasonable commercial
          judgment, and to protect and maintain its interest therein.

              (vi) No action, suit, investigation, litigation or proceeding has
          been asserted or is pending against such Grantor or naming such
          Grantor as a party or, to such Grantor's knowledge, threatened against
          such Grantor (i) based upon or challenging or seeking to deny or
          restrict the use by such Grantor of any of the Intellectual Property
          Collateral, or (ii) alleging that any services provided by, processes
          used by, or products manufactured or sold by, such Grantor infringe
          upon or misappropriate any patent, trademark, copyright or any other
          proprietary right of any third party.  To such Grantor's knowledge, no
          Person is engaging in any activity that infringes upon or
          misappropriates the Intellectual Property Collateral or upon the
          rights of such Grantor therein.  Except as set forth on Schedule IV
          hereto, such Grantor has not granted any license, release, covenant
          not to sue, non-assertion assurance, or other right to any Person with
          respect to any part of the Intellectual Property Collateral.  The
          consummation of the Transaction will not result in the termination or
          impairment of any of the Intellectual Property Collateral in a manner
          that would constitute a Material Adverse Effect.


                                       11


             (vii)  With respect to each License: (A) such License will not
          cease to be valid and binding and in full force and effect on terms
          identical to those currently in effect as a result of the rights and
          interest granted herein, nor will the grant of such rights and
          interest constitute a breach or default under such License or
          otherwise give the licensor or licensee a right to terminate such
          License; (B) except as set forth on Schedule VII hereto, such Grantor
          has not received any notice of termination or cancellation under such
          License; (C) except as set forth on Schedule VII hereto, such Grantor
          has not received any notice of a breach or default under such License,
          which breach or default has not been cured; and (D) such Grantor has
          not granted to any other third party any rights, adverse or otherwise,
          under such License.

          Section 9. Further Assurances. Each Grantor agrees that from time to
                     ------------------
time, at the expense of such Grantor, such Grantor will promptly execute and
deliver all further instruments and documents, and take all further action, that
may be necessary or desirable, or that the Collateral Agent may reasonably
request, in order to perfect and protect any pledge, assignment or security
interest granted or purported to be granted by such Grantor hereunder or to
enable the Collateral Agent to exercise and enforce its rights and remedies
hereunder with respect to any Collateral of such Grantor. Without limiting the
generality of the foregoing, each Grantor will promptly with respect to
Collateral of such Grantor: (i) at the request of the Collateral Agent, mark
conspicuously each of its records pertaining to such Collateral with a legend,
in form and substance satisfactory to the Collateral Agent, indicating that
Collateral is subject to the security interest granted hereby; (ii) if any such
Collateral shall be evidenced by a promissory note or other instrument or
chattel paper, deliver and pledge to the Collateral Agent hereunder such note or
instrument or chattel paper duly indorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance satisfactory to
the Collateral Agent; (iii) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or notices, as may
be necessary or desirable, or as the Collateral Agent may reasonably request, in
order to perfect and preserve the security interest granted or purported to be
granted by such Grantor hereunder; (iv) deliver and pledge to the Collateral
Agent for the benefit of the Secured Parties certificates representing Security
Collateral that constitutes certificated securities, accompanied by undated
stock or bond powers executed in blank; and (v) deliver to the Collateral Agent
evidence that all other action that the Collateral Agent may deem reasonably
necessary or desirable in order to perfect and protect the security interest
created by such Grantor under this Agreement has been taken.

          (a)  Each Grantor hereby authorizes the Collateral Agent to file one
or more financing or continuation statements, and amendments thereto, relating
to all or any part of the Collateral of such Grantor without the signature of
such Grantor where permitted by law. A photocopy or other reproduction of this
Agreement or any financing statement covering the Collateral or any part thereof
shall be sufficient as a financing statement where permitted by law.

          (b)  Each Grantor will furnish to the Collateral Agent from time to
time statements and schedules further identifying and describing the Collateral
of such Grantor and such other reports in connection with such Collateral as the
Collateral Agent may reasonably request, all in reasonable detail.


                                       12


          Section 10.  As to Equipment and Inventory. Each Grantor will keep the
Equipment and Inventory of such Grantor (other than Inventory sold in the
ordinary course of business) at the places therefor specified in Section 8(a)
or, except in circumstances governed by Section 5.01(j) of the Credit Agreement,
upon 30 days' prior written notice to the Collateral Agent, at such other places
in a jurisdiction where all action required by Section 9 shall have been taken
with respect to such Equipment and Inventory (and, upon the taking of such
action in such jurisdiction, Schedule II hereto shall be automatically amended
to include such other places). In any case governed by Section 5.01(j) of the
Credit Agreement, such Grantor will comply with the provisions of such section.

          (a)  In all cases subject to its rights to sell or dispose of
obsolete, damaged or worn-out items, or items that are no longer useful, as
provided in Section 5.02(e)(iv) of the Credit Agreement, each Grantor will cause
the Equipment of such Grantor to be maintained and preserved in the good
condition, repair and working order, ordinary wear and tear excepted, and will
forthwith, or in the case of any loss or damage to any of such Equipment as soon
as practicable after the occurrence thereof, make or cause to be made all
repairs, replacements and other improvements in connection therewith that are
necessary or desirable to such end.

          (b)  Each Grantor will pay promptly when due all property and other
taxes, assessments and governmental charges or levies imposed upon, and all
claims (including, without limitation, claims for labor, materials and supplies)
against, the Equipment and Inventory of such Grantor, except to the extent
payment thereof is not required by Section 5.01(b) of the Credit Agreement.

          Section 11. Insurance. Each Grantor will, at its own expense, maintain
                       ---------
insurance with respect to the Equipment and Inventory of such Grantor in such
amounts, against such risks, in such form and with such insurers, as required
under Section 5.01(d) of the Credit Agreement. Each policy of each Grantor for
liability insurance shall provide for all losses to be paid on behalf of the
Collateral Agent and such Grantor as their interests may appear, and each policy
for property damage insurance shall provide for all losses to be paid directly
to the Collateral Agent during the continuance of a Default. Each such policy
shall in addition (i) name such Grantor and the Collateral Agent as insured
parties thereunder (without any representation or warranty by or obligation upon
the Collateral Agent) as their interests may appear, (ii) contain the agreement
by the insurer that any loss thereunder shall be payable to the Collateral Agent
notwithstanding any action, inaction or breach of representation or warranty by
such Grantor, (iii) provide that there shall be no recourse against the
Collateral Agent for payment of premiums or other amounts with respect thereto
and (iv) provide that at least 10 days' prior written notice of cancellation or
of lapse shall be given to the Collateral Agent by the insurer. Each Grantor
will, if so requested by the Collateral Agent, deliver to the Collateral Agent
original or duplicate policies of such insurance and, as often as the Collateral
Agent may reasonably request, a report of a reputable insurance broker with
respect to such insurance. Further, each Grantor will, at the request of the
Collateral Agent, duly execute and deliver instruments of assignment of such
insurance policies to comply with the requirements of Section 9 and cause the
insurers to acknowledge notice of such assignment.

          (a)  Reimbursement under any liability insurance maintained by any
Grantor pursuant to this Section 11 may be paid directly to the Person who shall
have incurred liability


                                       13


covered by such insurance. In case of any loss involving damage to Equipment or
Inventory when subsection (c) of this Section 11 is not applicable, the
applicable Grantor will make or cause to be made the necessary repairs to or
replacements of such Equipment or Inventory, and any proceeds of insurance
properly received by or released to such Grantor shall be used by such Grantor,
except as otherwise required or permitted hereunder or under the Credit
Agreement, to pay, or as reimbursement for, the costs of such repairs or
replacements.

          (b)  So long as no Default shall have occurred and be continuing, all
insurance payments received by the Collateral Agent in connection with any loss,
damage or destruction of any Inventory or Equipment will be released by the
Collateral Agent to the applicable Grantor for the repair, replacement or
restoration thereof, subject to such terms and conditions with respect to the
release thereof as the Collateral Agent may reasonably require. To the extent
that (i) the amount of any such insurance payments exceeds the cost of any such
repair, replacement or restoration, or (ii) such insurance payments are not
otherwise required by the applicable Grantor to complete any such repair,
replacement or restoration required hereunder, the Collateral Agent will release
the amount thereof to such Grantor except during the continuance of any Default
and during which period the Collateral Agent may hold or continue to hold such
amount as additional security for the Secured Obligations of such Grantor.
During the continuance of any Default, all insurance payments in respect of such
Equipment or Inventory shall be paid to the Collateral Agent and shall, in the
Collateral Agent's sole discretion, (i) be released to the applicable Grantor to
be applied as set forth in the first sentence of this subsection (c) or (ii) be
held as additional Collateral hereunder or applied as specified in Section
20(b).

          Section 12.  Place of Perfection; Records; Collection of Receivables.
                       -------------------------------------------------------
Each Grantor will keep its chief executive office at the location therefor
specified in Section 8(a) or, upon 30 days' prior written notice to the
Collateral Agent, at such other location in a jurisdiction where all actions
required by Section 9 shall have been taken with respect to the Collateral of
such Grantor (and, upon the taking of such action in such jurisdiction, Schedule
III hereto shall be automatically amended to include such other location). Each
Grantor will hold and preserve its records relating to the Collateral and will
permit representatives of the Collateral Agent at any time during normal
business hours to inspect and make abstracts from such records and other
documents.

          (a)  Except as otherwise provided in this subsection (b), each Grantor
will continue to collect, at its own expense, all amounts due or to become due
such Grantor under the Receivables and the Related Contracts. In connection with
such collections, such Grantor may take (and during the continuance of an Event
of Default, at the Collateral Agent's direction, will take) such action as such
Grantor or the Collateral Agent may deem necessary or advisable to enforce
collection of the Receivables and the Related Contracts; provided, however, that
the Collateral Agent shall have the right at any time, upon the occurrence and
during the continuance of an Event of Default and upon written notice to such
Grantor of its intention to do so, to notify the Obligors under any Receivables
or Related Contracts of the assignment of such Receivables or Related Contracts
to the Collateral Agent and to direct such Obligors to make payment of all
amounts due or to become due to such Grantor thereunder directly to the
Collateral Agent and, upon such notification and at the expense of such Grantor,
to enforce collection of any such Receivables or Related Contracts, and to
adjust, settle or compromise the amount or payment thereof, in the same manner
and to the same extent as such Grantor might have done. After


                                       14


receipt by any Grantor of the notice from the Collateral Agent referred to in
the proviso to the preceding sentence, (i) all amounts and proceeds (including
instruments) received by such Grantor in respect of the Receivables and the
Related Contracts of such Grantor shall be received in trust for the benefit of
the Collateral Agent hereunder, shall be segregated from other funds of such
Grantor and shall be forthwith paid over to the Collateral Agent in the same
form as so received (with any necessary endorsement) to be deposited in the
Collateral Account and either, as the Collateral Agent may in its sole
discretion determine, (A) released to such Grantor or (B) applied as provided in
Section 20(b) and (ii) such Grantor will not adjust, settle or compromise the
amount or payment of any Receivable, release wholly or partly any Obligor
thereof, or allow any credit or discount thereon. No Grantor will permit or
consent to the subordination of its right to payment under any of the
Receivables or the Related Contracts to any other indebtedness or obligations of
the Obligor thereof.

          Section 13. As to Intellectual Property Collateral. With respect to
                      --------------------------------------
each item of its Intellectual Property Collateral, each Grantor agrees, unless
and until each Grantor, in its reasonable commercial judgment, decides
otherwise, to take, at its expense, all necessary steps, including, without
limitation, in the U.S. Patent and Trademark Office, the U.S. Copyright Office
and any other governmental authority, to (i) maintain the validity and
enforceability of each such item of Intellectual Property Collateral and
maintain each such item of Intellectual Property Collateral in full force and
effect, and (ii) pursue the registration and maintenance of each patent,
trademark, or copyright registration or application, now or hereafter included
in the Intellectual Property Collateral of such Grantor, including, without
limitation, the payment of required fees and taxes, the filing of responses to
office actions issued by the U.S. Patent and Trademark Office, the U.S.
Copyright Office or other governmental authorities, the filing of applications
for renewal or extension, the filing of affidavits under Sections 8 and 15 of
the U.S. Trademark Act, the filing of divisional, continuation, continuation-in-
part, reissue and renewal applications or extensions, the payment of maintenance
fees and the participation in interference, reexamination, opposition,
cancellation, infringement and misappropriation proceedings. No Grantor shall,
without the written consent of the Collateral Agent upon or after an Event of
Default, discontinue use of or otherwise abandon any Intellectual Property
Collateral, or abandon any right to file an application for letters patent,
trademark, or copyright, unless such Grantor shall have previously determined
that such use or the pursuit or maintenance of such Intellectual Property
Collateral is no longer desirable in the conduct of such Grantor's business and
that the loss thereof would not be reasonably likely to have a Material Adverse
Effect. In the case of any material Intellectual Property Collateral, such
Grantor will give prompt notice of any such abandonment to the Collateral Agent.

          (a)  Each Grantor agrees promptly to notify the Collateral Agent if
such Grantor learns (i) that any item of the Intellectual Property Collateral
may have become abandoned, placed in the public domain, invalid or
unenforceable, or of any adverse determination or development regarding such
Grantor's ownership of any of the Intellectual Property Collateral or its right
to register the same or to keep and maintain and enforce the same, or (ii) of
any adverse determination or the institution of any proceeding (including,
without limitation, the institution of any proceeding in the U.S. Patent and
Trademark Office or any court) regarding any item of the Intellectual Property
Collateral, if in any such case, such development would be reasonably likely to
have a Material Adverse Effect.


                                       15


          (b)  In the event that any Grantor becomes aware that any item of the
Intellectual Property Collateral is being infringed or misappropriated by a
third party, such Grantor shall promptly notify the Collateral Agent and shall
take such actions, at its expense, as such Grantor or the Collateral Agent deems
reasonable and appropriate under the circumstances to protect such Intellectual
Property Collateral, including, without limitation, suing for infringement or
misappropriation and for an injunction against such infringement or
misappropriation, if in any such case, such development would be reasonably
likely to have a Material Adverse Effect.

          (c)  Each Grantor shall take all steps which it deems reasonable and
appropriate under the circumstances to preserve and protect each item of its
Intellectual Property Collateral, including, without limitation, maintaining the
quality of any and all products or services used or provided in connection with
any of the Trademarks, consistent with the quality of the products and services
as of the date hereof, and taking all steps necessary to ensure that all
licensed users of any of the Trademarks use such consistent standards of
quality.

          (d)  With respect to its Intellectual Property Collateral, each
Grantor agrees to execute an agreement, in substantially the form set forth in
Exhibit B hereto (an "Intellectual Property Security Agreement"), for recording
the security interest granted hereunder to the Collateral Agent in such
Intellectual Property Collateral with the U.S. Patent and Trademark Office, the
U.S. Copyright Office and any other governmental authorities necessary to
perfect the security interest hereunder in such Intellectual Property
Collateral.

          (e)  Each Grantor agrees that, should it obtain an ownership interest
in any material item of the type set forth in Section 1(g) which is not on the
date hereof a part of the Intellectual Property Collateral (the "After-Acquired
Intellectual Property"), (i) the provisions of Section 1 shall automatically
apply thereto, (ii) any such After-Acquired Intellectual Property and, in the
case of trademarks, the goodwill of the business connected therewith or
symbolized thereby, shall automatically become part of the Intellectual Property
Collateral subject to the terms and conditions of this Agreement with respect
thereto, (iii) such Grantor shall give prompt written notice thereof to the
Collateral Agent in accordance herewith and (iv) such Grantor shall execute and
deliver to the Collateral Agent an IP Security Agreement Supplement covering
such After-Acquired Intellectual Property as "Additional Collateral" thereunder
and as defined therein, and shall record such IP Security Agreement Supplement
with the U.S. Patent and Trademark Office, the U.S. Copyright Office and any
other governmental authorities necessary to perfect the security interest
hereunder in such After-Acquired Intellectual Property.

          Section 14.  Voting Rights; Dividends; Etc.   So long as no Default
                       ------------------------------
shall have occurred and be continuing:

          (i)  Each Grantor shall be entitled to exercise any and all voting and
     other consensual rights pertaining to the Security Collateral of such
     Grantor or any part thereof for any purpose; provided however, that such
     Grantor will not exercise or refrain from exercising any such right if such
     action would have a material adverse effect on the value of the Security
     Collateral or any part thereof.


                                       16

          (ii) Each Grantor shall be entitled to receive and retain any and all
     dividends, interest and other distributions paid in respect of the Security
     Collateral of such Grantor if and to the extent that the payment thereof is
     not otherwise prohibited by the terms of the Loan Documents; provided,
     however, that any and all

               (A) dividends, interest and other distributions paid or payable
          other than in cash in respect of, and instruments and other property
          received, receivable or otherwise distributed in respect of, or in
          exchange for, any Security Collateral,

               (B) dividends and other distributions paid or payable in cash in
          respect of any Security Collateral (other than in respect of any
          Subsidiary of the Borrower as provided in Section 5.02(e)(iii) of the
          Credit Agreement) in connection with a partial or total liquidation or
          dissolution or in connection with a reduction of capital, capital
          surplus or paid-in-surplus and

               (C) cash paid, payable or otherwise distributed in respect of
          principal of, or in redemption of, or in exchange for, any Security
          Collateral (other than in respect of any Subsidiary of the Borrower as
          provided in Section 5.02(e)(iii) of the Credit Agreement)

     shall be, and shall be forthwith delivered to the Collateral Agent to hold
     as, Security Collateral and shall, if received by such Grantor, be received
     in trust for the benefit of the Collateral Agent, be segregated from the
     other property or funds of such Grantor and be forthwith delivered to the
     Collateral Agent as Security Collateral in the same form as so received
     (with any necessary endorsement).

          (iii) The Collateral Agent will execute and deliver (or cause to be
     executed and delivered) to each Grantor all such proxies and other
     instruments as such Grantor may reasonably request for the purpose of
     enabling such Grantor to exercise the voting and other rights that it is
     entitled to exercise pursuant to paragraph (i) above and to receive the
     dividends or interest payments that it is authorized to receive and retain
     pursuant to paragraph (ii) above.

          (b)  Upon the occurrence and during the continuance of a Default:

          (i)  All rights of each Grantor (x) to exercise or refrain from
     exercising the voting and other consensual rights that it would otherwise
     be entitled to exercise pursuant to Section 14(a)(i) shall, upon notice to
     such Grantor by the Collateral Agent, cease and (y) to receive the
     dividends, interest and other distributions that it would otherwise be
     authorized to receive and retain pursuant to Section 14(a)(ii) shall
     automatically cease, and all such rights shall thereupon become vested in
     the Collateral Agent, which shall thereupon have the sole right to exercise
     or refrain from exercising such voting and other consensual rights and to
     receive and hold as Security Collateral such dividends, interest and other
     distributions; and

          (ii) All dividends, interest and other distributions that are received
     by any Grantor contrary to the provisions of paragraph (i) of this Section
     14(b) shall be received in trust for the benefit of the Collateral Agent,
     shall be segregated from other funds of


                                       17

     such Grantor and shall be forthwith paid over to the Collateral Agent as
     Security Collateral in the same form as so received (with any necessary
     endorsement).

          Section 15.  As to the Assigned Agreements.  Each Grantor will at its
                       ------------------------------
     expense:

          (i)   from time to time (A) furnish to the Collateral Agent such
     information and reports regarding the Assigned Agreements and such other
     Collateral of such Grantor as the Collateral Agent may reasonably request
     and (B) upon request of the Collateral Agent make to each other party to
     any Assigned Agreement to which it is a party such demands and requests for
     information and reports or for action as such Grantor is entitled to make
     thereunder.

          (b)   Each Grantor agrees after the occurrence and during the
continuance of an Event of Default, not to:

          (i)   cancel or terminate any Assigned Agreement to which it is a
     party or consent to or accept any cancellation or termination thereof;

          (ii)  amend, amend and restate, supplement or otherwise modify any
     such Assigned Agreement or give any consent, waiver or approval thereunder;

          (iii) waive any default under or breach of any such Assigned
     Agreement; or

          (iv)  take any other action in connection with any such Assigned
     Agreement that would impair the value of the interests or rights of such
     Grantor thereunder or that would impair the interests or rights of any
     Secured Party.

          (c)   Each Grantor hereby consents on its behalf and on behalf of its
Subsidiaries to the assignment and pledge to the Collateral Agent for benefit of
the Secured Parties of each Assigned Agreement to which it is a party by any
other Grantor hereunder.

          Section 16.  Transfers and Other Liens; Additional Share.  Each
                       --------------------------------------------
Grantor agrees that it will not (i) sell, assign or otherwise dispose of, or
grant any option with respect to, any of the Collateral, other than sales,
assignments and other dispositions of Collateral, and options relating to
Collateral, permitted under the terms of the Credit Agreement, or (ii) create or
suffer to exist any Lien upon or with respect to any of the Collateral of such
Grantor except for the pledge, assignment and security interest created under
this Agreement and Liens permitted under the Credit Agreement.

          (a)   Each Grantor agrees that it will (i) cause each issuer of the
Pledged Shares pledged by such Grantor not to issue any stock or other
securities in addition to or in substitution for the Pledged Shares issued by
such issuer, except to such Grantor, and (ii) pledge hereunder, immediately upon
its acquisition (directly or indirectly) thereof, any and all additional shares
of stock or other securities.

          Section 17.  Collateral Agent Appointed Attorney-in-Fact.  Each
                       --------------------------------------------
Grantor hereby irrevocably appoints the Collateral Agent such Grantor's attorney
- -in-fact, with full authority in the place and stead of such Grantor and in the
name of such Grantor or otherwise,


                                       18

from time to time in the Collateral Agent's discretion, to take any action and
to execute any instrument that the Collateral Agent may deem necessary or
advisable to accomplish the purposes of this Agreement, including, without
limitation:

          (a)   to obtain and adjust insurance required to be paid to the
     Collateral Agent pursuant to Section 11,

          (b)   to ask for, demand, collect, sue for, recover, compromise,
     receive and give acquittance and receipts for moneys due and to become due
     under or in respect of any of the Collateral,

          (c)   to receive, indorse and collect any drafts or other instruments,
     documents and chattel paper, in connection with clause (a) or (b) above,
     and

          (d)   to file any claims or take any action or institute any
     proceedings that the Collateral Agent may deem necessary or desirable for
     the collection of any of the Collateral or otherwise to enforce compliance
     with the terms and conditions of any Assigned Agreement or the rights of
     the Collateral Agent with respect to any of the Collateral;

provided however, that the Collateral Agent shall not exercise any rights
referred to above unless an Event of Default has occurred and is continuing.

          Section 18.  Collateral Agent May Perform.  If any Grantor fails to
                       -----------------------------
perform any agreement contained herein, within the time provided or allowed, the
Collateral Agent may, but without any obligation to do so and without notice,
itself perform, or cause performance of, such agreement, and the expense of the
Collateral Agent incurred in connection therewith shall be payable by such
Grantor under Section 21(b).

          Section 19.  The Collateral Agent's Duties.    The powers conferred
                       ------------------------------
on the Collateral Agent hereunder are solely to protect the Secured Parties'
interest in the Collateral and shall not impose any duty upon it to exercise any
such powers. Except for the safe custody of any Collateral in its possession and
the accounting for moneys actually received by it hereunder, the Collateral
Agent shall have no duty as to any Collateral, as to ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Collateral, whether or not any Secured Party has
or is deemed to have knowledge of such matters, or as to the taking of any
necessary steps to preserve rights against any parties or any other rights
pertaining to any Collateral. The Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of any Collateral in
its possession if such Collateral is accorded treatment substantially equal to
that which it accords its own property.

          (a)   Anything contained herein to the contrary notwithstanding, the
Collateral Agent may from time to time, when the Collateral Agent deems it to be
necessary, appoint one or more subagents (each a "Subagent") for the Collateral
Agent hereunder with respect to all or any part of the Collateral.  In the event
that the Collateral Agent so appoints any Subagent with respect to any
Collateral, (i) the assignment and pledge of such Collateral and the security
interest granted in such Collateral by each Grantor hereunder shall be deemed
for purposes of this Security Agreement to have been made to such Subagent, in
addition to the Collateral Agent,


                                       19

for the ratable benefit of the Secured Parties, as security for the Secured
Obligations of such Grantor, (ii) such Subagent shall automatically be vested,
in addition to the Collateral Agent, with all rights, powers, privileges,
interests and remedies of the Collateral Agent hereunder with respect to such
Collateral, and (iii) the term "Collateral Agent," when used herein in relation
to any rights, powers, privileges, interests and remedies of the Collateral
Agent with respect to such Collateral, shall include such Subagent; provided,
however, that no such Subagent shall be authorized to take any action with
respect to any such Collateral unless and except to the extent expressly
authorized in writing by the Collateral Agent.

          Section 20.  Remedies.  If any Event of Default shall have occurred
                       ---------
and be continuing:

          (a)   The Collateral Agent may exercise in respect of the Collateral,
     in addition to other rights and remedies provided for herein or otherwise
     available to it, all the rights and remedies of a secured party upon
     default under the N.Y. Uniform Commercial Code (whether or not the N.Y.
     Uniform Commercial Code applies to the affected Collateral) and also may:
     (i) require each Grantor to, and each Grantor hereby agrees that it will at
     its expense and upon request of the Collateral Agent forthwith, assemble
     all or part of the Collateral as directed by the Collateral Agent and make
     it available to the Collateral Agent at a place and time to be designated
     by the Collateral Agent that is reasonably convenient to both parties; (ii)
     without notice except as specified below, sell the Collateral or any part
     thereof in one or more parcels at public or private sale, at any of the
     Collateral Agent's offices or elsewhere, for cash, on credit or for future
     delivery, and upon such other terms as the Collateral Agent may deem
     commercially reasonable; (iii) occupy any premises owned or leased by any
     of the Grantors where the Collateral or any part thereof is assembled or
     located for a reasonable period in order to effectuate its rights and
     remedies hereunder or under law, without obligation to such Grantor in
     respect of such occupation; and (iv) exercise any and all rights and
     remedies of any of the Grantors under or in connection with the Assigned
     Agreements, the Receivables and the Related Contracts or otherwise in
     respect of the Collateral, including, without limitation, any and all
     rights of such Grantor to demand or otherwise require payment of any amount
     under, or performance of any provision of, the Assigned Agreements, the
     Receivables and the Related Contracts. Each Grantor agrees that, to the
     extent notice of sale shall be required by law, at least ten days' notice
     to such Grantor of the time and place of any public sale or the time after
     which any private sale is to be made shall constitute reasonable
     notification. The Collateral Agent shall not be obligated to make any sale
     of Collateral regardless of notice of sale having been given. The
     Collateral 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.

          (b)   Any cash held by or on behalf of the Collateral Agent and all
     cash proceeds received by or on behalf of the Collateral Agent in respect
     of any sale of, collection from, or other realization upon all or any part
     of the Collateral may, in the discretion of the Collateral Agent, be held
     by the Collateral Agent as collateral for, and/or then or at any time
     thereafter applied (after payment of any amounts payable to the Collateral
     Agent pursuant to Section 21) in whole or in part by the Collateral Agent
     for


                                       20

     the ratable benefit of the Secured Parties against, all or any part of
     the Secured Obligations, in the following manner:

               (i)    first, to the Agents for any amounts owing to the Agents
          pursuant to Section 8.04 of the Credit Agreement or otherwise under
          the Loan Documents, ratably in accordance with such respective amounts
          then owing to the Agents;

               (ii)   second, deposited as Collateral in the L/C Collateral
          Account up to an amount equal to 100% of the aggregate Available
          Amount of all outstanding Letters of Credit, provided that in the
          event that any such Letter of Credit is drawn, the Collateral Agent
          shall pay to the Issuing Bank that issued such Letter of Credit the
          amount held in the L/C Collateral Account in respect of such Letter of
          Credit, provided further that, to the extent that any such Letter of
          Credit shall expire or terminate undrawn and as a result thereof the
          amount of the Collateral in the L/C Collateral Account shall exceed
          the aggregate Available Amount of all then outstanding Letters of
          Credit, such excess amount of such Collateral shall be applied in
          accordance with the order of priority set out in this Section 20(b);

               (iii)  third, to the Issuing Bank and the Swing Line Bank for any
          amounts then owing to them, in their capacities as such, under the
          Loan Documents ratably in accordance with such respective amounts then
          owing to the Issuing Bank and the Swing Line Bank; and

               (iv)   fourth, to the Lender Parties for any amount then owing to
          them under the Loan Documents ratably in accordance with such
          respective amounts then owing to the Lender Parties.

     Any surplus of such cash or cash proceeds held by or on the behalf of the
     Collateral Agent and remaining after payment in full of all the Secured
     Obligations shall be paid over to the applicable Grantor or to whomsoever
     may be lawfully entitled to receive such surplus.

          (c)   All payments received by any Grantor under or in connection with
     any Assigned Agreement or otherwise in respect of the Collateral shall be
     received in trust for the benefit of the Collateral Agent, shall be
     segregated from other funds of such Grantor and shall be forthwith paid
     over to the Collateral Agent in the same form as so received (with any
     necessary endorsement).

          (d)   The Collateral Agent may, without notice to any Grantor except
     as required by law and at any time or from time to time, charge, set-off
     and otherwise apply all or any part of the Secured Obligations against any
     funds held in the L/C Collateral Account or in any other deposit account.

          (e)   In the event of any sale or other disposition of any of the
     Intellectual Property Collateral of any Grantor, the goodwill of the
     business connected with and symbolized by any Trademarks subject to such
     sale or other disposition shall be included therein, and such Grantor shall
     supply to the Collateral Agent or its designee such Grantor's know-how and
     expertise, and documents and things relating to any Intellectual


                                       21

     Property Collateral subject to such sale or other disposition, and such
     Grantor's customer lists and other records and documents relating to such
     Intellectual Property Collateral and to the manufacture, distribution,
     advertising and sale of products and services of such Grantor.

          Section 21.  Indemnity and Expenses.    Each Grantor agrees to
                       -----------------------
indemnify, defend and save and hold harmless each Secured Party and each of
their Affiliates and their respective officers, directors, employees, agents and
advisors (each, an "Indemnified Party") from and against, and shall pay on
demand, any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable fees and expenses of counsel) that
may be incurred by or asserted or awarded against any Indemnified Party, in each
case arising out of or in connection with or resulting from this Agreement
(including, without limitation, enforcement of this Agreement), except to the
extent such claim, damage, loss, liability or expense is found in a final, non-
appealable judgment by a court of competent jurisdiction to have resulted from
such Indemnified Party's gross negligence or willful misconduct.

          (a)   Each Grantor will upon demand pay to the Collateral Agent the
amount of any and all reasonable expenses, including, without limitation, the
reasonable fees and expenses of its counsel and of any experts and agents, that
the Collateral Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or the sale of,
collection from or other realization upon, any of the Collateral of such
Grantor, (iii) the exercise or enforcement of any of the rights of the
Collateral Agent or the other Secured Parties hereunder or (iv) the failure by
such Grantor to perform or observe any of the provisions hereof.

          Section 22.  Amendments; Waivers; Additional Grantors; Etc.  No
                       ----------------------------------------------
amendment or waiver of any provision of this Agreement, and no consent to any
departure by any Grantor herefrom, shall in any event be effective unless the
same shall be in writing and signed by the Collateral Agent, and, in the case of
amendments, the Grantors, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given. No
failure on the part of the Collateral Agent or any other Secured Party to
exercise, and no delay in exercising any right hereunder, shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right.

          (a)   Upon the execution and delivery by any Person of a security
agreement supplement in substantially the form of Exhibit A hereto (each a
"Security Agreement Supplement"), (i) such Person shall be referred to as an
"Additional Grantor" and shall be and become a Grantor hereunder and each
reference in this Agreement and the other Loan Documents to "Grantor" shall also
mean and be a reference to such Additional Grantor, and (ii) the supplemental
Schedules I through VII attached to each Security Agreement Supplement shall be
incorporated into and become a part of and supplement Schedules I through VII,
respectively, hereto, and the Collateral Agent may attach such supplemental
schedules to such Schedules; and each reference to such Schedules shall mean and
be a reference to such Schedules as supplemented pursuant to each Security
Agreement Supplement.


                                       22

          Section 23.  Notices; Etc.   All notices and other communications
                       -------------
provided for hereunder shall be in writing (including telecopier communication)
and mailed, telecopied, or delivered to, in the case of the Borrower or the
Collateral Agent, addressed to it at its address specified in the Credit
Agreement and, in the case of each Grantor other than the Borrower, addressed to
it at the Borrower's address; or, as to any party, at such other address as
shall be designated by such party in a written notice to the other parties. All
such notices and other communications shall, be effective three Business Days
after deposit in the mails, or when telecopied or delivered, respectively,
addressed as aforesaid; except that notices and other communications to the
Collateral Agent shall not be effective until received by the Collateral Agent.
Delivery by telecopier of an executed counterpart of any amendment or waiver of
any provision of this Agreement or of any Security Agreement Supplement or
Schedule hereto shall be effective as delivery of an original executed
counterpart thereof.

          Section 24.  Continuing Security Interest; Assignments under the
                       ---------------------------------------------------
Credit Agreement.  This Agreement shall create a continuing security interest
- -----------------
in the Collateral and shall (a) remain in full force and effect until the latest
of (i) the payment in full in cash of the Secured Obligations (other than
inchoate reimbursement or indemnification Obligations), (ii) the Termination
Date and (iii) the termination or expiration of all Letters of Credit, (b) be
binding upon each Grantor, its successors and assigns and (c) inure, together
with the rights and remedies of the Collateral Agent hereunder, to the benefit
of the Secured Parties and their respective successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), any Lender Party
may assign or otherwise transfer all or any portion of its rights and
obligations under the Credit Agreement (including, without limitation, all or
any portion of its Commitments, the Advances owing to it and the Note or Notes,
if any, held by it) to any other Person, and such other Person shall thereupon
become vested with all the benefits in respect thereof granted to such Lender
Party herein or otherwise, in each case as provided in Section 8.07 of the
Credit Agreement.

          Section 25.  Release; Termination.  Upon any sale, lease, transfer or
                       ---------------------
other disposition of any item of Collateral of any Grantor in accordance with
the terms of the Loan Documents, the Collateral Agent will, at such Grantor's
expense, execute and deliver to such Grantor such documents as such Grantor
shall reasonably request to evidence the release of such item of Collateral from
the security interest granted hereby; provided, however, that (i) in the case of
a transaction effected under Section 5.02(e)(vi) or (vii) of the Credit
Agreement, at the time of such request and such release no Default shall have
occurred and be continuing, (ii) such Grantor shall have delivered to the
Collateral Agent, at least six Business Days prior to the date of the proposed
release, a written request for release describing the item of Collateral and the
terms of the sale, lease, transfer or other disposition in reasonable detail,
including, without limitation, the price thereof and any expenses in connection
therewith, together with a form of release for execution by the Collateral Agent
and a certificate of such Grantor to the effect that the transaction is in
compliance with the Loan Documents and as to such other matters as the
Collateral Agent may request and (iii) the proceeds of any such sale, lease,
transfer or other disposition required to be applied, or any payment to be made
in connection therewith, in accordance with Section 2.06 of the Credit Agreement
shall, to the extent so required, be paid or made to, or in accordance with the
instructions of, the Collateral Agent when and as required under Section 2.06 of
the Credit Agreement.


                                       23

          (a)   Upon the sale of any Equity Interests in any Grantor in
accordance with the provisions of Section 5.02(m)(iii) of the Credit Agreement,
the Collateral Agent will, at such Grantor's expense, execute and deliver to
such Grantor such documents as such Grantor shall reasonably request to evidence
the release of all items of Collateral owned by such Grantor or in which such
Grantor has an interest from the security interest granted hereby; provided,
however, that (i) at the time of such request and such release no Default shall
have occurred and be continuing and (ii) such Grantor shall have delivered to
the Collateral Agent, at least six Business Days prior to the date of the
proposed release, a written request describing the items of Collateral and
together with a form of release for execution by the Collateral Agent and a
certificate of such Grantor to the effect that the transaction is in compliance
with the Loan Documents and as to such other matters as the Collateral Agent may
request.

          (b)   In connection with the granting of a Lien permitted by Section
5.02(a)(iv) of the Credit Agreement in any real estate or equipment owned by a
Grantor, the Collateral Agent shall, at such Grantor's request if required by
the lender or lessor providing Debt to be secured by such Lien, at such
Grantor's expense, either (i) subordinate the security interest granted hereby
in the applicable item or items of Collateral owned by such Grantor to the Debt
to be secured by such Lien on terms reasonably acceptable to the lender or
lessor providing such Debt, or (ii) if such lender or lessor is not willing to
accept a subordination of the security interest granted hereby, execute and
deliver such documents as such Grantor shall reasonably request to evidence the
release of such item or items of Collateral from the security interest granted
hereby; provided, however, that such Grantor shall have delivered to the
Collateral Agent, at least six Business Days prior to the date of the proposed
subordination or release, a written request describing the items of Collateral
and together with a form of subordination or release for execution by the
Collateral Agent and a certificate of such Grantor to the effect that the
transaction is in compliance with the Loan Documents and as to such other
matters as the Collateral Agent may request.

          (c)   Upon the latest of (i) the payment in full in cash of the
Secured Obligations (other than inchoate indemnification and reimbursement
Obligations), (ii) the Termination Date and (iii) the termination or expiration
of all Letters of Credit, the pledge, assignment and security interest granted
hereby shall terminate and all rights to the Collateral shall revert to the
applicable Grantor. Upon any such termination, the Collateral Agent will, at the
applicable Grantor's expense, execute and deliver to such Grantor such documents
as such Grantor shall reasonably request to evidence such termination.

          Section 26.  Security Interest Absolute.  The obligations of each
                       ---------------------------
Grantor under this Agreement are independent of the Secured Obligations or any
other Obligations of any other Loan Party under or in respect of the Loan
Documents, and a separate action or actions may be brought and prosecuted
against each Grantor to enforce this Agreement, irrespective of whether any
action is brought against such Grantor or any other Loan Party or whether such
Grantor or any other Loan Party is joined in any such action or actions. All
rights of the Collateral Agent and the other Secured Parties and the pledge and
security interest hereunder, and all obligations of each Grantor hereunder,
shall be irrevocable, absolute and unconditional irrespective of, and each
Grantor hereby irrevocably waives (to the maximum extent permitted by applicable
law) any defenses it may now have or may hereafter acquire in any way relating
to, any or all of the following:


                                       24

          (a)   any lack of validity or enforceability of any Loan Document or
     any other agreement or instrument relating thereto;

          (b)   any change in the time, manner or place of payment of, or in any
     other term of, all or any of the Secured Obligations or any other
     Obligations of any other Loan Party under or in respect of the Loan
     Documents or any other amendment or waiver of or any consent to any
     departure from any Loan Document, including, without limitation, any
     increase in the Secured Obligations resulting from the extension of
     additional credit to any Loan Party or any of its Subsidiaries or
     otherwise;

          (c)   any taking, exchange, release or non-perfection of any
     Collateral or any other collateral, or any taking, release or amendment or
     waiver of or consent to departure from any guaranty, for all or any of the
     Secured Obligations ;

          (d)   any manner of application of any Collateral or any other
     collateral, or proceeds thereof, to all or any of the Secured Obligations,
     or any manner of sale or other disposition of any Collateral or any other
     collateral for all or any of the Secured Obligations or any other
     Obligations of any other Loan Party under or in respect of the Loan
     Documents or any other assets of any Loan Party or any of its Subsidiaries;

          (e)   any change, restructuring or termination of the corporate
     structure or existence of any Loan Party or any of its Subsidiaries;

          (f)   any failure of any Secured Party to disclose to any Loan Party
     any information relating to the business, condition (financial or
     otherwise), operations, performance, assets, nature of assets, liabilities
     or prospects of any other Loan Party now or hereafter known to such Secured
     Party (each Grantor waiving any duty on the part of the Secured Parties to
     disclose such information);

          (g)   the failure of any other Person to execute this Agreement or any
     other Collateral Document, guaranty or agreement or the release or
     reduction of liability of any Grantor or other grantor or surety with
     respect to the Secured Obligations; or

          (h)   any other circumstance (including, without limitation, any
     statute of limitations) or any existence of or reliance on any
     representation by any Secured Party that might otherwise constitute a
     defense available to, or a discharge of, such Grantor or any other Grantor
     or a third party grantor of a security interest.

This Agreement shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Secured Obligations is rescinded or
must otherwise be returned by any Secured Party or by any other Person upon the
insolvency, bankruptcy or reorganization of any Loan Party or otherwise, all as
though such payment had not been made.

          Section 27.  Execution in Counterparts.  This Agreement may be
                       --------------------------
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement. Delivery of an executed counterpart of a signature page
to this Agreement by telecopier shall be effective as delivery of an original
executed counterpart of this Agreement.


          Section 28.  Governing Law.  This Agreement shall be governed by, and
                       -------------
construed in accordance with, the laws of the State of New York.

          IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.

                                    DAVITA INC.

                                    By _____________________________________
                                       Name:  Marshal Salomon
                                       Title: Vice President


                                      S-1


                                By _____________________________________
                                   Name:  Marshal Salomon
                                   Title: Vice President
                                          on behalf of each of the entities
                                          listed on Appendix A attached hereto

                                      S-2


                                    TOTAL RENAL CARE, INC., on behalf of each of
                                    the entities listed on Appendix B attached
                                    hereto

                                    By _____________________________________
                                       Name:   Marshal Salomon
                                       Title:  Vice President

                                      S-3


                                    TRC WEST, INC.

                                    By _____________________________________
                                       Name:   Marshal Salomon
                                       Title:  Vice President



                                      S-4


                                    TRC OF NEW YORK, INC., on behalf of each of
                                    the entities listed on Appendix C attached
                                    hereto

                                    By _____________________________________
                                       Name:  Marshal Salomon
                                       Title: Vice President



                                      S-5


                                                               Appendix A to the
                                                              Security Agreement

                    Carroll County Dialysis Facility, Inc.
                      Continental Dialysis Centers, Inc.
           Continental Dialysis Center of Springfield-Fairfax, Inc.
                     Dialysis Specialists of Dallas, Inc.
                        East End Dialysis Center, Inc.
                       Elberton Dialysis Facility, Inc.
                       Flamingo Park Kidney Center, Inc.
                     Lincoln Park Dialysis Services, Inc.
                     Mason-Dixon Dialysis Facilities, Inc.
                         Open Access Sonography, Inc.
                        Peninsula Dialysis Center, Inc.
                         Renal Treatment Centers, Inc.
                  Renal Treatment Centers - California, Inc.
                    Renal Treatment Centers - Hawaii, Inc.
                   Renal Treatment Centers - Illinois, Inc.
                  Renal Treatment Centers - Mid-Atlantic,Inc.
                   Renal Treatment Centers - Northeast, Inc.
                   Renal Treatment Centers - Southeast, Inc.
                     Renal Treatment Centers - West, Inc.
                              RTC Holdings, Inc.
                         RTC - Texas Acquisition, Inc.
                                 RTC TN, Inc.
                         Total Acute Kidney Care, Inc.
                            Total Renal Care, Inc.
                      Total Renal Care of Colorado, Inc.
                     Total Renal Care of Puerto Rico, Inc.
                        Total Renal Laboratories, Inc.
                          Total Renal Research, Inc.
                      Total Renal Support Services, Inc.
                             TRC of New York, Inc.
                        Tri-City Dialysis Center, Inc.


                                                               Appendix B to the
                                                              Security Agreement

                      Beverly Hills Dialysis Partnership
  Houston Kidney Center/Total Renal Care Integrated Service Network Limited
                                  Partnership
                         Sunrise Dialysis Partnership
               Total Renal Care/Peralta Renal Center Partnership
                Total Renal Care/Piedmont Dialysis Partnership
                  Total Renal Care Texas Limited Partnership
                       Total Renal Care of Utah, L.L.C.
                              TRC - Indiana, LLC


                                                               Appendix C to the
                                                              Security Agreement

                                  MHS-I, LLC
                                 MHS-III, LLC
                                  MHS-IV, LLC
                                  MHS-V, LLC
                                  MHS-VI, LLC
                                 MHS-VII, LLC
                                 MHS-VIII, LLC
                                  MHS-IX, LLC
                                  MHS-X, LLC
                                  MHS-XI, LLC
                                 MHS-XII, LLC



                                                               Schedule I to the
                                                              Security Agreement

                        PLEDGED SHARES AND PLEDGED DEBT

                                    Part I




===============================================================================================
                                                                                     Percentage
                                                         Stock                          of
                                                       Certificate       Number     Outstanding
  Grantor    Stock Issuer   Class of Stock  Par Value    No(s)         of Shares       Shares
===============================================================================================
                                                                  
- -----------------------------------------------------------------------------------------------

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

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

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

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

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

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


                                    Part II




===============================================================================================
                                                                                     Outstanding
                 Debt       Description of     Debt Certificate       Final         Principal
  Grantor       Issuer           Debt              No (s).           Maturity         Amount
===============================================================================================
                                                                    
- -----------------------------------------------------------------------------------------------

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

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

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

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

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

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




                                                              Schedule II to the

                                                              Security Agreement

                     LOCATIONS OF EQUIPMENT AND INVENTORY

[Name of Grantor]
 ---------------

     Locations of Equipment:


     Locations of Inventory:


[Name of Grantor]
 ---------------

     Locations of Equipment:


     Locations of Inventory:


[Etc.]


                                                             Schedule III to the
                                                              Security Agreement

                            CHIEF EXECUTIVE OFFICE

                     AND FEDERAL TAX IDENTIFICATION NUMBER



                                                          Federal Tax
Grantor                 Chief Executive Office            Identification Number
- -------                 ----------------------            ---------------------


                                                              Schedule IV to the
                                                              Security Agreement


                            PATENTS, TRADEMARKS AND
                     TRADE NAMES, COPYRIGHTS AND LICENSES


                                           Applic.
                                           -------
Grantor  Patents     Country     Patent No.   No.      Filing Date    Issue Date
- -------  -------     -------     ---------    ---      -----------    ----------




          Trademarks
          ----------
           and Trade                             Applic.  Filing    Issue
           ---------                             ------   ------    -----
Grantor     Names    Country     Mark   Reg. No.   No.      Date    Date
- ------      -----    -------     ----   -------    --       ----    ----


                                                  Applic. Filing    Issue
                                                  ------- ------    -----
Grantor   Copyrights Country     Title  Reg. No.   No.      Date    Date
- -------   ---------- -------     -----  --------   ---      ----    ----


Grantor              Licenses        Title         Date            Parties
- -------              --------        -----         ----            -------


                                                               Schedule V to the
                                                              Security Agreement


                 ASSETS SUBJECT TO EXISTING CONTRACTS OF SALE



                                                              Schedule VI to the
                                                              Security Agreement


                  RECEIVABLES EVIDENCED BY CHATTEL PAPER


                                                             Schedule VII to the
                                                             Security Agreement

                            NOTICES OF TERMINATION
                          OR CANCELLATION OF LICENSES


                                                                Exhibit A to the
                                                              Security Agreement

                     FORM OF SECURITY AGREEMENT SUPPLEMENT

                                         [Date of Security Agreement Supplement]

Bank of America, N.A.
 as the Collateral Agent for the
 Secured Parties referred to in the
 Credit Agreement referred to below
   __________________________
   __________________________
   Attn: ____________________

                                  DaVita Inc.
                                  ----------

Ladies and Gentlemen:

          Reference is made to (i) the Credit Agreement dated as of May 3, 2001
(as amended, amended and restated, supplemented or otherwise modified from time
to time, the "Credit Agreement"), among DaVita Inc., a Delaware corporation, as
the Borrower, the Lender Parties party thereto, Bank of America, N.A., as
collateral agent (together with any successor collateral agent appointed
pursuant to Article VII of the Credit Agreement, the "Collateral Agent"), and as
administrative agent for the Lender Parties, and (ii) the Security Agreement
dated May 3, 2001 (as amended, amended and restated, supplemented or otherwise
modified from time to time, the "Security Agreement") made by the Grantors from
time to time party thereto in favor of the Collateral Agent for the Secured
Parties. Terms defined in the Credit Agreement or the Security Agreement and not
otherwise defined herein are used herein as defined in the Credit Agreement or
the Security Agreement.

          Section 1.  Grant of Security. The undersigned hereby pledges to the
                      ----------------
Collateral Agent for the ratable benefit of the Secured Parties, and hereby
grants to the Collateral Agent for the ratable benefit of the Secured Parties, a
security interest in, all of its right, title and interest in and to all of the
Collateral of the undersigned, whether now owned or hereafter acquired by the
undersigned, wherever located and whether now or hereafter existing or arising,
including, without limitation, the property and assets of the undersigned set
forth on the attached supplemental schedules to the Schedules to the Security
Agreement.

          Section 2.  Security for Obligations. The pledge and assignment of,
                      ------------------------
and the grant of a security interest in, the Collateral by the undersigned under
this Security Agreement Supplement and the Security Agreement secures the
payment of all Obligations of the undersigned now or hereafter existing under or
in respect of the Loan Documents, whether direct or indirect, absolute or
contingent, and whether for principal, reimbursement obligations,


interest, premiums, penalties, fees, indemnifications, contract causes of
action, costs, expenses or otherwise. Without limiting the generality of the
foregoing, this Security Agreement Supplement and the Security Agreement secures
the payment of all amounts that constitute part of the Secured Obligations and
that would be owed by the undersigned to any Secured Party under the Loan
Documents but for the fact that such Secured Obligations are unenforceable or
not allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving a Loan Party.

          Section 3.  Supplements to Security Agreement Schedules. The
                      -------------------------------------------
undersigned has attached hereto supplemental Schedules I through VII to
Schedules I through VII, respectively, to the Security Agreement, and the
undersigned hereby certifies, as of the date first above written, that such
supplemental schedules have been prepared by the undersigned in substantially
the form of the equivalent Schedules to the Security Agreement and are complete
and correct in all material respects.

          Section 4.  Representations and Warranties. The undersigned hereby
                      ------------------------------
makes each representation and warranty set forth in Section 8 of the Security
Agreement (as supplemented by the attached supplemental schedules) to the same
extent as each other Grantor.

          Section 5.  Obligations Under the Security Agreement. The undersigned
                      ----------------------------------------
hereby agrees, as of the date first above written, to be bound as a Grantor by
all of the terms and provisions of the Security Agreement to the same extent as
each of the other Grantors. The undersigned further agrees, as of the date first
above written, that each reference in the Security Agreement to an "Additional
Grantor" or a "Grantor" shall also mean and be a reference to the undersigned.

          Section 6.  Governing Law. This Security Agreement Supplement shall be
                      -------------
governed by, and construed in accordance with, the laws of the State of New
York.
                                    Very truly yours,

                                    [NAME OF ADDITIONAL GRANTOR]

                                    By_______________________________
                                      Title:

                                           Address for notices:
                                           _______________________
                                           _______________________
                                           _______________________


                                                                Exhibit B to the
                                                              Security Agreement

               FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT

          This INTELLECTUAL PROPERTY SECURITY AGREEMENT (as amended, amended and
restated, supplemented or otherwise modified from time to time, the "IP Security
Agreement") dated ________, ____, is made by the Persons listed on the signature
pages hereof (collectively, the "Grantors") in favor of Bank of America, N.A.
("Bank of America"), as collateral agent (the "Collateral Agent") for the
Secured Parties (as defined in the Credit Agreement referred to below).

          WHEREAS, DaVita Inc., a Delaware corporation, has entered into a
Credit Agreement dated as of May 3, 2001 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
with Bank of America, as Administrative Agent and as Collateral Agent, and the
Lender Parties party thereto. Terms defined in the Credit Agreement and not
otherwise defined herein are used herein as defined in the Credit Agreement.

          WHEREAS, as a condition precedent to the making of Advances and the
issuance of Letters of Credit by the Lender Parties under the Credit Agreement
and the entry into Secured Hedge Agreements by the Hedge Banks from time to
time, each Grantor has executed and delivered that certain Security Agreement
dated May 3, 2001 made by the Grantors to the Collateral Agent (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"Security Agreement").

          WHEREAS, under the terms of the Security Agreement, Grantors have
granted a security interest in, among other property, certain intellectual
property of the Grantors to the Collateral Agent for the ratable benefit of the
Secured Parties, and have agreed as a condition thereof to execute this IP
Security Agreement covering such intellectual property for recording with the
U.S. Patent and Trademark Office, the United States Copyright Office and other
governmental authorities.

          NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Grantor agrees as follows:

          SECTION 1.  Grant of Security. Each Grantor hereby grants to the
                      -----------------
Collateral Agent for the ratable benefit of the Secured Parties a security
interest in and to all of such Grantor's right, title and interest in and to the
following (the "Collateral"):

               (i)    the United States, international, and foreign patents,
          patent applications and patent licenses set forth in Schedule A hereto
          (as such Schedule A may be supplemented from time to time by
          supplements to the Security Agreement and this IP Security Agreement,
          each such supplement being in substantially the form of Exhibit C to
          the Security Agreement (an "IP Security Agreement Supplement"),
          executed and delivered by such Grantor to the


          Collateral Agent from time to time), together with all reissues,
          divisions, continuations, continuations-in-part, extensions and
          reexaminations thereof, and all rights therein provided by
          international treaties or conventions (the "Patents");

               (ii)  the United States and foreign trademark and service mark
          registrations, applications, and licenses set forth in Schedule B
          hereto (as such Schedule B may be supplemented from time to time by IP
          Security Agreement Supplements executed and delivered by such Grantor
          to the Collateral Agent from time to time) (the "Trademarks");

               (iii) the copyrights, United States and foreign copyright
          registrations and applications and copyright licenses set forth in
          Schedule C hereto (as such Schedule C may be supplemented from time to
          time by IP Security Agreement Supplements executed and delivered by
          such Grantor to the Collateral Agent from time to time) (the
          "Copyrights");

               (iv)  any and all claims for damages for past, present and future
          infringement, misappropriation or breach with respect to the Patents,
          Trademarks and Copyrights, with the right, but not the obligation, to
          sue for and collect, or otherwise recover, such damages; and

               (v)   any and all proceeds of the foregoing.

          SECTION 2. Security for Obligations. The pledge and assignment of, and
                     ------------------------
the grant of a security interest in, the Collateral by each Grantor under this
IP Security Agreement secures the payment of all Obligations of such Grantor now
or hereafter existing under or in respect of the Loan Documents, whether direct
or indirect, absolute or contingent, and whether for principal, reimbursement
obligations, interest, premiums, penalties, fees, indemnifications, contract
causes of action, costs, expenses or otherwise. Without limiting the generality
of the foregoing, this IP Security Agreement secures, as to each Grantor, the
payment of all amounts that constitute part of the Secured Obligations and that
would be owed by such Grantor to any Secured Party under the Loan Documents but
for the fact that such Secured Obligations are unenforceable or not allowable
due to the existence of a bankruptcy, reorganization or similar proceeding
involving a Loan Party.

          SECTION 3.  Recordation. Each Grantor authorizes and requests that the
                      -----------
Register of Copyrights, the Commissioner of Patents and Trademarks and any other
applicable government officer record this IP Security Agreement.


          SECTION 4.  Execution in Counterparts. This Agreement may be executed
                      -------------------------
in any number of counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute one and the same
agreement.

          SECTION 5.  Grants, Rights and Remedies. This IP Security Agreement
                      ---------------------------
has been entered into in conjunction with the provisions of the Security
Agreement. Each Grantor does hereby acknowledge and confirm that the grant of
the security interest hereunder to, and the rights and remedies of, the
Collateral Agent with respect to the Collateral are more fully set forth


in the Security Agreement, the terms and provisions of which are incorporated
herein by reference as if fully set forth herein.

          SECTION 6.  Governing Law. This IP Security Agreement shall be
                      -------------
governed by, and construed in accordance with, the laws of the State of New
York.
          IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.

                                    DAVITA INC.

                                    By_________________________________
                                     Name:
                                     Title:

                                    Address for Notices:
                                    ____________________________________
                                    ____________________________________
                                    ____________________________________


                                    [NAME OF GRANTOR]

                                    By__________________________________
                                     Name:
                                     Title:

                                    Address for Notices:
                                    ____________________________________
                                    ____________________________________
                                    ____________________________________



                                    [NAME OF GRANTOR]

                                    By__________________________________
                                     Name:
                                     Title:

                                    Address for Notices:
                                    ____________________________________
                                    ____________________________________
                                    ____________________________________


                                         [ETC.]

                      [ADD ACKNOWLEDGMENT FORM IF NEEDED]


                                                                Exhibit C to the
                                                              Security Agreement

          FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT SUPPLEMENT

               This INTELLECTUAL PROPERTY SECURITY AGREEMENT SUPPLEMENT (this
"IP Security Agreement Supplement") dated ________, ____, is made by the Person
listed on the signature page hereof (the "Grantor") in favor of Bank of America,
N.A. ("Bank of America"), as collateral agent (the "Collateral Agent") for the
Secured Parties (as defined in the Credit Agreement referred to below).

               WHEREAS, DaVita Inc., a Delaware corporation, has entered into a
Credit Agreement dated as of May 3, 2001 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
with Bank of America, as Administrative Agent, and as Collateral Agent, and the
Lender Parties party thereto. Terms defined in the Credit Agreement and not
otherwise defined herein are used herein as defined in the Credit Agreement.

               WHEREAS, pursuant to the Credit Agreement, the Grantor and
certain other Persons have executed and delivered that certain Security
Agreement dated May 3, 2001 made by the Grantor and such other Persons to the
Collateral Agent (as amended, amended and restated, supplemented or otherwise
modified from time to time, the "Security Agreement"). To create a short form
version of the Security Agreement covering certain intellectual property of the
Grantor and such other Persons for recording with the U.S. Patent and Trademark
Office, the United States Copyright Office and other governmental authorities,
the Grantor and such other Persons have executed and delivered that certain
Intellectual Property Security Agreement made by the Grantor and such other
Persons to the Collateral Agent dated ________, ______ (as amended, amended and
restated, supplemented or otherwise modified from time to time, the "IP Security
Agreement").

               WHEREAS, under the terms of the Security Agreement and the IP
Security Agreement, the Grantor has granted a security interest in the
Additional Collateral (as defined in Section 1 below) of the Grantor to the
Collateral Agent for the ratable benefit of the Secured Parties and has agreed
as a condition thereof to execute this IP Security Agreement Supplement for
recording with the U.S. Patent and Trademark Office, the United States Copyright
Office and other governmental authorities.

               NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Grantor agrees as follows:

               SECTION 1.  Confirmation of Grant of Security. The Grantor hereby
                           ---------------------------------
acknowledges and confirms the grant of a security interest to the Collateral
Agent for the ratable benefit of the Secured Parties under the Security
Agreement and the IP Security Agreement in and to all of the Grantor's right,
title and interest in and to the following (the "Additional Collateral"):


          (i)   The United States, international, and foreign patents, patent
     applications, and patent licenses set forth in Schedule A hereto, together
     with all reissues, divisions, continuations, continuations-in-part,
     extensions and reexaminations thereof, and all rights therein provided by
     international treaties or conventions (the "Patents");

          (ii)  The United States and foreign trademark and service mark
     registrations, applications, and licenses set forth in Schedule B hereto
     (the "Trademarks");

          (iii) The copyrights, United States and foreign copyright
     registrations and applications and copyright licenses set forth in Schedule
     C hereto (the "Copyrights");

          (iv)  any and all claims for damages for past, present and future
     infringement, misappropriation or breach with respect to the Patents,
     Trademarks and Copyrights, with the right, but not the obligation, to sue
     for and collect, or otherwise recover, such damages; and

          (v)   any and all proceeds of the foregoing.

     SECTION 2.  Supplement to Security Agreement and IP Security Agreement.
                 ----------------------------------------------------------
Schedule V to the Security Agreement and Schedules A, B and C to the IP Security
Agreement are each, effective as of the date hereof, hereby supplemented to add
to such Schedules the Additional Collateral.

     SECTION 3.  Recordation.  The Grantor authorizes and requests that the
                 -----------
Register of Copyrights, the Commissioner of Patents and Trademarks and any other
applicable government officer to record this IP Security Agreement Supplement.

     SECTION 4.  Governing Law.  This IP Security Agreement Supplement shall be
                 -------------
governed by, and construed in accordance with, the laws of the State of New
York.


          IN WITNESS WHEREOF, the Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.

                                    [NAME OF GRANTOR]

                                    By__________________________________
                                     Name:
                                      Title:

                                    Address for Notices:
                                    __________________________
                                    __________________________
                                    __________________________




                      [ADD ACKNOWLEDGMENT FORM IF NEEDED]

EX-10.21

                                                                   Exhibit 10.21

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


                             SUBSIDIARY GUARANTEE

                               Dated May 3, 2001

                                    made by

                    EACH OF THE SUBSIDIARIES OF DAVITA INC.
                     LISTED ON THE SIGNATURE PAGES HEREOF,

                                as Guarantors,
                                -------------

                                  in favor of

                       THE LENDER PARTIES REFERRED TO IN
                    THE CREDIT AGREEMENT REFERRED TO HEREIN

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


                                TABLE OF CONTENTS
                                -----------------



                                                                                                               Page
                                                                                                               -----
                                                                                                              
SECTION 1.        Guarantee; Limitation of Liability........................................................      1

SECTION 2.        Guarantee Absolute........................................................................      2

SECTION 3.        Waivers and Acknowledgments...............................................................      3

SECTION 4.        Subrogation...............................................................................      4

SECTION 5.        Payments Free and Clear of Taxes, Etc.....................................................      5

SECTION 6.        Representations and Warranties............................................................      7

SECTION 7.        Confirmation of Certain Provisions of the Loan Documents..................................      8

SECTION 8.        Amendments; Supplements, Etc..............................................................      8

SECTION 9.        Notices, Etc..............................................................................      8

SECTION 10.       No Waiver; Remedies.......................................................................      9

SECTION 11.       Right of Setoff...........................................................................      9

SECTION 12.       Indemnification...........................................................................      9

SECTION 13.       Continuing Guarantee; Assignments under the Credit Agreement..............................     10

SECTION 14.       Release of Guarantors.....................................................................     10

SECTION 15.       Execution in Counterparts.................................................................     10

SECTION 16.       Governing Law; Jurisdiction; Etc..........................................................     10

SECTION 17.       WAIVER OF JURY TRIAL......................................................................      1


                                    EXHIBIT
                                    -------

Exhibit A         -        Form of Guarantee Supplement

                                   APPENDICES
                                   ----------

Appendix A
Appendix B


                              SUBSIDIARY GUARANTEE

          GUARANTEE dated May 3, 2001 made by each of the Persons listed on the
signature pages hereto (together with each of the Additional Guarantors (as
defined in Section 8(b)), the "Guarantors") in favor of the Administrative Agent
and the Lender Parties (as defined in the Credit Agreement referred to below).

                             PRELIMINARY STATEMENTS

          (1)  DaVita Inc., a Delaware corporation (the "Borrower"), has entered
into a Credit Agreement dated as of May 3, 2001 (as further amended,
supplemented or otherwise modified from time to time, the "Credit Agreement")
with the banks, financial institutions and other institutional lenders from time
to time party thereto, Bank of America, N.A. ("BofA"), as the Initial Issuing
Bank and Swing Line Bank thereunder, The Bank of New York ("BONY"), as Issuing
Bank thereunder, Credit Suisse First Boston ("CSFB"), as the Syndication Agent
therefor, Banc of America Securities LLC ("BAS") and CSFB, as the Joint Lead
Arrangers and Joint Book Managers therefor, BONY, Bank of Nova Scotia and
SunTrust Bank, as Documentation Agents therefor, and BofA as the administrative
agent (together with any successor thereto appointed pursuant to Article VII of
the Credit Agreement, the "Administrative Agent") for the Lender Parties
thereunder. Capitalized terms not otherwise defined in this Guarantee shall have
the same meanings as specified therefor in the Credit Agreement. Each of the
Guarantors may receive, directly or indirectly, a portion of the proceeds of the
Advances under the Credit Agreement and will derive substantial direct and
indirect benefit from the transactions contemplated by the Credit Agreement.

          (2)  It is a condition precedent to the making of Advances by the
Lenders under the Credit Agreement and the issuance of Letters of Credit by the
Issuing Bank that each of the Guarantors shall have executed and delivered this
Guarantee.

          NOW, THEREFORE, in consideration of the premises and in order to
induce the Lenders to make Advances and the Issuing Bank to issue Letters of
Credit from time to time under the Credit Agreement, each of the Guarantors
hereby agrees as follows:

          SECTION 1. Guarantee; Limitation of Liability. (a) Each of the
          ---------------------------------------------
Guarantors jointly and severally hereby unconditionally and irrevocably
guarantees the punctual payment when due, whether at scheduled maturity or at a
date fixed for prepayment or by acceleration, demand or otherwise, of all of the
Obligations of the Borrower now or hereafter existing under or in respect of the
Loan Documents (including, without limitation, any extensions, modifications,
substitutions, amendments or renewals of any or all of the foregoing
Obligations), whether direct or indirect, absolute or contingent, and whether
for principal, interest, premium, fees, indemnification payments, contract
causes of action, costs, expenses or otherwise (such Obligations being the
"Guaranteed Obligations"), and agrees to pay any and all expenses (including,
without limitation, reasonable fees and expenses of counsel) incurred by the
Administrative Agent or any of the Lender Parties in enforcing any rights under
this Guarantee. Without limiting the generality of the foregoing, each of the
Guarantors' liability shall extend to all amounts that constitute part of the
Guaranteed Obligations and would be owed by any of the other Loan Parties to the
Administrative Agent or any of the Lender Parties under or in respect of the
Loan Documents but for the fact that they are unenforceable or not allowable due
to the existence of a bankruptcy, reorganization or similar proceeding involving
such other Loan Party.

          (b)  Each of the Guarantors, and by its acceptance of this Guarantee,
the Administrative Agent and each of the Lender Parties, hereby confirm that it
is the intention of all such Persons that this Guarantee and the Obligations of
each of the Guarantors hereunder not constitute a


                                       2



fraudulent transfer or conveyance for purposes of the United States Federal
Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state Requirements of Law covering the
protection of creditors' rights or the relief of debtors to the extent
applicable to this Guarantee and the Obligations of each of the Guarantors
hereunder. To effectuate the foregoing intention, each of the Guarantors, the
Administrative Agent and each of the Lender Parties hereby irrevocably agree
that the Guaranteed Obligations and all of the other liabilities of each of the
Guarantors under this Guarantee shall be limited to the maximum amount as will,
after giving effect to such maximum amount and all of the other contingent and
fixed liabilities of such Guarantor that are relevant under such Requirements of
Law, and after giving effect to any collections from, any rights to receive
contributions from, or any payments made by or on behalf of, any of the other
Guarantors in respect of the Obligations of such other Guarantor under this
Guarantee, result in the Guaranteed Obligations and all of the other liabilities
of each of the Guarantors under this Guarantee not constituting a fraudulent
transfer or conveyance.

          (c)  Each of the Guarantors hereby unconditionally and irrevocably
agrees that, in the event any payment shall be required to be made to the Lender
Parties under this Guarantee or any other guarantee, such Guarantor will
contribute, to the fullest extent permitted by applicable law, such amounts to
each of the other Guarantors and each other guarantor as would maximize the
aggregate amount paid to the Lender Parties under or in respect of the Loan
Documents.

          SECTION 2. Guarantee Absolute. (a) Each of the Guarantors jointly and
          -----------------------------
severally guarantees that all of the Guaranteed Obligations will be paid
strictly in accordance with the terms of the Loan Documents, regardless of any
Requirements of Law now or hereafter in effect in any jurisdiction affecting any
of such terms or the rights of the Administrative Agent or any of the Lender
Parties with respect thereto. The Obligations of each of the Guarantors under
this Guarantee are independent of the Guaranteed Obligations or any other
Obligations of any of the other Loan Parties under or in respect of the Loan
Documents, and a separate action or actions may be brought and prosecuted
against each of the Guarantors to enforce this Guarantee, irrespective of
whether any action is brought against any of the other Loan Parties or whether
any of the other Loan Parties is joined in any such action or actions. The
liability of each of the Guarantors under this Guarantee shall be absolute,
unconditional and irrevocable irrespective of, and each of the Guarantors hereby
irrevocably waives any defenses it may now have or may hereafter acquire in any
way relating to, any and all of the following:

          (i)    any lack of validity or enforceability of any of the Loan
     Documents or any other agreement or instrument relating thereto;

          (ii)   any change in the time, manner or place of payment of, or in
     any other term of, all or any of the Guaranteed Obligations or any other
     Obligations of any of the other Loan Parties under or in respect of the
     Loan Documents, or any other amendment or waiver of or any consent to
     departure from any of the Loan Documents (including, without limitation,
     any increase in the Guaranteed Obligations resulting from the extension of
     additional credit to any of the Loan Parties or any of their respective
     Subsidiaries or otherwise);

          (iii)  any taking, exchange, release or nonperfection of any
     collateral, or any taking, release or amendment or waiver of, or consent to
     departure from, any other guarantee, for all or any of the Guaranteed
     Obligations;

          (iv)   any manner of application of collateral, or proceeds thereof,
     to all or any of the Guaranteed Obligations, or any manner of sale or other
     disposition of any of the property and assets of any of the other Loan
     Parties or any of their respective Subsidiaries for all or any of the
     Guaranteed Obligations or any other Obligations of any of the Loan Parties
     under or in respect of


                                       3

     the Loan Documents;

          (v)    any change, restructuring or termination of the legal structure
     or existence of any of the other Loan Parties or any of their respective
     Subsidiaries;

          (vi)   any failure of any of the Lender Parties to disclose to any of
     the Loan Parties any information relating to the business, condition
     (financial or otherwise), operations, liabilities (actual or contingent),
     properties or prospects of any of the other Loan Parties now or hereafter
     known to such Lender Party;

          (vii)  the failure of any other Person to execute this Guarantee or
     any other guarantee or agreement or the release or reduction of liability
     of any of the other Guarantors or any other guarantor or surety with
     respect to the Guaranteed Obligations; or

          (viii) any other circumstance (including, without limitation, any
     statute of limitations or any existence of or reliance on any
     representation by the Administrative Agent or any of the Lender Parties)
     that might otherwise constitute a defense available to, or a discharge of,
     such Guarantor, any of the other Loan Parties or any other guarantor or
     surety.

This Guarantee shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by the Administrative Agent or any of the Lender
Parties or by any other Person upon the insolvency, bankruptcy or reorganization
of any of the Loan Parties or otherwise, all as though such payment had not been
made, and each of the Guarantors hereby unconditionally and irrevocably agrees
that it will jointly and severally indemnify the Administrative Agent and each
of the Lender Parties, upon demand, for all of the costs and expenses
(including, without limitation, reasonable fees and expenses of counsel)
incurred by the Administrative Agent or such Lender Party in connection with
such rescission or restoration, including any such costs and expenses incurred
in defending against any claim alleging that such payment constituted a
preference, a fraudulent transfer or a similar payment under any bankruptcy,
insolvency or similar Requirements of Law.

          (b)    Each of the Guarantors hereby further agrees that, as between
such Guarantor, on the one hand, and the Administrative Agent and the Lender
Parties, on the other hand, (i) the Guaranteed Obligations of such Guarantor may
be declared to be forthwith due and payable as provided in Section 6.01 of the
Credit Agreement (and shall be deemed to have become automatically due and
payable in the circumstances provided in Section 6.01 of the Credit Agreement)
for all purposes of this Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such declaration in respect of the Obligations of
any of the Loan Parties guaranteed hereunder (or preventing such Guaranteed
Obligations from becoming automatically due and payable) as against any other
Person and (ii) in the event of any declaration of acceleration of such
Guaranteed Obligations (or such Guaranteed Obligations being deemed to have
become automatically due and payable) as provided in Section 6.01 of the Credit
Agreement, such Guaranteed Obligations (whether or not due and payable by any
other Person) shall forthwith become due and payable by such Guarantor for all
purposes of this Guarantee.

          SECTION 3. Waivers and Acknowledgments. (a) Each of the Guarantors
          ---------------------------------------
hereby unconditionally and irrevocably waives promptness, diligence, notice of
acceptance, presentment, demand for performance, notice of nonperformance,
default, protest, dishonor and any other notice with respect to any of the
Guaranteed Obligations and this Guarantee, and any requirement that the
Administrative Agent or any of the Lender Parties protect, secure, perfect or
insure any Lien or any property or assets subject thereto or exhaust any right
or take any action against any of the other Loan Parties or any other Person or
any Collateral.


                                       4

          (b)  Each of the Guarantors hereby waives (i) any defense arising by
reason of any claim or defense based upon an election of remedies by the
Administrative Agent or the Lender Parties which in any manner impairs, reduces,
releases or otherwise adversely affects the subrogation, reimbursement,
exoneration, contribution or indemnification rights of such Guarantor or any
other rights of such Guarantor to proceed against any of the other Loan Parties,
any other guarantor or any other Person or any Collateral and (ii) any defense
based on any right of setoff or counterclaim against or in respect of the
Obligations of such Guarantor under this Guarantee.

          (c)  Each of the Guarantors hereby unconditionally and irrevocably
waives any duty on the part of the Administrative Agent or any of the Lender
Parties to disclose to such Guarantor any matter, fact or thing relating to the
business, condition (financial or otherwise), operations, liabilities (actual or
contingent), properties or prospects of any of the other Loan Parties or any of
their respective Subsidiaries or the property and assets thereof now or
hereafter known by the Administrative Agent or such Lender Party.

          (d)  Each of the Guarantors hereby unconditionally waives any right to
revoke this Guarantee, and acknowledges that this Guarantee is continuing in
nature and applies to all Guaranteed Obligations, whether existing now or in the
future.

          (e)  Each of the Guarantors acknowledges that it will receive
substantial direct and indirect benefits from the financing arrangements
contemplated by the Loan Documents and that the waivers set forth in Section 2
and in this Section 3 are knowingly made in contemplation of such benefits.

          SECTION 4. Subrogation. Each of the Guarantors hereby unconditionally
          ----------------------
and irrevocably agrees not to exercise any rights that it may now have or may
hereafter acquire against any of the other Loan Parties or any other insider
guarantor that arise from the existence, payment, performance or enforcement of
the Obligations of such Guarantor under or in respect of this Guarantee or any
of the other Loan Documents, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution or indemnification and any
right to participate in any claim or remedy of the Administrative Agent or any
of the Lender Parties against such other Loan Party or any other insider
guarantor or any Collateral, whether or not such claim, remedy or right arises
in equity or under contract, statute, common law or any other Requirements of
Law, including, without limitation, the right to take or receive from such other
Loan Party or any other insider guarantor, directly or indirectly, in cash or
other property or by set off or in any other manner, payment or security on
account of such claim, remedy or right, unless and until such time as all of the
Guaranteed Obligations and all of the other amounts payable under this Guarantee
shall have been paid in full in cash, all of the Letters of Credit shall have
expired or been fully drawn, terminated or cancelled and all Commitments shall
have expired or been terminated. If any amount shall be paid to any of the
Guarantors in violation of the immediately preceding sentence at any time prior
to the latest of (a) the payment in full in cash of all of the Guaranteed
Obligations and all of the other amounts payable under this Guarantee (other
than in choate reimbursement or indemnification Obligations), (b) the full
drawing, expiration, termination or cancellation of all of the Letters of Credit
and (c) the Termination Date, such amount shall be received and held in trust
for the benefit of the Administrative Agent and the Lender Parties, shall be
segregated from the other property and funds of such Guarantor and shall be
delivered forthwith to the Administrative Agent in the same form as so received
(with any necessary endorsement or assignment) to be credited and applied to the
Guaranteed Obligations and the other amounts payable under this Guarantee,
whether matured or unmatured, in accordance with the terms of the Loan
Documents, or to be held in escrow (in an account to be established at BofA, in
the name and under the control of the Administrative Agent and on terms,
including the rate of interest payable with respect to the credit balance of
such account from time to time, substantially the same as BofA's standard terms
applicable to escrow accounts maintained with it) for any of the Guaranteed
Obligations or the other amounts payable under this Guarantee thereafter
arising. If (i)


                                       5

any of the Guarantors shall pay to the Administrative Agent all or any part of
the Guaranteed Obligations, (ii) all of the Guaranteed Obligations (other than
inchoate indemnification and reimbursement Obligations) and the of the other
amounts payable under this Guarantee shall have been paid in full in cash, (iii)
all of the Letters of Credit shall have expired or been fully drawn, terminated
or cancelled and (iv) the Termination Date shall have occurred, the
Administrative Agent and Lender Parties will, at such Guarantor's request and
expense, execute and deliver to such Guarantor appropriate documents, without
recourse and without representation or warranty, necessary to evidence the
transfer or subrogation to such Guarantor of an interest in the Guaranteed
Obligations resulting from the payment made by such Guarantor under this
Guarantee.

          SECTION 5. Payments Free and Clear of Taxes, Etc. (a) Any and all
          ------------------------------------------------
payments by any of the Guarantors under or in respect of this Guarantee or any
of the other Loan Documents to which such Guarantor is a party shall be made, in
accordance with Section 2.13 of the Credit Agreement, free and clear of and
without deduction for any and all present or future Taxes. If any of the
Guarantors shall be required by applicable Requirements of Law to deduct any
Taxes from or in respect of any sum payable under or in respect of this
Guarantee or any of the other Loan Documents to which such Guarantor is a party
to any of the Agents or any of the Lender Parties, (i) the sum payable by such
Guarantor shall be increased as may be necessary so that after such Guarantor
and the Administrative Agent have made all required deductions (including
deductions applicable to additional sums payable under this Section 5) such
Agent or such Lender Party, as the case may be, receives an amount equal to the
sum it would have received had no such deductions been made, (ii) such Guarantor
shall make such deductions and (iii) such Guarantor shall pay the full amount
deducted to the relevant taxation authority or other Governmental Authority in
accordance with the applicable Requirements of Law.

          (b)  In addition, each of the Guarantors hereby agrees to pay on a
joint and several basis any present or future Other Taxes.

          (c)  Each of the Guarantors shall jointly and severally indemnify each
of the Agents and each of the Lender Parties for, and hold each of them harmless
against, the full amount of Taxes and Other Taxes, and the full amount of taxes
of any kind imposed by any jurisdiction on amounts payable under this Section 5,
imposed on or paid by such Agent or such Lender Party, as the case may be, and
any liability (including penalties, additions to tax, interest and expenses)
arising therefrom or with respect thereto. The indemnity by each of the
Guarantors provided for in this subsection (c) shall apply and be made whether
or not the Taxes or Other Taxes for which indemnification hereunder is sought
have been correctly or legally asserted; provided, however, that such Agent or
such Lender Party seeking such indemnification shall take all reasonable actions
(consistent with its internal policy and legal and regulatory restrictions)
requested by any of the Guarantors to assist the Guarantors in recovering the
amounts paid thereby pursuant to this subsection (c) from the relevant taxation
authority or other Governmental Authority. Amounts payable by any of the
Guarantors under the indemnity set forth in this subsection (c) shall be paid
within 30 days from the date on which the applicable Agent or Lender Party, as
the case may be, makes written demand therefor.

          (d)  Within 30 days after the date of any payment of Taxes, the
Guarantor making such payment (or on whose behalf such payment was made) shall
furnish to the Administrative Agent, at its address referred to in Section 9,
the original or a certified copy of a receipt evidencing payment thereof, to the
extent such a receipt is issued therefor, or other written proof of payment
thereof that is reasonably satisfactory to the Administrative Agent. In the case
of any payment under or in respect of this Guarantee or any of the other Loan
Documents by or on behalf of any of the Guarantors through an account or branch
outside the United States, or on behalf of such Guarantor by a payor that is not
a United States person, if such Guarantor determines that no Taxes are payable
in respect thereof, such Guarantor shall furnish, or shall cause such payor to
furnish, to the Administrative Agent, at its address referred to in


                                       6

Section 9, an opinion of counsel reasonably acceptable to the Administrative
Agent stating that such payment is exempt from Taxes. For purposes of this
subsection (d) and subsection (e) of this Section 5, the terms "United States"
and "United States person" shall have the meanings specified in Section 7701 of
the Internal Revenue Code.

          (e)  Each of the Lender Parties organized under the laws of a
jurisdiction outside the United States shall, on or prior to the date of its
execution and delivery of the Credit Agreement in the case of each of the
Initial Lenders, the Swing Line Bank and the Initial Issuing Bank, and on the
date of the Assignment and Acceptance pursuant to which it becomes a Lender
Party, and from time to time thereafter as reasonably requested in writing by
any of the Guarantors or the Administrative Agent (but only so long thereafter
as such Lender Party remains lawfully able to do so), provide each of such
Guarantor and the Administrative Agent with two original Internal Revenue
Service forms W-8BEN, W-8ECI or W-8IMY or, in the case of any of the Lender
Parties that is claiming exemption from United States withholding tax under
Section 871(h) or 881(c) of the Internal Revenue Code with respect to payments
of "portfolio interest", form W-8BEN (and, if such Lender Party delivers a form
W-8BEN, a certificate representing that such Lender Party is not (i) a "bank"
for purposes of Section 881(c) of the Internal Revenue Code, (ii) a ten-percent
shareholder (within the meaning of Section 871(h)(3)(B) of the Internal Revenue
Code) of any of the Guarantors or (iii) a controlled foreign corporation related
to any of the Guarantors (within the meaning of Section 864(d)(4) of the
Internal Revenue Code), as appropriate), or any successor or other form
prescribed by the Internal Revenue Service, certifying that such Lender Party is
exempt from or entitled to a reduced rate of United States withholding tax on
payments pursuant to the Credit Agreement or the other Loan Documents or, in the
case of a Lender Party delivering a form W-8BEN, certifying that such Lender
Party is a foreign corporation, partnership, estate or trust. If the forms
referred to above in this subsection (e) that are provided by a Lender Party at
the time such Lender Party first becomes a party to the Credit Agreement
indicate a United States interest withholding tax rate in excess of zero,
withholding tax at such rate shall be considered excluded from Taxes unless and
until such Lender Party provides the appropriate form certifying that a lesser
rate applies, whereupon withholding tax at such lesser rate shall be considered
excluded from Taxes solely for the periods governed by such form. However, if,
at the date of the Assignment and Acceptance pursuant to which a Lender Party
becomes a party to the Credit Agreement, the Lender Party assignor was entitled
to payments under subsection (a) of this Section 5 in respect of United States
withholding tax with respect to interest paid at such date, then, to such extent
(and only to such extent), the term "Taxes" shall include (in addition to
withholding taxes that may be imposed in the future or other amounts otherwise
includable in Taxes) United States withholding tax, if any, applicable with
respect to such Lender Party assignee on such date. None of the Lender Parties
shall be entitled to payment pursuant to subsection (a) or (c) of this Section 5
with respect to any additional Taxes that result solely and directly from a
change in either of the Applicable Lending Offices of such Lender Party (other
than any such additional Taxes that are imposed as a result of a change in the
applicable Requirements of Law, or in the interpretation of application thereof,
occurring after the date of such change), unless such change is made pursuant to
the terms of Section 2.10(e) or 2.13(g) of the Credit Agreement or as a result
of a request therefor by the Borrower or any of the Guarantors.

          (f)  For any period with respect to which any of the Lender Parties
has failed to provide any of the Guarantors, following such Guarantor's request
therefor pursuant to subsection (e) of this Section 5, with the appropriate
form, certificate or other document described in subsection (e) of this Section
5 (other than if such failure is due to a change in the applicable Requirements
of Law, or in the interpretation or application thereof, occurring after the
date on which a form, certificate or other document originally was required to
be provided or if such form otherwise is not required under subsection (e) of
this Section 5), such Lender Party shall not be entitled to indemnification
under subsection (a) or (c) of this Section 5 with respect to Taxes imposed by
the United States by reason of such failure; provided, however, that should any
of the Lender Parties become subject to Taxes because of


                                       7


its failure to deliver a form, certificate or other document required hereunder,
each of the Guarantors shall take such steps as such Lender Party shall
reasonably request to assist such Lender Party in recovering such Taxes.

          SECTION 6. Representations and Warranties. Each of the Guarantors
          -----------------------------------------
hereby represents and warrants as follows:

          (a)  Such Guarantor (i) is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, (ii) is
duly qualified and in good standing as a foreign business enterprise in each
other jurisdiction in which it owns or leases property or in which the conduct
of its business requires it to so qualify or be licensed except where failure to
be so qualified or licensed would not have a Material Adverse Effect, and (iii)
has all requisite power and authority (including, without limitation, all
Governmental Authorizations) to enter into the Loan Documents to which it is a
party and to own or lease and operate its properties and to carry on its
business as now conducted and as proposed to be conducted.

          (b)  The execution, delivery and performance by each Guarantor of each
Loan Document to which it is or is to be a party, and the consummation of the
Transaction, are within such Guarantor's corporate, partnership or limited
liability company powers, have been duly authorized by all necessary action, and
do not (i) contravene such Guarantor's Constitutive Documents, (ii) violate any
Requirements of Law, (iii) conflict with or result in the breach of, or
constitute a default or require any payment to be made under, any material
contract, loan agreement, indenture, mortgage, deed of trust, lease or other
instrument binding on or affecting such Guarantor or any of its properties or
(iv) except for the Liens created under the Loan Documents, result in or require
the creation or imposition of any Lien upon or with respect to any of the
properties of such Guarantor. No Guarantor is in violation of any such
Requirements of Law or in breach of any such contract, loan agreement,
indenture, mortgage, deed of trust, lease or other instrument, the violation or
breach of which would be reasonably likely to have a Material Adverse Effect.

          (c)  No Governmental Authorization, and no other authorization or
approval or other action by, and no notice to or filing with, any Governmental
Authority or any other third party is required for (i) the due execution,
delivery, recordation, filing or performance by any Guarantor of this Guarantee
or any other Loan Document to which it is or is to be a party, or for the
consummation of the Transaction, (ii) the grant by any Guarantor of the Liens
granted by it pursuant to the Collateral Documents, (iii) the perfection or
maintenance of the Liens created under the Collateral Documents (including the
first priority nature thereof) or (iv) the exercise by any Agent or any Lender
Party of its rights under the Loan Documents or the remedies in respect of the
Collateral pursuant to the Collateral Documents, except for the filings and
recordations required to perfect the security interests granted under the
Collateral Documents to which such Grantor is a party.

          (d)  This Guarantee has been duly executed and delivered by each
Guarantor and is the legal, valid and binding obligation of such Guarantor,
enforceable against such Guarantor in accordance with its terms.

          (e)  There are no conditions precedent to the effectiveness of this
Guarantee that have not been satisfied or waived.

          (f)  Such Guarantor has, independently and without reliance upon the
Administrative Agent or any of the Lender Parties and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Guarantee and all of the other Loan Documents to
which it is a party, and such Guarantor has established adequate means of
obtaining


                                       8

from each of the other Loan Parties on a continuing basis information pertaining
to, and is now and on a continuing basis will be completely familiar with, the
business, condition (financial or otherwise), operations, liabilities (actual or
contingent), properties or prospects of each of the other Loan Parties.

          SECTION 7. Confirmation of Certain Provisions of the Loan Documents.
          --------------------------------------------------------------------
Each of the Guarantors hereby confirms to the Administrative Agent and the
Lender Parties that each of the representations and warranties set forth in the
Loan Documents that is made by such Guarantor or on behalf of such Guarantor by
the Borrower is correct in all material respects. Each of the Guarantors hereby
confirms and agrees that, so long as any of the Advances or any of the other
Obligations of any Loan Party under or in respect of any of the Loan Documents
shall remain unpaid, any of the Letters of Credit shall remain outstanding or
any of the Lender Parties shall have any Commitment under the Credit Agreement,
such Guarantor will perform and observe, and cause each of its Subsidiaries to
perform and observe, all of the terms, covenants and agreements set forth in the
Loan Documents on its part to be performed or observed or that the Borrower has
agreed to cause such Guarantor to perform or observe.

          SECTION 8. Amendments; Supplements, Etc. (a) No amendment or waiver of
          ---------------------------------------
any provision of this Guarantee, nor consent to any departure by any of the
Guarantors therefrom, shall in any event be effective unless the same shall be
in writing and signed by the Required Lenders and, in the case of amendments, by
the Guarantors, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided that no
amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent in addition to the Lender Parties required to take such
action, affect the rights or duties of the Administrative Agent under this
Guarantee.

          (b)  Upon the execution and delivery by any Person of a supplement to
this Guarantee (whether pursuant to Section 5.01(j) of the Credit Agreement or
otherwise), in each case in substantially the form of Exhibit A hereto or
otherwise in form and substance reasonably satisfactory to the Lender Parties
(each a "Guarantee Supplement"), such Person shall be referred to as an
"Additional Guarantor" and shall be and become a Guarantor as if such Person had
originally been party hereto in such capacity, and each reference in this
Guarantee to an "Additional Guarantor" or a "Guarantor" shall also mean and be a
reference to such Additional Guarantor and each reference in any of the other
Loan Documents to a "Guarantor" or a "Loan Party" shall also mean and be a
reference to such Additional Guarantor.

          SECTION 9. Notices, Etc. All notices and other communications provided
          ------------------------
for hereunder shall be in writing (including telecopy communication) and mailed,
telecopied or delivered:

          (a)  if to any of the Guarantors, at the address of the Borrower set
forth in Section 8.02 of the Credit Agreement; and

          (b)  if to the Administrative Agent, at its address set forth in
Section 8.02 of the Credit Agreement; or

          (c)  as to any of the Guarantors or the Administrative Agent, at such
other address as shall be designated by such party in a written notice to each
of the other Guarantors and Lender Parties and, as to each of the other parties,
at such other address as shall be designated by such party in a written notice
to each of the Guarantors and the Administrative Agent.

Notwithstanding any of the other provisions of this Guarantee or any of the
other Loan Documents to which any of the Guarantors is a party, any notice to
the Guarantors or to any of them required to be made under this Guarantee that
is delivered to the Borrower in accordance with Section 8.02 of the Credit
Agreement shall constitute effective notice to the Guarantors or to any such
Guarantor. All such notices and communications shall, be effective three
Business Days after deposit in the mail or upon transmission


                                       9


by telecopier or delivery, respectively, addressed as aforesaid. Delivery by
telecopier of an executed counterpart of any amendment or waiver of any
provision of this Guarantee shall be effective as delivery of an originally
executed counterpart thereof.

          SECTION 10. No Waiver; Remedies. No failure on the part of the
          --------------------------------
Administrative Agent or any of the Lender Parties to exercise, and no delay in
exercising, any right, power or privilege hereunder shall operate as a waiver
thereof or consent thereto; nor shall any single or partial exercise of any such
right, power or privilege preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The remedies herein provided
are cumulative and not exclusive of any remedies provided by applicable law.

          SECTION 11. Right of Setoff. Upon (a) the occurrence and during the
          --------------------------
continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 6.01 of the Credit Agreement to
authorize the Administrative Agent to declare the Notes due and payable pursuant
to the provisions of Section 6.01 of the Credit Agreement, each of the Lender
Parties 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 otherwise apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by such Lender Party or such affiliate to or for the credit or the
account of any of the Guarantors against any and all of the Obligations of the
Guarantors now or hereafter existing under this Guarantee, if any, held by such
Lender Party, irrespective of whether such Lender Party shall have made any
demand under this Guarantee and although such obligations may be unmatured. Each
of the Lender Parties hereby agrees to notify the applicable Guarantor promptly
after any such setoff and application shall be made by such Lender Party or any
of its affiliates; provided, however, that the failure to give such notice shall
not affect the validity of such setoff and application. The rights of each of
the Lender Parties and each of their respective affiliates under this Section 11
are in addition to any other rights and remedies (including, without limitation,
any other rights of setoff) that such Lender Party and its affiliates may have.

          SECTION 12. Indemnification. (a) Without limiting any of the other
          ---------------------------
Obligations of the Guarantors or any of the other remedies of the Lender Parties
under this Guarantee, each of the Guarantors hereby agrees to indemnify and hold
harmless the Administrative Agent and each of the Lender Parties from, and hold
each of them harmless against, any and all claims, damages, losses, liabilities
and expenses (including, without limitation, reasonable fees and expenses of
counsel), joint or several, that may be incurred by or asserted or awarded
against the Administrative Agent or such Lender Party in connection with or by
reason of the failure of any of the Guaranteed Obligations to be the legal,
valid and binding obligations of any of the Loan Parties intended to be
obligated therefor, enforceable against such Loan Party in accordance with its
terms.

          (b)  Each of the Guarantors hereby also severally agrees that none of
the Administrative Agent or any of the Lender Parties or any of their respective
affiliates or any of their respective officers, directors, employers, agents,
representatives or advisors (each an "Indemnified Party") shall have any
liability (whether direct or indirect, in contract, tort or otherwise) to any of
the Guarantors or any of their respective Affiliates or their respective
officers, directors, stockholders, partners, members, employees, agents,
representatives or advisors, except to the extent, in the case of any such
Indemnified Party, that such claim is found in a final, nonappealable judgment
by a court of competent jurisdiction to have resulted from such Indemnified
Party's gross negligence or willful misconduct. Each of the Guarantors hereby
severally agrees not to assert any claim against any of the Indemnified Parties
on any theory of liability, for special, indirect, consequential or punitive
damages, arising out of or otherwise relating to the Transaction (or any aspect
thereof), the Facilities, the actual or proposed use of the proceeds of the
Advances or the Letters of Credit, the Loan Documents or any of the other
transactions contemplated thereby.


                                       10


          (c)  Without prejudice to the survival of any other agreement of any
of the Guarantors under this Guarantee or any of the other Loan Documents, the
agreements and obligations of each of the Guarantors contained in Section 1(a)
(with respect to enforcement expenses), the last sentence of Section 2(a),
Section 5 and this Section 12 shall survive the payment in full of the
Guaranteed Obligations and all of the other amounts payable under this
Guarantee.

          SECTION 13.  Continuing Guarantee; Assignments under the Credit
          ---------------------------------------------------------------
Agreement. This Guarantee is a continuing guarantee and shall (a) remain in full
- ---------
force and effect until the latest of (i) the payment in full in cash of all of
the Guaranteed Obligations and all other amounts payable under this Guarantee
(other than inchoate indemnification and reimbursement Obligations), (ii) the
full drawing, expiration, termination or cancellation of all of the Letters of
Credit and (iii) the Termination Date, (b) be binding upon each of the
Guarantors, their respective successors and assigns and (c) inure to the benefit
of, and be enforceable by, the Administrative Agent and the Lender Parties and
their respective successors, transferees and assigns. Without limiting the
generality of clause (c) of the immediately preceding sentence, any of the
Lender Parties may assign or otherwise transfer all or any portion of its rights
and obligations under the Credit Agreement (including, without limitation, all
or any portion of its Commitment or Commitments, the Advances owing to it and
the Note or Notes held by it) to any other Person, and such other Person shall
thereupon become vested with all of the benefits in respect thereof granted to
such Lender Party under this Guarantee or otherwise, in each case as provided in
Section 8.07 of the Credit Agreement. None of the Guarantors shall, subject to
Section 14, have the right to assign its rights hereunder or any interest herein
without the prior written consent of all of the Lender Parties.

           SECTION 14. Release of Guarantors. If any of the Guarantors shall
          ----------------------------------
cease to be a wholly owned Subsidiary of the Borrower in accordance with the
terms of the Credit Agreement and the other Loan Documents (including, without
limitation, in connection with a transaction permitted under Section 5.02(d),
5.02(e) or 5.02(m)(iii) of the Credit Agreement), such Guarantor shall,
automatically and without any further action on the part of any of the other
Loan Parties or the Administrative Agent or any of the Lender Parties, and upon
notice to the Administrative Agent, be fully released and discharged from all
its Obligations under or in respect of the Loan Documents to which such
Guarantor is a party and, upon the request of the Borrower, the Administrative
Agent shall, at the Borrower's sole expense, execute such documents and take
such other action as is reasonably requested by the Borrower to evidence the
release and discharge of such Guarantor from all such Obligations under or in
respect of the Loan Documents.

          SECTION 15.  Execution in Counterparts. This Guarantee may be executed
          --------------------------------------
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Guarantee by
telecopier shall be effective as delivery of an originally executed counterpart
of this Guarantee.

          SECTION 16.  Governing Law; Jurisdiction; Etc. (a) This Guarantee
          ----------------------------------------------
shall be governed by, and construed in accordance with, the laws of the State of
New York.

          (b)  Each of the Guarantors hereby irrevocably and unconditionally
submits, for itself and its property and assets, to the nonexclusive
jurisdiction of any New York state court or any federal court of the United
States of America sitting in New York City, New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Guarantee or any of the other Loan Documents to which it is a party, or for
recognition or enforcement of any judgment in respect thereof, and each of the
Guarantors hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in any such
New York state court or, to the fullest extent permitted by applicable law, in
any such federal court. Each of the Guarantors


                                       11

hereby irrevocably consents to the service of copies of any summons and
complaint and any other process which may be served in any such action or
proceeding by certified mail, return receipt requested, or by delivering a copy
of such process to such party, at its address specified in Section 9, or by any
other method permitted by applicable law. Each of the Guarantors hereby 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 applicable law. Nothing in this Guarantee shall affect any
right that any of the Guarantors, the Administrative Agent or any of the Lender
Parties may otherwise have to bring any action or proceeding relating to this
Guarantee or any of the other Loan Documents in the courts of any jurisdiction.

          (c)  Each of the Guarantors irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, 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 Guarantee or any of the other Loan Documents
to which it is a party in any New York state court or federal court. Each of the
Guarantors 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.

             [the remainder of this page intentionally left blank]


          SECTION 17. WAIVER OF JURY TRIAL. EACH OF THE GUARANTORS BY THEIR
          --------------------------------
EXECUTION HEREOF AND EACH OF THE LENDER PARTIES BY THEIR ACCEPTANCE OF THIS
GUARANTEE IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS GUARANTEE, ANY OF THE OTHER LOAN DOCUMENTS,
THE ADVANCES, THE LETTERS OF CREDIT OR THE ACTIONS OF THE ADMINISTRATIVE AGENT
OR ANY LENDER PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR
ENFORCEMENT THEREOF.

          IN WITNESS WHEREOF, each of the Guarantors has caused this Guarantee
to be duly executed and delivered by its officer thereunto duly authorized, as
of the date first above written.

                                             DAVITA INC.


                                             By  _______________________________
                                                 Name:  Marshal Salomon
                                                 Title: Vice President

                                      S-1


                                             By  _______________________________
                                                 Name:  Marshal Salomon
                                                 Title: Vice President
                                                        on behalf of each of the
                                                        entities listed on
                                                        Appendix A attached
                                                        hereto

                                      S-2


                                             TOTAL RENAL CARE, INC., on behalf
                                             of each of the entities listed on
                                             Appendix B attached hereto


                                             By________________________________
                                                Name:  Marshal Salomon
                                                Title: Vice President

                                      S-3


                                             TRC WEST, INC


                                             By  _______________________________
                                                 Name:  Marshal Salomon
                                                 Title: Vice President

                                      S-4


                                             TRC OF NEW YORK, INC., on behalf of
                                             each of the entities listed on
                                             Appendix C attached hereto


                                             By  _______________________________
                                                 Name:  Marshal Salomon
                                                 Title: Vice President

                                      S-5


                                                                EXHIBIT A TO THE
                                                            SUBSIDIARY GUARANTEE
                                                            --------------------


                         FORM OF GUARANTEE SUPPLEMENT

                                                  [Date of Guarantee Supplement]

Bank of America, N.A.,
(as the Administrative Agent under
the Credit Agreement referred to below)
Independence Center
101 North Tryon Street, 15th Floor
Charlotte, North Carolina 28255
Attention: Corporate Credit Services

 Credit Agreement dated as of May 3, 2001 (as in effect on the date hereof, the
 ------------------------------------------------------------------------------
"Credit Agreement") among DaVita Inc. with the banks, financial institutions and
- --------------------------------------------------------------------------------
 other institutional lenders from time to time party thereto, Bank of America,
 -----------------------------------------------------------------------------
 N.A. ("BofA"), as the Initial Issuing Bank and Swing Line Bank thereunder, The
 ------------------------------------------------------------------------------
   Bank of New York ("BONY"), as Issuing Bank thereunder, Credit Suisse First
   --------------------------------------------------------------------------
Boston Corporation ("CSFB"), as the Syndication Agent therefor, Banc of America
- -------------------------------------------------------------------------------
  Securities LLC and CSFB, as the Joint Lead Arrangers and Joint Book Managers
  ----------------------------------------------------------------------------
     therefor, BONY, Bank of Nova Scotia, SunTrust Bank Nashville, Inc., as
     ----------------------------------------------------------------------
  Documentation Agents therefor, and BofA as the Administrative Agent for the
  ---------------------------------------------------------------------------
                           Lender Parties thereunder
                           -------------------------

Ladies and Gentlemen:

          Reference is made to the above-captioned Credit Agreement and to the
Subsidiary Guarantee referred to therein (such Subsidiary Guarantee, as in
effect on the date hereof and as it may be further amended, supplemented or
otherwise modified hereafter from time to time, the "Guarantee"). Capitalized
terms not otherwise defined in this Guarantee Supplement shall have the same
meanings as specified therefor in the Credit Agreement or the Guarantee.

          SECTION 1. Guarantee; Limitation of Liability. (a) The undersigned
                     ----------------------------------
hereby unconditionally and irrevocably guarantees on a joint and several basis
with the other Guarantors the punctual payment when due, whether at scheduled
maturity or at a date fixed for prepayment or by acceleration, demand or
otherwise, of all of the Obligations of the Borrower now or hereafter existing
under or in respect of the Loan Documents (including, without limitation, any
extensions, modifications, substitutions, amendments or renewals of any or all
of the foregoing Obligations), whether direct or indirect, absolute or
contingent, and whether for principal, interest, premium, fees, indemnification
payments, contract causes of action, costs, expenses or otherwise (such
Obligations being the "Guaranteed Obligations"), and agrees to pay any and all
expenses (including, without limitation, reasonable fees and expenses of
counsel) incurred by the Administrative Agent or any of the Lender Parties in
enforcing any rights under this Guarantee Supplement or the Guarantee, on the
terms and subject to the limitations set forth in the Guarantee, as if it were
an original party thereto. Without limiting the generality of the foregoing, the
undersigned's liability shall extend to all amounts that constitute part of the
Guaranteed Obligations and would be owed by any of the other Loan Parties to the
Administrative Agent or any of the Lender Parties under or in respect of the
Loan Documents but for the fact that they are unenforceable or not allowable due
to the existence of a bankruptcy, reorganization or similar proceeding involving
such other Loan Party.



          (b)  The undersigned, and by their acceptance of this Guarantee
Supplement, the Administrative Agent and each of the Lender Parties, hereby
confirm that it is the intention of all such Persons that this Guarantee
Supplement, the Guarantee and the Obligations of the undersigned hereunder and
thereunder not constitute a fraudulent transfer or conveyance for purposes of
the United States Federal Bankruptcy Code, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar federal or state
Requirements of Law covering the protection of creditors' rights or the relief
of debtors to the extent applicable to this Guarantee Supplement, the Guarantee
and the Obligations of the undersigned hereunder and thereunder. To effectuate
the foregoing intention, the undersigned, the Administrative Agent and each of
the Lender Parties hereby irrevocably agree that the Guaranteed Obligations and
all of the other liabilities of the undersigned under this Guarantee Supplement
and the Guarantee shall be limited to the maximum amount as will, after giving
effect to such maximum amount and all of the other contingent and fixed
liabilities of the undersigned that are relevant under such Requirements of Law,
and after giving effect to any collections from, any rights to receive
contributions from, or any payments made by or on behalf of, any of the other
Guarantors in respect of the Obligations of such other Guarantor under the
Guarantee, result in the Guaranteed Obligations and all of the other liabilities
of the undersigned under this Guarantee Supplement and the Guarantee not
constituting a fraudulent transfer or conveyance.

          (c)  The undersigned hereby unconditionally and irrevocably agrees
that, in the event any payment shall be required to be made to the Lender
Parties under this Guarantee Supplement, the Guarantee or any other guarantee,
the undersigned will contribute, to the fullest extent permitted by applicable
law, such amounts to each of the other Guarantors and each other guarantor so as
to maximize the aggregate amount paid to the Lender Parties under or in respect
of the Loan Documents.

          SECTION 2. Obligations Under the Guarantee. The undersigned hereby
                     -------------------------------
agrees, as of the date first above written, to be bound as a Guarantor by all of
the terms and conditions of the Guarantee to the same extent as each of the
other Guarantors. The undersigned further agrees, as of the date first above
written, that each reference in the Guarantee to an "Additional Guarantor" or a
"Guarantor" shall also mean and be a reference to the undersigned, and each
reference in any other Loan Document to a "Guarantor" or a "Loan Party" shall
also mean and be a reference to the undersigned.

          SECTION 3. Governing Law; Jurisdiction; Etc. (a) This Guarantee
                     --------------------------------
Supplement shall be governed by, and construed in accordance with, the laws of
the State of New York.

          (b)  The undersigned hereby irrevocably and unconditionally submits,
for itself and its property and assets, to the nonexclusive jurisdiction of any
New York state court or any federal court of the United States of America
sitting in New York City, New York, and any appellate court from any thereof, in
any action or proceeding arising out of or relating to this Guarantee
Supplement, the Guarantee or any of the other Loan Documents to which it is a
party, or for recognition or enforcement of any judgment in respect thereof, and
the undersigned hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in any such
New York state court or, to the fullest extent permitted by applicable law, in
any such federal court. The undersigned hereby irrevocably consents to the
service of copies of any summons and complaint and any other process which may
be served in any such action or proceeding by certified mail, return receipt
requested, or by delivering a copy of such process to such party, at its address
set forth below its name on the signature page to this Guarantee Supplement, or
by any other method permitted by applicable law. The undersigned hereby 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 applicable law. Nothing in this Guarantee Supplement or the
Guarantee shall affect any right that any party may otherwise have to bring any
action or proceeding relating to this Guarantee Supplement, the Guarantee or any
of the other Loan Documents in the courts of any jurisdiction.




          (c)  The undersigned irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, 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 Guarantee Supplement or any of the other Loan
Documents to which it is a party in any New York state court or federal court.
The undersigned 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.

          SECTION 4. WAIVER OF JURY TRIAL. THE UNDERSIGNED IRREVOCABLY WAIVES
                     --------------------
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER
BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS
GUARANTEE SUPPLEMENT, THE GUARANTEE, ANY OF THE OTHER LOAN DOCUMENTS, ANY
DOCUMENTS DELIVERED PURSUANT TO THE LOAN DOCUMENTS, THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY OR THE ACTIONS OF ANY OF THE ADMINISTRATIVE AGENT
OR ANY OF THE OTHER LENDER PARTIES IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT THEREOF.

                                         Very truly yours,

                                         [NAME OF ADDITIONAL GUARANTOR]


                                         By _______________________________
                                         Name:
                                         Title:

                                         Address:




                                                               Appendix A to the
                                                            Subsidiary Guarantee


                     Carroll County Dialysis Facility, Inc.
                       Continental Dialysis Centers, Inc.
            Continental Dialysis Center of Springfield-Fairfax, Inc.
                      Dialysis Specialists of Dallas, Inc.
                         East End Dialysis Center, Inc.
                        Elberton Dialysis Facility, Inc.
                        Flamingo Park Kidney Center, Inc.
                      Lincoln Park Dialysis Services, Inc.
                      Mason-Dixon Dialysis Facilities, Inc.
                          Open Access Sonography, Inc.
                         Peninsula Dialysis Center, Inc.
                          Renal Treatment Centers, Inc.
                   Renal Treatment Centers - California, Inc.
                     Renal Treatment Centers - Hawaii, Inc.
                    Renal Treatment Centers - Illinois, Inc.
                   Renal Treatment Centers - Mid-Atlantic,Inc.
                    Renal Treatment Centers - Northeast, Inc.
                    Renal Treatment Centers - Southeast, Inc.
                      Renal Treatment Centers - West, Inc.
                               RTC Holdings, Inc.
                          RTC - Texas Acquisition, Inc.
                                  RTC TN, Inc.
                          Total Acute Kidney Care, Inc.
                             Total Renal Care, Inc.
                       Total Renal Care of Colorado, Inc.
                      Total Renal Care of Puerto Rico, Inc.
                         Total Renal Laboratories, Inc.
                           Total Renal Research, Inc.
                       Total Renal Support Services, Inc.
                              TRC of New York, Inc.
                         Tri-City Dialysis Center, Inc.


                                                               Appendix B to the
                                                            Subsidiary Guarantee


                       Beverly Hills Dialysis Partnership
   Houston Kidney Center/Total Renal Care Integrated Service Network Limited
                                  Partnership
                          Sunrise Dialysis Partnership
                Total Renal Care/Peralta Renal Center Partnership
                 Total Renal Care/Piedmont Dialysis Partnership
                   Total Renal Care Texas Limited Partnership
                        Total Renal Care of Utah, L.L.C.
                               TRC - Indiana, LLC


                                                               APPENDIX C TO THE
                                                            SUBSIDIARY GUARANTEE

                                   MHS-I, LLC
                                  MHS-III, LLC
                                   MHS-IV, LLC
                                   MHS-V, LLC
                                   MHS-VI, LLC
                                  MHS-VII, LLC
                                  MHS-VIII, LLC
                                   MHS-IX, LLC
                                   MHS-X, LLC
                                   MHS-XI, LLC
                                  MHS-XII, LLC

EX-23.1

                                                                    EXHIBIT 23.1

                         Independent Auditors' Consent

The Board of Directors
DaVita Inc.:


We consent to the use of our report included herein and our report incorporated
herein by reference and to the reference to our firm under the heading "Experts"
in the prospectus.


/s/ KPMG LLP

Seattle, Washington
June 6, 2001

EX-23.2

                                                                    Exhibit 23.2

                      CONSENT OF INDEPENDENT ACCOUNTANTS
                      ----------------------------------


We hereby consent to the use in this Registration Statement on Form S-4 of
DaVita Inc. (formerly Total Renal Care Holdings, Inc.) of our report dated March
22, 2000, except for the first paragraph of Note 10 as to which the date is July
14, 2000, relating to the consolidated financial statements, which appear in
such Registration Statement.  We also consent to the incorporation by reference
of our report dated March 22, 2000, except for the first paragraph of Note 10 as
to which the date is July 14, 2000, relating to the Financial Statement
Schedule, which appears in DaVita Inc.'s Annual Report on Form 10-K/A (Amendment
No. 1).  We also consent to the reference to us under the heading "Experts" in
such Registration Statement.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
Seattle, Washington
June 7, 2001

EX-25.1

                                                                    Exhibit 25.1

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

                      SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, DC. 20549

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

                                   FORM T-l

          STATEMENT OF ELIGIBILITY AND QUALIFICATION UNDER THE TRUST
      INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE

            CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A
                     TRUSTEE PURSUANT TO SECTION 305(b)(2)

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

                       U.S. TRUST COMPANY OF TEXAS, N.A.
              (Exact name of trustee as specified in its charter)

                                                             75-2353745
      (State of incorporation                             (I.R.S.employer
      if not a national bank)                          identification  No.)

     2001 Ross Ave, Suite 2700                                 75201
           Dallas, Texas                                    (Zip Code)
       (Address of trustee's
    principal executive offices)

                              Compliance Officer

                       US. Trust Company of Texas, N.A.
                           2001 Ross Ave, Suite 2700
                              Dallas, Texas 75201
                                (214) 754-1200

           (Name, address and telephone number of agent for service)

                                 -------------
                                 DaVita, Inc.

              (Exact name of obliger as specified in its charter)

                 Delaware                               51-0354549
        (State or other jurisdiction of              (I.R.S. Employer
       incorporation or organization)                Identification No.)

     21250 Hawthorn Blvd., Suite 800                       90503
           Torrance, California                         (Zip code)
  (Address of principal executive offices)

                             ---------------------
                   9 1/4% Senior Subordinated Notes due 2011
                      (Title of the indenture securities)


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


                                    GENERAL

1.   General Information.
     -------------------

     Furnish the following information as to the Trustee:

     (a)     Name and address of each examining or supervising authority to
             which it is subject.

                 Federal Reserve Bank of Dallas (11th District), Dallas, Texas
                        (Board of Governors of the Federal Reserve System)
                 Federal Deposit Insurance Corporation, Dallas, Texas
                 The Office of the Comptroller of the Currency, Dallas, Texas

     (b)     Whether it is authorized to exercise corporate trust powers.

                 The Trustee is authorized to exercise corporate trust powers.

2.   Affiliations with Obligor and Underwriters.
     ------------------------------------------

     If the obligor or any underwriter for the obligor is an affiliate of the
     Trustee, describe each such affiliation.

     None.

3.   Voting Securities of the Trustee.
     --------------------------------

     Furnish the following information as to each class of voting securities of
     the Trustee:

                               As of May 23,200l

- --------------------------------------------------------------------------------
                   Co1  A.                                   Co1 B
- --------------------------------------------------------------------------------
               Title of Class                          Amount Outstanding
- --------------------------------------------------------------------------------

 Capital Stock - par value $100 per share                   5,000 shares

4.   Trusteeships under Other Indentures.
     ------------------------------------

     Not Applicable

5.   Interlocking Directorates and Similar Relationships with the
     ---------------------------------------------------------------------
     Obligor or Underwriters.
     -----------------------

     Not Applicable


6.   Voting Securities of the Trustee Owned by the Obligor or its Officials.
     -----------------------------------------------------------------------

     Not Applicable

7.   Voting Securities of the Trustee Owned by Underwriters or their Officials.
     --------------------------------------------------------------------------

     Not Applicable

8.   Securities of the Obligor Owned or Held by the Trustee.
     -------------------------------------------------------

     Not Applicable

9.   Securities of Underwriters Owned or Held by the Trustee.
     --------------------------------------------------------

     Not Applicable

10.  Ownership or Holding by the Trustee of Voting Securities of Certain
     -------------------------------------------------------------------
     Affiliates or Security Holders of the Obligor.
     ----------------------------------------------

     Not Applicable

11.  Ownership or Holdings by the Trustee of any Securities of a Person Owning
     -------------------------------------------------------------------------
     50 Percent of More of the Voting Securities of the Obligor.
     -----------------------------------------------------------

    Not Applicable

12.  Indebtedness of the Obligor to the Trustee.
     -------------------------------------------

     Not Applicable

13.  Defaults by the Obligor.
     ------------------------

     Not Applicable

14.  Affiliations with the Underwriters.
     -----------------------------------

     Not  Applicable

15.  Foreign Trustee.
     ----------------

     Not Applicable

16.  List of Exhibits.
     -----------------

     T-l.1 - A copy of the Articles of Association of U.S. Trust Company of
             Texas, N.A.; incorporated herein by reference to Exhibit T-l. 1
             filed with Form T- 1 Statement, Registration No. 22-21897.


16.  (con't.)

     T-1.2 - A copy of the certificate of authority of the Trustee to commence
             business; incorporated herein by reference to Exhibit T-1.2 filed
             with Form T-l Statement, Registration No. 22-21897.

     T-1.3 - A copy of the authorization of the Trustee to exercise corporate
             trust powers; incorporated herein by reference to Exhibit T-1.3
             filed with Form T-1 Statement, Registration No. 22-21897.

     T-1.4 - A copy of the By-laws of the U.S. Trust Company of Texas, N.A., as
             amended to date; incorporated herein by reference to Exhibit T-1.4
             filed with Form T-1 Statement, Registration No. 22-21897.

     T-1.6 - The consent of the Trustee required by Section 321(b) of the Trust
             Indenture Act of 1939.

     T-1.7 - A copy of the latest report of condition of the Trustee published
             pursuant to law or the requirements of its supervising or examining
             authority.

                                     NOTE

As of May 23, 2001, the Trustee had 5,000 shares of Capital Stock outstanding,
all of which are owned by U.S. T.L.P.O, Corp. As of May 23, 2001, U.S. T.L.P.O.
Corp. had 35 shares of Capital Stock outstanding, all of which are owned by U.S.
Trust Corporation. U.S. Trust Corporation had outstanding l8,597,534 shares of
$1 par value Common Stock as of May 23, 2001

The term "Trustee" in Items 2, 5, 6, 7, 8, 9, 10 and 11 refers to each of U.S
Trust Company of Texas, N.A., U.S. T.L.P.O. Corp. and U.S. Trust Corporation.

In as much as this Form T-1 is filed prior to the ascertainment by the Trustee
of all the facts on which to base responsive answers to Items 2, 5, 6, 7, 9, 10
and 11, the answers to said Items are based upon incomplete information. Items
2, 5, 6, 7, 9, 10 and 11 may, however, be considered correct unless amended by
an amendment to this Form T-1.

In answering any items in this Statement of Eligibility and Qualification which
relates to matters peculiarly within the knowledge of the obligors or their
directors or officers, or an underwriter for the obligors, the Trustee has
relied upon information furnished to it by the obligors and will rely on
information to be furnished by the obligors or such underwriter, and the Trustee
disclaims responsibility for the accuracy or completeness of such information.

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


                                   SIGNATURE

Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee, US
Trust Company of Texas, N.A., a national banking association organized under the
laws of the United States of America, has duly caused this statement of
eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Dallas, and State of Texas on the
23rd day of May, 2001.

                                                U.S. Trust Company
                                                of Texas, N.A., Trustee



                                                By: /s/ Patricia Gallagher
                                                    ----------------------------
                                                    Authorized Officer


                                                                   Exhibit T-1.6


                              CONSENT OF TRUSTEE

Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of
1939 as amended in connection with the proposed issue of NEXTLINK
Communications, Inc., Senior Discount Notes, we hereby consent that reports of
examination by Federal, State, Territorial. or District authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
request therefore.

                                               U.S. Trust Company of Texas, N.A.





                                               By: /s/ Patricia Gallagher
                                                   -----------------------------
                                                   Authorized Officer


                                                             Exhibit T-1.7

                                Board of Governors of the Federal Reserve System

                                OMB Number: 7100-003G

                                Federal Deposit Insurance Corporation

                                OMB Number: 3064-0052

                                Office of the Comptroller of the Currency

                                OMB Number: 1557-0081
                                Expires: March 31, 2002

Federal Financial Institutions Examination Council
- --------------------------------------------------------------------------------
                                                                 -------------
                                Please refer to page i                 1
                                                                 -------------
                                Table of Contents, for
                                the required disclosure
                                of estimated burden.

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

Consolidated Reports of Condition and Income for
A Bank With Domestic Offices Only -- FFIEC 041

Report at the close of business March 31, 2001

This report is required by law: 12 U.S.C. (S)324 (State member banks): 12
U.S.C. (S)1817 (State nonmember banks): and 12 U.S.C. (S)(S)161 (National
banks).
- --------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed by an authorized
officer and the Report of Condition must be attested to by not less than two
directors (trustees) for State nonmember banks and three directors for State
member and National banks.

I, Alfred B. Childs, Managing Director
- ----------------------------------------------
  Name and Title of Officer Authorized to Sign Report
of the named bank do hereby declare that the Reports of Condition and Income
(including the supporting schedules) for this report date have been prepared in
conformance with the instructions issued by the appropriate Federal regulatory
authority and are true to the best of my knowledge and belief

/s/ Alfred B. Childs
- ----------------------------------------------
Signature of Officer Authorized to Sign Report

4/10/01
- ----------------------------------------------
Date of Signature

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

Submission of Reports

Each bank must prepare its Reports of Condition and Income either;

(a)  In electronic form and then file the computer data file directly with the
     banking agencies' collection agent, Electronic Data Systems Corporation
     (EDS), by modem or on computer diskette; or

(b)  In hard-copy (paper) form and arrange for another party to convert the
     paper report to electronic form. That party

- --------------------------------------------------------------------------------
FDIC Certificate Number                                              33217
                                                                     -----
                                                                  (RCRI 9050)

- ----------------------------------------------
Primary Internet Web Address of Bank
(Home Page), if any (TEXT4087)
(Example: www.oxamplebank.com)


       20010331
   ---------------
     (RCRI 9999)

This report form is to be filed by banks with domestic offices only.  Banks with
foreign offices (as defined in the Instructions) must file FFIEC 031.

- --------------------------------------------------------------------------------
The Reports of Conditions and Income are to be prepared in accordance with
Federal regulatory authority Instructions.

We, the undersigned directors (trustees), attest to the correctness of the
Reports of Condition (including the supporting schedules) for this report date
and declare that it has been examined by us and to the best of our knowledge and
belief has been prepared in conformance with the Instructions Issued by the
appropriate Federal regulatory authority and is true and correct.

/s/ [ILLEGIBLE]
- -------------------------------------------------
Director (Trustee)

/s/ [ILLEGIBLE]
- -------------------------------------------------
Director (Trustee)

/s/ [ILLEGIBLE]
- -------------------------------------------------
Director (Trustee)

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

     (if other EDS) must transmit the bank's computer data file to EDS.

For electronic filing assistance, contact EDS Call Report Services, 2150 N.
Prospect Ave., Milwaukee, WI 53202, telephone (800) 255-1571.

To fulfil the signature and attestation requirement for the Reports of Condition
and Income for this report data, attach this signature page (or a photocopy or a
computer-generated version of this page) to the hard-copy record of the
completed report that the bank places in its files.

- --------------------------------------------------------------------------------
U.S. Trust Co. of Texas, N.A.
- -------------------------------------------------
Legal Title of Bank (TEXT 9010)

Dallas
- -------------------------------------------------
City (TEXT 9130)

TX                           75201
- -------------------------------------------------
State Abbrev, (TEXT 9200)    Zip Code (TEXT 9220)

 Board of Governors of the Federal Reserve System, Federal Deposit Insurance
            Corporation, Office of the Comptroller of the Currency


U.S. Trust Co. of Texas, N.A.                                          FFIEC 041
- ---------------------------------------------
Legal Title of Bank                                                    RC-1

Dallas                                                                 ---------
- ---------------------------------------------                              10
City                                                                   ---------

TX                              75201
- ---------------------------------------------
State                           Zip Code


FDIC Certificate Number - 33217

Consolidated Report of Condition for Insured Commercial and State-Chartered
Savings Banks for March 31, 2001

All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.

Schedule RC-Balance Sheet



                                                                                                      -----------------------
                                                                           Dollar Amount in Thousands RCON   Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------------
ASSETS
                                                                                                              
1. Cash and balances due from depository institutions (from Schedule RC-A).
                                                                                                      -----------------------
   a. Noninterest-bearing balances and currency and coin (1)                                          0051            2,351  1.a
                                                           ------------------------------------------------------------------
   b. Interest-bearing balances (2)                                                                   0071            3,849  1.b
                                  -------------------------------------------------------------------------------------------
2. Securities:
                                                                                                      -----------------------
   a. Held-to-maturity securities (from Schedule RC-B, column A)                                      1784                0  2.a
                                                               --------------------------------------------------------------
   b. Available-for-sale securities (from Schedule RC-B, column D)                                    1773          135,946  2.b
                                                                 ------------------------------------------------------------
3. Federal funds sold and securities purchased under agreements to resell                             1350           13,000  3
                                                                        -----------------------------------------------------
4. Loans and lease financing receivables (from Schedule RC-C):
                                                                                                      -----------------------
   a. Loans and leases held for sale                                                                  5369                0  4.a
                                   ------------------------------------------------------------------------------------------
   b. Loans and leases, net of unearned Income                             B528         37,367                               4.b
                                             ---------------------------------------------------------
   c. LESS: Allowance for loan and leases                                  3123            260                               4.c
                                        -------------------------------------------------------------------------------------
   d. Loans and leases, net of unearned income and allowances (Item 4.b minus 4.c)                     B529           37,107 4.d
                                                                                ---------------------------------------------
5. Trading assets (from Schedule RC-D)                                                                3545              N/A  5
                                     ----------------------------------------------------------------------------------------
6. Premises and fixed assets (including capitalized leases)                                           2145              804  6
                                                          -------------------------------------------------------------------
7. Other real estate owned (from Schedule RC-M)                                                       2150                0  7
                                              -------------------------------------------------------------------------------
8. Investments in unconsolidated subsidiaries and associated companies (from
   Schedule RC-M)                                                                                     2150                0  8
                -------------------------------------------------------------------------------------------------------------
9. Customers' liability to this bank on acceptances outstanding                                       2155                0  9
                                                             ----------------------------------------------------------------
10.Intangible assets
                                                                                                      -----------------------
   a. Goodwill                                                                                        3163                0  10.a
             ----------------------------------------------------------------------------------------------------------------
   b. Other intangible assets (from schedule RC-M)                                                    0426            2,609  10.b
                                                 ----------------------------------------------------------------------------
11.Other assets (from Schedule RC-F)                                                                  2160            4,432  11
                                   ------------------------------------------------------------------------------------------
12.Total assets (sum of items 1 through 11)                                                           2175          200,098  12
                                          -----------------------------------------------------------------------------------

__________
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificate of deposit not held for trading.


U.S. Trust Co. of Texas, N.A.                                          FFIEC 041
- -------------------------------------
Legal Title of Bank                                                    RC-2

                                                                        --------
FDIC Certificate Number - 33217                                            11
                                                                        --------

Schedule RC - Continued



                                                                                                         --------------------
                                                                             Dollars Amounts in Thousands RCON  Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------------
LIABILITIES
13.  Deposits:
                                                                                                           
                                                                            -------------------------------------------------
     a. In domestic offices (sum totals of columns A and C from Schedule RC-E)                            2200       170,836 13.a
                                                                            -------------------------------------------------
        (1) Noninterest-bearing (1)                                                  8631       17,836                       13.a.1
                                   ----------------------------------------------------------------------
        (2) Interest-bearing                                                         8538      153,000                       13.a.2
                            -----------------------------------------------------------------------------
     b. Not applicable

                                                                                                          ------------------
14.  Federal funds purchased and securities sold under agreements to repurchase                           2800             0 14
                                                                             -----------------------------------------------
15.  Trading liabilities (from Schedule RC-D)                                                             3548             0 15
                                            --------------------------------------------------------------------------------
16.  Other borrowed money (includes mortgage indebtedness and obligations under
                                                                                                          ------------------
     capitalized leases) (from schedule RC-M):                                                            3190         2,000 16
                                             -------------------------------------------------------------------------------
17.  Not applicable
                                                                                                          ------------------
18.  Bank's liability on acceptances executed and outstanding                                             2920             0 18
                                                             ---------------------------------------------------------------
19.  Subordinated notes and debentures (2)                                                                3200             0 19
                                          ----------------------------------------------------------------------------------
20.  Other liabilities (from Schedule RC-G)                                                               2930         3,704 20
                                          ----------------------------------------------------------------------------------
21.  Total liabilities (sum of items 13 through 20)                                                       2948       176,540 21
                                                  --------------------------------------------------------------------------
22.  Minority interests in consolidated subsidiaries                                                      3000             0 22
                                                   -------------------------------------------------------------------------
EQUITY CAPITAL
                                                                                                          ------------------
23.  Perpetual preferred stock and related surplus                                                        3838         2,000 23
                                                   -------------------------------------------------------------------------
24.  Common stock                                                                                         3250           500 24
                ------------------------------------------------------------------------------------------------------------
25.  Surplus (excludes all surplus related to preferred stock)                                            3830        14,051 25
                                                             ---------------------------------------------------------------
26.  a. Retained earnings                                                                                 3632         6,193 26.a
                        ----------------------------------------------------------------------------------------------------
     b. Accumulated other comprehensive income (3)                                                        R530           814 26.b
                                                 ---------------------------------------------------------------------------
27.  Other equity capital components (4)                                                                  A130             0 27
                                       -------------------------------------------------------------------------------------
28.  Total equity capital (sum of items 23 through 27)                                                    3210        23,658 28
                                                     -----------------------------------------------------------------------
29.  Total liabilites, minority interests, and equity capital (sum of items 21, 22, and 28)               3300       200,095 29
                                                                                          ----------------------------------
Memorandum
To be reported with the March Report of Condition.
1.   Indicate in the box at the right the number of the statement below that
                                                                                                          ------------------
     best describes the most comprehensive level of auditing work performed for                           RCON      Number
                                                                                                          ------------------
     the bank by Independant external auditors as of any date during 2000                                 6724             1 M. 1
                                                                        ----------------------------------------------------


1 = Independant audit of the bank conducted in accordance with generally
    accepted auditing standards by a certified public accounting firm which
    submits a report on the bank
2 = Independant audit of the bank's parent holding company conducted in
    accordance with generally accepted auditing standards by a certified public
    accounting firm which submits a report on the consolidated holding company
    (but not on the bank separately)
3 = Attestation on bank management's asseration on the effectiveness of the
    bank's internal control over financial reporting by a certified public
    accounting firm.
4 = Directors' examination of the bank conducted in accordance with generally
    accepted auditing standards by a certified public accounting firm (may be
    required by state chartering authority)
5 = Directors' examination of the bank performed by other external auditors
    (may be required by state chartering authority)
6 = Review of bank's financial statements by external auditors
7 = compilation of the bank's financial statements by external auditors
8 = Other audit procedures (excluding tax preparation work)
9 = No external audit work

_____
(1)  Includes total demand deposits and non interest-bearing time and savings
     deposits.
(2)  Includes limited-life preferred stock and related surplus.
(3)  Includes not unrealized holding gains (losses) on avaidable-for-sale
     securities, accumulated net gains (losses) on cash flow hedges, and minimum
     pension liability adjustments.
(4)  Includes treasury stock and unearned Employee Stock Ownership Plan shares.

EX-99.1

                                                                    EXHIBIT 99.1

                             LETTER OF TRANSMITTAL


 THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON       ,
                2001, UNLESS EXTENDED (THE "EXPIRATION DATE").


                                  DAVITA, INC.

                             LETTER OF TRANSMITTAL

                   9 1/4% Senior Subordinated Notes due 2011

   To: U.S. Trust Company of Texas, National Association, The Exchange Agent



                     By Mail:                                    By Overnight Courier:
                                                
U.S. Trust Company of Texas, National Association  U.S. Trust Company of Texas, National Association
           2001 Ross Avenue, Suite 2700                       2001 Ross Avenue, Suite 2700
               Dallas, Texas 75201                                Dallas, Texas 75201
    (registered or certified mail recommended)         Attention: Corporate Trust Administration

                     By Hand:                                        By Facsimile:
U.S. Trust Company of Texas, National Association                    (214) 754-1301
           2001 Ross Avenue, Suite 2700                     (For Eligible Institutions Only)
               Dallas, Texas 75201                        Confirm by telephone: (800) 829-5653
    Attention: Corporate Trust Administration


    Delivery of this instrument to an address other than as set forth above or
transmission of instructions via a facsimile transmission to a number other
than as set forth above will not constitute a valid delivery. The instructions
accompanying this Letter of Transmittal should be read carefully before this
Letter of Transmittal is completed.

    The undersigned acknowledges that he or she has received the Prospectus
dated           , 2001 (the "Prospectus") of DaVita Inc. (the "Company") and
this Letter of Transmittal (the "Letter of Transmittal"), which
together constitute the Company's offer (the "Exchange Offer") to exchange
$1,000 principal amount of its 9 1/4% Series B Senior Subordinated Notes due
2011 (the "Series B Notes") which have been registered under the Securities Act
of 1933, as amended (the "Securities Act"), pursuant to a Registration
Statement of which the Prospectus is a part, for each $1,000 principal amount
of its outstanding 9 1/4% Series A Senior Subordinated Notes due 2011 (the
"Series A Notes"), of which $225,000,000 principal amount is outstanding. Other
capitalized terms used but not defined herein have the meaning given to them in
the Prospectus.

    The Letter of Transmittal is to be used by Holders of Series A Notes (i) if
certificates representing the Series A Notes are to be physically delivered
herewith; (ii) if tender of Series A Notes is to be made by book-entry transfer
to the Exchange Agent's account at The Depository Trust Company ("DTC"),
pursuant to the procedures set forth in the Prospectus under "Exchange Offer--
Procedures for tendering" by any financial institution that is a participant in
DTC and whose name appears on a security position listing as the owner of
Series A Notes; or (iii) if tender of Series A Notes is to be made according to
the guaranteed delivery procedures set forth in the Prospectus under "Exchange
Offer--Guaranteed delivery procedures." Delivery of documents to DTC does not
constitute delivery to the Exchange Agent.

    The term "Holder" with respect to the Exchange Offer means any person (i)
in whose name Series A Notes are registered on the books of the Company or any
other person who has obtained a properly completed bond power from the
registered holder; or (ii) whose Series A Notes are held of record by DTC who
desires to deliver such Series A Notes by book-entry transfer at DTC. The
undersigned has completed, executed and delivered this Letter of Transmittal to
indicate the action the undersigned desires to take with respect to the
Exchange Offer. Holders who wish to tender their Series A Notes must complete
this Letter of Transmittal in its entirety.

                                       1


                 PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
                    CAREFULLY BEFORE CHECKING ANY BOX BELOW

  DESCRIPTION OF 9 1/4% SERIES A SENIOR SUBORDINATED NOTES DUE 2011 ("SERIES A
                                    NOTES"):
- --------------------------------------------------------------------------------
Name(s) and Address(es) of   Aggregate Principle    Principal Amount Tendered
   Registered Holder(s)     Amount Represented by (must be in integral multiple
(Please fill in, if blank)     Certificate(s)              of $1,000)*
- -------------------------------------------------------------------------------
                                                 ------------------------------
                                                 ------------------------------
                                                 ------------------------------
                                                 ------------------------------
                             Total
- --------------------------------------------------------------------------------
 * Unless indicated in the column labeled "Principal Amount Tendered," any
   tendering Holder of Series A Notes will be deemed to have tendered the
   entire aggregate principal amount represented by the column labeled
   "Aggregate Principal Amount Represented by Certificate(s)."

   If the space provided above is inadequate, list the principal amounts on a
   separate signed schedule and affix the list to this Letter of Transmittal.

   The minimum permitted tender is $1,000 in principal amount of Series A
   Notes. All other tenders must be in integral multiples of $1,000.


                                             SPECIAL DELIVERY INSTRUCTIONS
    SPECIAL PAYMENT INSTRUCTIONS             (See Instructions 4, 5 and 6)
   (See Instructions 4, 5 and 6)


                                             To be completed ONLY if
   To be completed ONLY if                 certificates for Series A Notes
 certificates for Series A Notes           in a principal amount not
 in a principal amount not                 tendered or not accepted for
 tendered or not accepted for              exchange, or Series B Notes
 exchange, or Series B Notes               issued in exchange for Series A
 issued in exchange for Series A           Notes accepted for exchange, are
 Notes accepted for exchange, are          to be sent to someone other than
 to be issued in the name of               the undersigned, or to the
 someone other than the                    undersigned at an address other
 undersigned, or if the Series A           than that shown above.
 Notes tendered by book-entry
 transfer that are not accepted
 for exchange are to be credited
 to an account maintained by DTC.

                                           Mail to:

                                           Name: ____________________________

                                                     (Please Print)
 Issue certificate(s) to:                  Address: _________________________

                                           __________________________________
 Name: ____________________________                (Include Zip Code)
           (Please Print)


                                           __________________________________
 Address: _________________________          (Tax Identification or Social
                                                     Security No.)
 __________________________________

         (Include Zip Code)



 __________________________________
[_]CHECK HERE IF TENDERED SERIES A NOTES ARE BEING DELIVERED BY DTC TO THE
   EXCHANGE AGENT'S ACCOUNT AT DTC AND COMPLETE THE FOLLOWING:
   (Tax Identification or Social
           Security No.)

  Name of Tendering Institution: __________________________
  DTC Book-Entry Account No.: _____________________________
  Transaction Code No.: ___________________________________
[_]CHECK HERE IF YOU ARE A BROKER-DEALER.
  Name: ___________________________________________________
  Address: ________________________________________________
[_]CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
   COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
   THERETO.

                                       2


Ladies and Gentlemen:

    Subject to the terms and conditions of the Exchange Offer, the undersigned
hereby tenders to the Company the principal amount of Series A Notes indicated
above. Subject to and effective upon the acceptance for exchange of the
principal amount of Series A Notes tendered in accordance with this Letter of
Transmittal, the undersigned sells, assigns and transfers to, or upon the order
of, the Company all right, title and interest in and to the Series A Notes
tendered hereby. The undersigned hereby irrevocably constitutes and appoints
the Exchange Agent its agent and attorney-in-fact (with full knowledge that the
Exchange Agent also acts as the agent of the Company) with respect to the
tendered Series A Notes with full power of substitution to (i) deliver
certificates for such Series A Notes to the Company, or transfer ownership of
such Series A Notes on the account books maintained by DTC, and deliver all
accompanying evidences of transfer and authenticity to, or upon the order of,
the Company; and (ii) present such Series A Notes for transfer on the books of
the Company and receive all benefits and otherwise exercise all rights of
beneficial ownership of such Series A Notes, all in accordance with the terms
of the Exchange Offer. The power of attorney granted in this paragraph shall be
deemed irrevocable and coupled with an interest.

    The undersigned hereby represents and warrants that he or she has full
power and authority to tender, sell, assign and transfer the Series A Notes
tendered hereby and that the Company will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances
and not subject to any adverse claim, when the same are acquired by the
Company. The undersigned hereby further represents that any Series B Notes
acquired in exchange for Series A Notes tendered hereby will have been acquired
in the ordinary course of business of the Holder receiving such Series B Notes,
whether or not the undersigned, that neither the Holder nor any such other
person has an arrangement with any person to participate in the distribution of
such Series B Notes and that neither the Holder nor any such other person is an
"affiliate," as defined under Rule 405 of the Securities Act, of the Company or
any of its subsidiaries. If the undersigned is not a broker-dealer, the
undersigned represents that it is not engaged in, and does not intend to engage
in, a distribution of Series B Notes. If the undersigned is a broker-dealer
that will receive Series B Notes, it represents that the Series A Notes to be
exchanged for Series B Notes were acquired as a result of market-making
activities or other trading activities and not acquired directly from the
Company, and it acknowledges that it will deliver a prospectus in connection
with any resale of such Series B Notes; however, by so acknowledging and by
delivering a prospectus, the undersigned will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. If the undersigned
is a broker-dealer, it acknowledges that it may not use the prospectus in
connection with resales of Series B Notes received in exchange for Series A
Notes that were acquired directly from the Company. The undersigned will, upon
request, execute and deliver any additional documents deemed by the Exchange
Agent or the Company to be necessary or desirable to complete the assignment,
transfer and purchase of the Series A Notes tendered hereby.

    For purposes of the Exchange Offer, the Company shall be deemed to have
accepted validly tendered Series A Notes when, as and if the Company has given
oral or written notice thereof to the Exchange Agent.

    If any tendered Series A Notes are not accepted for exchange pursuant to
the Exchange Offer for any reason, certificates for any such unaccepted Series
A Notes will be returned (except as noted below with respect to tenders through
DTC), without expense, to the undersigned at the address shown below or at a
different address as may be indicated herein under "Special Payment
Instructions" as promptly as practicable after the Expiration Date.

    All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned and every obligation of the undersigned under this Letter of
Transmittal shall be binding upon the undersigned's heirs, personal
representatives, successors and assigns.

    The undersigned understands that tenders of Series A Notes pursuant to the
procedures described under the caption "Exchange Offer--Procedures for
tendering Series A Notes" in the Prospectus and in the instructions hereto will
constitute a binding agreement between the undersigned and the Company upon the
terms and subject to the conditions of the Exchange Offer.

    Unless otherwise indicated under "Special Payment Instructions," please
issue the certificates representing the Series B Notes issued in exchange for
the Series A Notes accepted for exchange and return any Series A Notes not

                                       3


tendered or not exchanged, in the name(s) of the undersigned (or in either such
event in the case of Series A Notes tendered by DTC, by credit to the
undersigned's account at DTC). Similarly, unless otherwise indicated under
"Special Delivery Instructions," please send the certificates representing the
Series B Notes issued in exchange for the Series A Notes accepted for exchange
and any certificates for Series A Notes not tendered or not exchanged (and
accompanying documents, as appropriate) to the undersigned at the address shown
below the undersigned's signature(s), unless, in either event, tender is being
made through DTC. In the event that both "Special Payment Instructions" and
"Special Delivery Instructions" are completed, please issue the certificates
representing the Series B Notes issued in exchange for the Series A Notes
accepted for exchange and return any Series A Notes not tendered or not
exchanged in the name(s) of, and send said certificates to, the person(s) so
indicated. The undersigned recognizes that the Company has no obligation
pursuant to the "Special Payment Instructions" and "Special Delivery
Instructions" to transfer any Series A Notes from the name of the registered
holder(s) thereof if the Company does not accept for exchange any of the Series
A Notes so tendered.

    Holders of Series A Notes who wish to tender their Series A Notes and (i)
whose Series A Notes are not immediately available, or (ii) who cannot deliver
their Series A Notes, this Letter of Transmittal or any other documents
required hereby to the Exchange Agent, or cannot complete the procedure for
book-entry transfer, prior to the Expiration Date, may tender their Series A
Notes according to the guaranteed delivery procedures set forth in the
Prospectus under the caption "Exchange Offer--Guaranteed delivery procedures."
See Instruction 1 regarding the completion of the Letter of Transmittal printed
below.

                        PLEASE SIGN HERE WHETHER OR NOT
              SERIES A NOTES ARE BEING PHYSICALLY TENDERED HEREBY

                                                                
X
- -----------------------------------------------------------------  ------------
                                                                       Date
X
- -----------------------------------------------------------------  ------------
Signature(s) of Registered Holder(s) Date or Authorized Signatory      Date



Area Code and Telephone Number:

    The above lines must be signed by the registered holder(s) of Series A
Notes as their name(s) appear(s) on the Series A Notes or, if the Series A
Notes are tendered by a participant in DTC, as such participant's name appears
on a security position listing as the owner of the Series A Notes, or by
person(s) authorized to become registered holder(s) by a properly completed
bond power from the registered holder(s), a copy of which must be transmitted
with this Letter of Transmittal. If Series A Notes to which this Letter of
Transmittal relates are held of record by two or more joint holders, then all
such holders must sign this Letter of Transmittal. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person must (i) set forth his or her full title below and (ii) unless
waived by the Company, submit evidence satisfactory to the Company of such
person's authority so to act. See Instruction 4 regarding the completion of
this Letter of Transmittal printed below.

       
 Name(s):
           ----------------------------------------------------------------
           ----------------------------------------------------------------
                                      (Please Print)
 Capacity:
           ----------------------------------------------------------------
 Address:
           ----------------------------------------------------------------
           ----------------------------------------------------------------
           (Include Zip Code)

 


                                       4


  
     Signature(s) Guaranteed by an Eligible Institution:
     (If required by Instruction 4)

     ------------------------------------------------------------------------
                             (Authorized Signature)
     ------------------------------------------------------------------------
                                   (Title)
     ------------------------------------------------------------------------
                                 (Name of Firm)

     Dated:_________________, 2001



                                       5


                                  INSTRUCTIONS

         FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER

    1. Delivery of this Letter of Transmittal and Series A Notes. The tendered
Series A Notes (or a confirmation of a book-entry transfer into the Exchange
Agent's account at DTC of all Series A Notes delivered electronically), as well
as a properly completed and duly executed copy of this Letter of Transmittal or
facsimile hereof and any other documents required by this Letter of
Transmittal, must be received by the Exchange Agent at its address set forth
herein prior to 5:00 P.M., New York City time, on the Expiration Date. The
method of delivery of the tendered Series A Notes, this Letter of Transmittal
and all other required documents to the Exchange Agent is at the election and
risk of the Holder and, except as otherwise provided below, the delivery will
be deemed made only when actually received by the Exchange Agent. Instead of
delivery by mail, it is recommended that the Holder use an overnight or hand
delivery service. In all cases, sufficient time should be allowed to assure
timely delivery. No Letter of Transmittal or Series A Notes should be sent to
the Company.

    Holders who wish to tender their Series A Notes and (i) whose Series A
Notes are not immediately available; or (ii) who cannot deliver their Series A
Notes, this Letter of Transmittal or any other documents required hereby to the
Exchange Agent, or cannot complete the procedure for book-entry transfer, prior
to 5:00 P.M., New York City time, on the Expiration Date must tender their
Series A Notes according to the guaranteed delivery procedures set forth in the
Prospectus. Pursuant to such procedures: (i) such tender must be made by or
through a member firm of a registered national securities exchange or of the
National Association of Securities Dealers, Inc., or a commercial bank or trust
company having an office or correspondent in the United States or an
institution which falls within the definition of "Eligible Guarantor
Institution" contained in Regulation 17Ad-15 promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended
(each, an "Eligible Institution"); (ii) prior to the Expiration Date, the
Exchange Agent must have received from the Eligible Institution a properly
completed and duly executed Notice of Guaranteed Delivery (by facsimile
transmission, mail or hand delivery) setting forth the name and address of the
Holder of the Series A Notes and the principal amount of Series A Notes
tendered, stating that the tender is being made thereby and guaranteeing that,
within five New York Stock Exchange trading days after the Expiration Date,
this Letter of Transmittal (or facsimile hereof) together with the
certificate(s) representing the Series A Notes (or a confirmation of electronic
delivery of book-entry delivery into the Exchange Agent's account at DTC) and
any other required documents will be deposited by the Eligible Institution with
the Exchange Agent; and (iii) such properly completed and executed Letter of
Transmittal (or facsimile hereof), as well as all other documents required by
this Letter of Transmittal and the certificate(s) representing all tendered
Series A Notes in proper form for transfer (or a confirmation of electronic
delivery of book-entry delivery into the Exchange Agent's account at DTC), must
be received by the Exchange Agent within five New York Stock Exchange trading
days after the Expiration Date, all as provided in the Prospectus under the
caption "Exchange Offer--Guaranteed delivery procedures." Any Holder of Series
A Notes who wishes to tender his or her Series A Notes pursuant to the
guaranteed delivery procedures described above must ensure that the Exchange
Agent receives the Notice of Guaranteed Delivery prior to 5:00 P.M., New York
City time, on the Expiration Date. Upon request of the Exchange Agent, a Notice
of Guaranteed Delivery will be sent to Holders who wish to tender their Series
A Notes according to the guaranteed delivery procedures set forth above.

    All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of tendered Series A Notes and withdrawal of tendered
Series A Notes will be determined by the Company in its sole discretion, which
determination will be final and binding. The Company reserves the absolute
right to reject any and all Series A Notes not properly tendered or any Series
A Notes the Company's acceptance of which would, in the opinion of counsel for
the Company, be unlawful. The Company also reserves the right to waive any
defects or irregularities or conditions of tender as to the Exchange Offer
and/or particular Series A Notes. The Company's interpretation of the terms and
conditions of the Exchange Offer (including the instructions in this Letter of
Transmittal) shall be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Series A Notes must be
cured within such time as the Company shall determine. Neither the Company, the
Exchange Agent nor any other person shall be under any duty to give
notification of defects or irregularities with respect to tenders of Series A
Notes, nor shall any of them incur any liability for failure to give such
notification. Tenders of Series A Notes will not be deemed to have been made
until such defects or irregularities have been cured or waived. Any Series A
Notes received by the Exchange Agent that are not properly

                                       6


tendered and as to which the defects or irregularities have not been cured or
waived will be returned by the Exchange Agent to the tendering Holders of
Series A Notes, unless otherwise provided in this Letter of Transmittal, as
soon as practicable following the Expiration Date.

    2. Tender by Holder. Only a Holder of Series A Notes may tender such Series
A Notes in the Exchange Offer. Any beneficial holder of Series A Notes who is
not the registered holder and who wishes to tender should arrange with the
registered holder to execute and deliver this Letter of Transmittal on his or
her behalf or must, prior to completing and executing this Letter of
Transmittal and delivering his or her Series A Notes, either make appropriate
arrangements to register ownership of the Series A Notes in such Holder's name
or obtain a properly completed bond power from the registered holder.

    3. Partial Tenders. Tenders of Series A Notes will be accepted only in
integral multiples of $1,000. If less than the entire principal amount of any
Series A Notes is tendered, the tendering Holder should fill in the principal
amount tendered in the third column of the box entitled "Description of 9 1/4%
Series A Senior Subordinated Notes due 2011 ("Series A Notes")" above. The
entire principal amount of Series A Notes delivered to the Exchange Agent will
be deemed to have been tendered unless otherwise indicated. If the entire
principal amount of all Series A Notes is not tendered, then Series A Notes for
the principal amount of Series A Notes not tendered and a certificate or
certificates representing Series B Notes issued in exchange for any Series A
Notes accepted will be sent to the Holder at his or her registered address,
unless a different address is provided in the appropriate box on this Letter of
Transmittal, promptly after the Series A Notes are accepted for exchange.

    4. Signatures on the Letter of Transmittal; Bond Powers and Endorsements;
Guarantee of Signatures. If this Letter of Transmittal (or facsimile hereof) is
signed by the record Holder(s) of the Series A Notes tendered hereby, the
signature must correspond with the name(s) as written on the face of the Series
A Notes or, if the Series A Notes are tendered by a participant in DTC, as such
participant's name appears on a security position listing as the owner of the
Series A Notes, without alteration, enlargement or any change whatsoever.

    If this Letter of Transmittal (or facsimile hereof) is signed by the
registered Holder or Holders of Series A Notes tendered and the certificate or
certificates for Series B Notes issued in exchange therefor are to be issued
(or any untendered principal amount of Series A Notes is to be reissued) to the
registered Holder, the said Holder need not and should not endorse any tendered
Series A Notes, nor provide a separate bond power. In any other case, such
Holder must either properly endorse the Series A Notes tendered or transmit a
properly completed separate bond power with this Letter of Transmittal, with
the signatures on the endorsement or bond power guaranteed by an Eligible
Institution.

    If this Letter of Transmittal (or facsimile hereof) is signed by a person
other than the registered Holder or Holders of any Series A Notes listed, such
Series A Notes must be endorsed or accompanied by appropriate bond powers
signed as the name of the registered Holder or Holders appears on the Series A
Notes.

    If this Letter of Transmittal (or facsimile hereof) or any Series A Notes
or bond powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact or officers of corporations or others acting in a fiduciary
or representative capacity, such persons should so indicate when signing, and
unless waived by the Company, evidence satisfactory to the Company of their
authority so to act must be submitted with this Letter of Transmittal.

    Endorsements on Series A Notes or signatures on bond powers required by
this Instruction 4 must be guaranteed by an Eligible Institution.

    Except as otherwise provided below, all signatures on this Letter of
Transmittal (or facsimile hereof) must be guaranteed by an Eligible
Institution. Signatures on this Letter of Transmittal need not be guaranteed if
(i) this Letter of Transmittal is signed by the registered Holder(s) of the
Series A Notes tendered herewith and such Holder(s) have not completed the box
set forth herein entitled "Special Payment Instructions" or the box entitled
"Special Delivery Instructions;" or (ii) such Series A Notes are tendered for
the account of an Eligible Institution.

    5. Special Payment and Delivery Instructions. Tendering Holders should
indicate, in the applicable box or boxes, the name and address to which Series
B Notes or substitute Series A Notes for principal amounts not tendered or not

                                       7


accepted for exchange are to be issued or sent, if different from the name and
address of the person signing this Letter of Transmittal (or in the case of
tender of Series A Notes through DTC, if different from DTC). In the case of
issuance in a different name, the taxpayer identification or social security
number of the person named must also be indicated.

    6. Tax Identification Number. Federal income tax law requires that a Holder
whose offered Series A Notes are accepted for exchange must provide the Company
(as payor) with his, her or its correct Taxpayer Identification Number ("TIN"),
which, in the case of an exchanging Holder who is an individual, is his or her
social security number. If the Company is not provided with the correct TIN or
an adequate basis for exemption, such Holder may be subject to a $50 penalty
imposed by the Internal Revenue Service (the "IRS"). In addition, delivery to
such Holder of Series B Notes may be subject to backup withholding in an amount
equal to 31% of the gross proceeds resulting from the Exchange Offer. If
withholding results in an overpayment of taxes, a refund may be obtained from
the IRS by the Holder. Exempt Holders (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. See instructions to the enclosed Form
W-9.

    To prevent backup withholding, each exchanging Holder must provide his, her
or its correct TIN by completing the Form W-9 enclosed herewith, certifying
that the TIN provided is correct (or that such Holder is awaiting a TIN) and
that (i) the Holder is exempt from backup withholding; (ii) the Holder has not
been notified by the IRS that he, she or it is subject to backup withholding as
a result of a failure to report all interest or dividends; or (iii) the IRS has
notified the Holder that he, she or it is no longer subject to backup
withholding. In order to satisfy the Exchange Agent that a foreign individual
qualifies as an exempt recipient, such Holder must submit a statement signed
under penalty of perjury attesting to such exempt status. Such statements may
be obtained from the Exchange Agent. If the Series A Notes are in more than one
name or are not in the name of the actual owner, consult the Form W-9 for
information on which TIN to report. If you do not provide your TIN to the
Company within 60 days, backup withholding will begin and continue until you
furnish your TIN to the Company.

    7. Transfer Taxes. The Company will pay all transfer taxes, if any,
applicable to the exchange of Series A Notes pursuant to the Exchange Offer.
If, however, certificates representing Series B Notes or Series A Notes for
principal amounts not tendered or accepted for exchange are to be delivered to,
or are to be registered or issued in the name of, any person other than the
registered Holder of the Series A Notes tendered hereby, or if tendered Series
A Notes are registered in the name of any person other than the person signing
this Letter of Transmittal, or if a transfer tax is imposed for any reason
other than the exchange of Series A Notes pursuant to the Exchange Offer, then
the amount of any such transfer taxes (whether imposed on the registered Holder
or on any other persons) will be payable by the tendering Holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with this Letter of Transmittal, the amount of such transfer taxes
will be billed directly to such tendering Holder.

    Except as provided in this Instruction 7, it will not be necessary for
transfer tax stamps to be affixed to the Series A Notes listed in this Letter
of Transmittal.

    8. Waiver of Conditions. The Company reserves the absolute right to amend,
waive or modify specified conditions in the Exchange Offer in the case of any
Series A Notes tendered.

    9. Mutilated, Lost, Stolen or Destroyed Notes. Any tendering Holder whose
Series A Notes have been mutilated, lost, stolen or destroyed should contact
the Exchange Agent at the address indicated herein for further instructions.

                                       8


    10. Requests for Assistance or Additional Copies. Questions and requests
for assistance and requests for additional copies of the Prospectus or this
Letter of Transmittal may be directed to the Exchange Agent at the address
specified in the Prospectus. Holders may also contact their broker, dealer,
commercial bank, trust company or other nominee for assistance concerning the
Exchange Offer.

                         (DO NOT WRITE IN SPACE BELOW)




           Certificate               Series A Notes                         Series A Notes
           Surrendered                  Tendered                               Accepted

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


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




Delivery Prepared by               Checked By         Date

                                       9


 Name (If joint names, see attached guidelines)


- --------------------------------------------------------------------------------
 Business name (Sole proprietors, see attached guidelines)


- --------------------------------------------------------------------------------
 Please check appropriate box: [_] Individual/Sole Proprietor  [_] Corporation
 [_] Partnership  [_] Other

- --------------------------------------------------------------------------------
 Address (number, street, and apt. or suite no.)


- --------------------------------------------------------------------------------
 City, state, and ZIP code


- -------------------------------------------------------------------------------
                     Part I--Taxpayer Identification   Part II--For Payees
                     No.                               Exempt From Backup
                                                       Withholding
                                                       (see enclosed Guidelines)

 SUBSTITUTE          Enter your taxpayer    ------------
 Form W-9            identification            Social
 Department of       number in the            Security
 the Treasury        appropriate box.          Number
 Internal Revenue    For most
 Service             individuals, this
                     is your social
 Payer's Request     security number. If
 for Taxpayer        you do not have a
 Identification      number, see How to      ---------------
 Number ("TIN")      Obtain a "TIN" in           Employer
                     the enclosed             Identification
                     Guidelines.                   Number

                     Note: If the
                     account is more
                     than one name, see
                     the chart in
                     enclosed Guidelines
                     to determine what
                     number to give.

 Part III--Certification--Under penalties of perjury, I certify that:

 (1) The number shown on this form is my correct Taxpayer Identification
     Number (or I am waiting for a number to be issued to me), and

 (2) I am not subject to backup withholding because (a) I am exempt from
     backup withholding, or (b) I have not been notified by the Internal
     Revenue Service ("IRS") that I am subject to backup withholding as a
     result of a failure to report all interest or dividends, or (c) the IRS
     has notified me that I am no longer subject to backup withholding.

 Certification Instructions.--You must cross out item (2) above if you have
 been notified by the IRS that you are subject to backup withholding because
 of under-reporting interest or dividends on your tax return. However, if
 after being notified by the IRS that you are subject to backup withholding,
 you received another notification from the IRS that you are no longer
 subject to backup withholding, do not cross out item (2).

 SIGNATURE: ____________________________________________   DATE: _______, 2001


 NOTE: FAILURE TO COMPLETE THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31%
       OF ANY PAYMENTS MADE TO YOU. PLEASE REVIEW THE ENCLOSED GUIDELINES
       FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE
       FORM W-9 FOR ADDITIONAL DETAILS.

                                       10


            GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
                         NUMBER ON SUBSTITUTE FORM W-9

What Is Backup Withholding?--Persons making certain payments to you are
required to withhold and pay to IRS 31% of such payments under certain
conditions. This is called "backup withholding." Payments that could be
subject to backup withholding include interest, dividends, broker and barter
exchange transactions, rents, royalties, nonemployee compensation, and certain
payments from fishing boat operators, but do not include real estate
transactions.

If you give the requester your correct TIN, make the appropriate
certifications, and report all your taxable interest and dividends on your tax
return, your payments will not be subject to backup withholding. Payments you
receive will be subject to backup withholding if:

    (1) You do not furnish your TIN to the requester, or
    (2) IRS notifies the requester that you furnished an incorrect TIN, or
    (3) You are notified by IRS that you are subject to backup withholding
because you failed to report all your interest and dividends on your tax
return (for interest and dividend accounts only), or
    (4) You fail to certify to the requester that you are not subject to
backup withholding under (3) above (for interest and dividend accounts opened
after 1983 only), or
    (5) You fail to certify your TIN. This applies only to interest, dividend,
broker or barter exchange accounts opened after 1983, or broker accounts
considered inactive in 1983.

For other payments, you are subject to backup withholding only if (1) or (2)
above applies.

Certain Payees and payments are exempt from backup withholding and information
reporting. See payees and Payments Exempt From Backup Withholding, below, and
Exempt Payees and Payments under Specific Instructions below if you are an
exempt payee.

Payees and Payments Exempt From Backup Withholding.--The following is a list
of payees exempt from backup withholding and for which no information
reporting is required. For interest and dividends, all listed payees are
exempt except item (9). For broker transactions, payees listed in (1) through
(13), and a person registered under the Investment Advisers Act of 1940 who
regularly acts as a broker are exempt. Payments subject to reporting under
sections 6041 and 6041A are generally exempt from backup withholding only if
made to payees described in items (1) through (7), except that a corporation
that provides medical and health care services or bills and collects payments
for such services is not exempt from backup withholding or information
reporting. Only payees described in items (2) through (6) are exempt from
backup withholding for barter exchange transactions, patronage dividends, and
payments by certain fishing boat operators.

   1. A corporation.
   2. An organization exempt from tax under section 501(a), or an individual
retirement plan (IRA), or a custodial account under 403(b)(7).
   3. The United States or any of its agencies or instrumentalities.
   4. A state, the District of Columbia, a possession of the United States, or
any of their political subdivisions or instrumentalities.
   5. A foreign government or any of its political subdivisions, agencies or
instrumentalities.
   6. An international organization or any of its agencies or
instrumentalities.
   7. A foreign central bank of issue.
   8. A dealer in securities or commodities required to register in the U.S.
or a possession of the U.S.
   9. A futures commission merchant registered with the Commodity Futures
Trading Commission.
  10. A real estate investment trust.
  11. An entity registered at all times during the tax year under the
Investment Company Act of 1940.
  12. A common trust fund operated by a bank under section 584(a).
  13. A financial institution.
  14. A middleman known in the investment community as a nominee or listed
in the most recent publication of the American Society of Corporate
Securities, Inc., Nominee List.
  15. A trust exempt from tax under section 664 or described in section
4947.

Payments of dividends and patronage dividends generally not subject to backup
withholding also include the following:

 . Payments to nonresident aliens subject to withholding under section 1441.
 . Payments to partnerships not engaged in a trade or business in the U.S. and
   that have at least one nonresident partner.

Payments of interest generally not subject to backup withholding include the
following:

 . Payments of interest on obligations issued by individuals.

Note: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and you have
not provided your correct TIN to the payer.

Payments that are not subject to information reporting are also not subject to
backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044,
6045, 6049, 6050A, and 6050N, and the regulations under such sections.

Penalties
Failure to Furnish TIN.--If you fail to furnish your TIN to a requester, you
are subject to a penalty of $50 for each such failure unless your failure is
due to reasonable cause and not to willful neglect.

Misuse of TINs.--If the requester discloses or uses TINs in violation of
Federal laws, the requester may be subject to civil and criminal penalties.

Civil Penalty for False Information With Respect to Withholding.--  If you
make a false statement with no reasonable basis that results in no imposition
of backup withholding, you are subject to a penalty of $500.

Criminal Penalty for Falsifying Information.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.

Specific Instructions
Name.--If you are an individual, generally provide the name shown on your
social security card. However, if you have changed your last name, for
instance, due to marriage, without informing the Social Security


                                      11


Administration of the name change, please enter your first name and both the
last name shown on your social security card and your new last name.

Signing the Certification.--
(1) Interest, Dividend, and Barter Exchange Accounts Opened Before 1984 and
Broker Accounts That Were Considered Active During 1983.--You are not required
to sign the certification; however, you may do so. You are required to provide
your correct TIN.

(2) Interest, Dividend, Broker and Barter Exchange Accounts Opened After 1983
and Broker Accounts That Were Considered Inactive During 1983.--You must sign
the certification or backup withholding will apply. If you are subject to
backup withholding and you are merely providing your correct TIN to the
requester, you must cross out item (2) in the certification before signing the
form.

(3) Other Payments.--You are required to furnish your correct TIN, but you are
not required to sign the certification unless you have been notified of an
incorrect TIN. Other payments include payments made in the course of the
requestor's trade or business for rents, royalties, goods (other than bills for
merchandise), medical and health care services, payments to a nonemployee for
services (including attorney and accounting fees), and payments to certain
fishing boat crew members.

(4) Exempt Payees and Payments--If you are exempt from backup withholding, you
should complete this form to avoid possible erroneous backup withholding. Enter
your correct TIN in Part I, write "EXEMPT" in the block in Part II, sign and
date the form. If you are a nonresident alien or foreign entity not subject to
backup withholding, give the requester a completed Form W-8, Certificate of
Foreign Status.

(5) TIN "Applied For."--Follow the instructions under How To Obtain a TIN, on
page 1, sign and date this form.

Signature.--For a joint account, only the person whose TIN is shown in Part I
should sign the form.

Privacy Act Notice.--Section 6109 requires you to furnish your correct taxpayer
identification number (TIN) to persons who must file information returns with
IRS to report interest, dividends, and certain other income paid to you,
mortgage interest you paid, the acquisition or abandonment of secured property,
or contributions you made to an individual retirement arrangement (IRA). IRS
uses the numbers for identification purposes and to help verify the accuracy of
your tax return. You must provide your TIN whether or not you are required to
file a tax return. Payers must generally withhold 20% of taxable interest,
dividend, and certain other payments to a payee who does not furnish a TIN to a
payer. Certain penalties may also apply.


                                       12


            GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
                      NUMBER (TIN) ON SUBSTITUTE FORM W-9
             (Section references are to the Internal Revenue Code)

Guidelines for Determining the Proper Identification Number to Give the Payer.

   Social Security numbers have nine digits separated by two hyphens: i.e. 000-
00-0000. Employer identification numbers have nine digits separated by only one
hyphen: i.e. 00-0000000. The table below will help determine the number to give
the payer.


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

                             Give the
For this type of account:    SOCIAL SECURITY
                             number of--
- ---------------------------------------------
                          
 1. An individual's account  The individual
 2. Two or more individuals  The actual owner
    (joint account)          of the account
                             or, if combined
                             funds, any one
                             of the
                             individuals(1)
 3. Custodian account of a   The minor(2)
    minor (Uniform Gift to
    Minors Act)
 4. a. The usual revocable    The grantor-
    savings trust account     trustee(1)
    (grantor is also
    trustee)
    b. So-called trust account   The actual
    that is not a legal or    owner(1)
    valid trust under State
    law.
 5. Sole proprietorship      The owner(3)
    account
 6. Sole Proprietorship      The owner(3)
- ---------------------------------------------


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

                             Give the EMPLOYER
For this type of account:    IDENTIFICATION
                             number of--
- ---------------------------------------------
                          
 7. A valid trust, estate,   The legal
    or pension trust         entity(4)
 8. Corporate account        The corporation
 9. Association, club,       The organization
    religious, charitable,
    educational or other
    tax-exempt
    organization account
10. Partnership account      The partnership
    held in the name of
    the business
11. A broker or registered   The broker or
    nominee                  nominee
12. Account with the         The public
    Department of            entity
    Agriculture in the
    name of a public
    entity (such as a
    State or local
    government, school
    district, or prison)
    that receives
    agricultural program
    payments
- ---------------------------------------------


(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Show the name of the owner.
(4) List first and circle the name of the valid trust, estate, or pension
    trust. (Do not furnish the identifying number of the personal
    representative or trustee unless the legal entity itself is not designated
    in the account title)

Note:If no name is circled when there is more than one name, the number will be
     considered to be that of the first name listed.


                                       13

EX-99.2

                                                                    EXHIBIT 99.2

                         Notice of Guaranteed Delivery

                                      for

              9 1/4% Series A Senior Subordinated Notes due 2011

                                      of

                                  DAVITA INC.

     This form, or one substantially equivalent hereto, must be used to accept
the Exchange Offer of DaVita Inc. (the "Company") made pursuant to the
Prospectus dated              , 2001 (the "Prospectus"), if certificates for
the 9 1/4% Series A Senior Subordinated Notes due 2011 (the "Series A Notes")
of the Company are not immediately available or if the Series A Notes, the
Letter of Transmittal or any other documents required thereby cannot be
delivered to the Exchange Agent or the procedure for book-entry transfer
cannot be completed, prior to 5:00 P.M., New York City time, on the Expiration
Date (as defined in the Prospectus). Such form may be delivered by hand or
transmitted by facsimile transmission, overnight courier or mail to the
Exchange Agent. Capitalized terms used but not defined herein have the meaning
given to them in the Prospectus.

   To: U.S. Trust Company of Texas, National Association, The Exchange Agent

                                            
                  By Mail:                                 By Overnight Courier:

    U.S. Trust Company of Texas, National          U.S. Trust Company of Texas, National
                 Association                                    Association
        2001 Ross Avenue, Suite 2700                    2001 Ross Avenue, Suite 2700
             Dallas, Texas 75201                            Dallas, Texas 75201
  Attention: Corporate Trust Administration      Attention: Corporate Trust Administration
 (registered or certified mail recommended)

                  By Hand:                                     By Facsimile:

    U.S. Trust Company of Texas, National
                 Association                                   (214) 754-1301
        2001 Ross Avenue, Suite 2700                  (For Eligible Institutions Only)
             Dallas, Texas 75201
  Attention: Corporate Trust Administration         Confirm by telephone: (800) 829-5653



     DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE, OTHER THAN AS SET FORTH ABOVE, DOES NOT CONSTITUTE
A VALID DELIVERY.

     This form is not to be used to guarantee signatures. If a signature on
the Letter of Transmittal to be used to tender Series A Notes is required to
be guaranteed by an "Eligible Institution" under the instructions thereto,
such signature guarantee must appear in the applicable space provided in the
Letter of Transmittal.



 Ladies and Gentlemen:

    The undersigned hereby tenders to DaVita Inc., a Delaware corporation
 (the "Company"), upon the terms and subject to the conditions set forth in
 the Prospectus and the Letter of Transmittal (which together constitute
 the "Exchange Offer"), receipt of which is hereby acknowledged,
                                       Series A Notes pursuant to the guaranteed
 -------------------------------------
 (principal amount of Series A  Notes)

 delivery procedures set forth in Instruction 1 of the Letter of Transmittal.

            NOTE: SIGNATURES MUST BE PROVIDED WHERE INDICATED BELOW.

 Principal Amount(s) of Series A Notes _____________________________________

 ___________________________________________________________________________

 Name(s) of Record Holder(s) _______________________________________________

 ___________________________________________________________________________
                              Please print or type

 Address ___________________________________________________________________
                                                                   (Zip Code)
 Area Code and Tel. No. ____________________________________________________

 Signature(s) ______________________________________________________________

 ___________________________________________________________________________

 Dated: __________________

    If Series A Notes will be delivered by book-entry transfer at The
 Depository Trust Company, Depository Account No: __________________________

    This Notice of Guaranteed Delivery must be signed by the registered
 Holder(s) of Series A Notes exactly as its (their) name(s) appear on
 certificates for Series A Notes or on a security position listing as the
 owner of Series A Notes, or by person(s) authorized to become registered
 Holder(s) by endorsements and documents transmitted with this Notice of
 Guaranteed Delivery. If signature is by a trustee, executor,
 administrator, guardian, attorney-in-fact, officer or other person acting
 in a fiduciary or representative capacity, such person must provide the
 following information.

                      Please print name(s) and address(es)

 Name(s): __________________________________________________________________

 ___________________________________________________________________________

 Capacity: _________________________________________________________________

 Address(es): ______________________________________________________________

 ___________________________________________________________________________



                                   GUARANTEE
                    (Not to be used for signature guarantee)

    The undersigned, a member firm of a registered national securities
 exchange or of the National Association of Securities Dealers, Inc., or a
 commercial bank or trust company having an office or correspondent in the
 United States or a commercial bank or trust company having an office or
 correspondent in the United States or an "Eligible Guarantor Institution"
 within the meaning of Rule 17Ad-15 under the Securities Exchange Act of
 1934, as amended (the "Exchange Act"), hereby (a) represents that the above
 named person(s) "own(s)" the Series A Notes tendered hereby within the
 meaning of Rule 10b-4 under the Exchange Act, (b) represents that such
 tender of Series A Notes complies with Rule 10b-4 and (c) guarantees that
 delivery to the Exchange Agent of certificates for the Series A Notes
 tendered hereby, in proper form for transfer (or confirmation of the book-
 entry transfer of such Series A Notes into the Exchange Agent's Account at
 DTC, pursuant to the procedures for book-entry transfer set forth in the
 Prospectus), with delivery of a properly completed and duly executed Letter
 of Transmittal (or manually signed facsimile thereof) with any required
 signature and any other required documents, will be received by the
 Exchange Agent at one of its addresses set forth above within five New York
 Stock Exchange trading days after the Expiration Date.

    The undersigned acknowledges that it must deliver the Letter of
 Transmittal and Series A Notes tendered hereby to the Exchange Agent within
 the time period set forth above and that failure to do so could result in
 financial loss to the undersigned.

 Name of Firm _______________________________________________________________

 ____________________________________________________________________________
                              Authorized Signature

 Address ____________________________________________________________________
                                                                     Zip Code

 Area Code and Tel. No. _____________________________________________________

 Name _______________________________________________________________________
                              Please Print or Type

 Title ______________________________________________________________________

 Date _______________________________________________________________________

 Dated:___________ , 2001

 NOTE: DO NOT SEND SERIES A NOTES WITH THIS FORM; SERIES A NOTES SHOULD BE
       SENT WITH YOUR LETTER OF TRANSMITTAL SO THAT THEY ARE RECEIVED BY THE
       EXCHANGE AGENT WITHIN FIVE NEW YORK STOCK EXCHANGE TRADING DAYS AFTER
       THE EXPIRATION DATE.

EX-99.3

                                                                    Exhibit 99.3

                   INSTRUCTION TO REGISTERED HOLDER AND/OR
                  BOOK-ENTRY TRANSFER PARTICIPANT FROM OWNER
                                      OF
                                  DAVITA INC.


               9 1/4% Series A Senior Subordinated Notes due 2011


To Registered Holder and/or Participant of the Book-Entry Transfer Facility:

     The undersigned hereby acknowledges receipt of the Prospectus dated
__________, 2001 (the "Prospectus") of DaVita Inc., a Delaware corporation (the
"Company"), and the accompanying Letter of Transmittal (the "Letter of
Transmittal"), that together constitute the Company's offer (the "Exchange
Offer").  Capitalized terms used but not defined herein have the meanings as
ascribed to them in the Prospectus and the Letter of transmittal.

     This will instruct you, the registered holder and/or book-entry transfer
facility participant, as to the action to be taken by you relating to the
Exchange Offer with respect to the Series A Notes held by you for the account of
the undersigned.

     The aggregate face amount of the Series A Senior Subordinated Notes Due
2011 ("Series A Notes") held by you for the account of the undersigned is (fill
in amount):

     $______________ of the 9 1/4% Series A Senior Subordinated Notes Due 2001.

     With respect to the Exchange Offer, the undersigned hereby instructs you
(check the appropriate box):

     [__] To TENDER the following Series A Notes held by you for the account of
          the undersigned (insert principal amount of Series A Notes to be
          tendered, if any) $_____________ of the 9 1/4% Series A Senior
          Subordinated Notes due 2011.

     [__] NOT to TENDER any Series A Notes held by you for the account of the
          undersigned.

     If the undersigned instructs you to tender the Series A Notes held by you
for the account of the undersigned, it is understood that you are authorized to
make, on behalf of the undersigned (and the undersigned, by its signature below,
hereby makes to you), the representations and warranties contained in the Letter
of Transmittal that are to be made with respect to the undersigned as a
beneficial owner, including but not limited to the representation that (i) the
holder is not an "affiliate" of the Company, (ii) any Series B Notes to be
received by the holder are being acquired in the ordinary course of its
business, and (iii) the holder has no arrangement or understanding with any
person to participate, and is not engaged, and does not intend to


engage, in a distribution (within the meaning of the Securities Act) of such
Series B Notes. If the tendering holder is a broker-dealer that will receive
Series B Notes for its own account in exchange for Series A Notes, you will
represent on behalf of such broker-dealer that the Series A Notes to be
exchanged for the Series B Notes were acquired by it as a result of market-
making activities or other trading activities, and acknowledge on behalf of such
broker-dealer that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such Series B Notes. By
acknowledging that it will deliver, and by delivering, a prospectus meeting the
requirements of the Securities Act in connection with any resale of such Series
B Notes, such broker-dealer is not deemed to admit that it is an "underwriter"
within the meaning of the Securities Act.

                                       2



                                   SIGN HERE


Name of beneficial owner (s): ___________________________________________

Signature (s): __________________________________________________________

Name (s) (please print): ________________________________________________

Address: ________________________________________________________________

Telephone Number: _______________________________________________________

Taxpayer Identification or Social Security Number:_______________________

Date: ___________________________________________________________________

                                       3

EX-99.4

                                                                    Exhibit 99.4



                               OFFER TO EXCHANGE
               9 1/4% SERIES B SENIOR SUBORDINATED NOTES DUE 2011
                     (REGISTERED UNDER THE SECURITIES ACT)
                          FOR ANY AND ALL OUTSTANDING
               9 1/4% SERIES A SENIOR SUBORDINATED NOTES DUE 2011
                                       OF
                                  DAVITA INC.


To Our Clients:

     Enclosed is a Prospectus, dated __________, 2001, of DaVita Inc., a
Delaware corporation (the "Company"), and a related Letter of Transmittal (which
together constitute the "Exchange Offer") relating to the offer by the Company
to exchange its 9 1/4% Series B Senior Subordinated Notes due 2011 (the "Series
B Notes"), pursuant to an offering registered under the Securities Act of 1933,
as amended (the "Securities Act"), for a like principal amount of its issued and
outstanding 9 1/4% Series A Senior Subordinated Notes due 2011 (the "Series A
Notes") upon the terms and subject to the conditions set forth in the Exchange
Offer.

     PLEASE NOTE THAT THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON ____________, 2001 UNLESS EXTENDED.

     The Exchange Offer is not conditioned upon any minimum number of Series A
Notes being tendered.

     We are the holder of record and/or participant in the book-entry transfer
facility of Series A Notes held by us for your account.  A tender of such Series
A Notes can be made only by us as the record holder and/or participant in the
book-entry transfer facility and pursuant to your instructions.  The Letter of
Transmittal is furnished to you for your information only and cannot be used by
you to tender Series A Notes held by us for your account.

     We request instructions as to whether you wish to tender any or all of the
Series A Notes held by us for your account pursuant to the terms and conditions
of the Exchange Offer.  We also request that you confirm that we may on your
behalf make the representations contained in the Letter of Transmittal.

     Pursuant to the Letter of Transmittal, each holder of Series A Notes will
represent to the Company that:

     (i)     The holder is not an "affiliate" of the Company,


     (ii)    Any Series B Notes to be received by it are being acquired in the
ordinary course of its business, and

     (iii)   The holder has no arrangement or understanding with any person to
participate, and is not engaged and does not intent to engage, in a distribution
(within the meaning of the Securities Act) of such Series B Notes.

     If the tendering holder is a broker-dealer that will receive Series B Notes
for its own account in exchange for Series A Notes, you will represent on behalf
of such broker-dealer that the Series A Notes to be exchanged for the Series B
Notes were acquired by it as a result of market-making activities or other
trading activities, and acknowledge on behalf of such broker-dealer that it will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Series B Notes.  By acknowledging that it
will deliver, and by delivering, a prospectus meeting the requirements of the
Securities Act in connection with any resale of such Series B Notes, such
broker-dealer is not deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.


                              Very truly yours,

                                       2