-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
 MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen
 TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
 DXn3998DrqmPSmtCUTmy68M2Wu/gE96eaz/fzhOYzk9XwcBUkmnKeuJgD3xsThWX
 5OAtz5hGQmkUoxxXsDlUug==

<SEC-DOCUMENT>/in/edgar/work/20000815/0000898430-00-002399/0000898430-00-002399.txt : 20000922
<SEC-HEADER>0000898430-00-002399.hdr.sgml : 20000921
ACCESSION NUMBER:		0000898430-00-002399
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		8
CONFORMED PERIOD OF REPORT:	20000630
FILED AS OF DATE:		20000814

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			TOTAL RENAL CARE HOLDINGS INC
		CENTRAL INDEX KEY:			0000927066
		STANDARD INDUSTRIAL CLASSIFICATION:	 [8090
]		IRS NUMBER:				510354549
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231
</COMPANY-DATA>

		FILING VALUES:
			FORM TYPE:		10-Q
			SEC ACT:		
			SEC FILE NUMBER:	001-04034
			FILM NUMBER:		701475
</FILING-VALUES>

			BUSINESS ADDRESS:	
				STREET 1:		21250 HAWTHORNE BLVD
				STREET 2:		SIE 800
				CITY:			TORRANCE
				STATE:			CA
				ZIP:			90503-5517
				BUSINESS PHONE:		3107922600
</BUSINESS-ADDRESS>

				MAIL ADDRESS:	
					STREET 1:		21250 HAWTHORNE BLVD SUITE 800
					STREET 2:		21250 HAWTHORNE BLVD SUITE 800
					CITY:			TORRANCE
					STATE:			CA
					ZIP:			90503-5517
</MAIL-ADDRESS>

					FORMER COMPANY:	
						FORMER CONFORMED NAME:	TOTAL RENAL CARE INC
						DATE OF NAME CHANGE:	19940719
</FORMER-COMPANY>
</FILER>
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>0001.txt
<DESCRIPTION>FORM 10-Q FOR PERIOD ENDED 06/30/2000
<TEXT>

<PAGE>

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

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 10-Q

                      For the quarter ended June 30, 2000

   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
   ACT OF 1934


                        Commission File Number: 1-4034

                        TOTAL RENAL CARE HOLDINGS, INC.

                       21250 Hawthorne Blvd., Suite 800
                        Torrance, California 90503-5517
                          Telephone # (310) 792-2600

<TABLE>
<S>                       <C>
        Delaware                            51-0354549
(State of incorporation)                 (I.R.S. Employer
                                       Identification No.)
</TABLE>

   The Registrant has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
and has been subject to such filing requirements for the past 90 days.

   As of August 1, 2000, there were 81,672,770 shares of common stock (par
value $0.001) issued and outstanding.

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.

                                     INDEX

<TABLE>
<CAPTION>
                                                                        Page No.
                                                                        --------
 <C>     <S>                                                            <C>
                         PART I. FINANCIAL INFORMATION

 Item 1. Condensed Consolidated Financial Statements:

          Consolidated Balance Sheets as of June 30, 2000 and December
         31, 1999.....................................................      2

         Consolidated Statements of Income and Comprehensive Income
          for the three months and six months ended June 30, 2000 and
          June 30, 1999...............................................      3

         Consolidated Statements of Cash Flows for the six months
          ended June 30, 2000 and June 30, 1999.......................      4

         Notes to Condensed Consolidated Financial Statements.........      5

         Management's Discussion and Analysis of Financial Condition
 Item 2. and Results of Operations....................................     10

 Item 3. Quantitative and Qualitative Disclosures About Market Risk...     13

 Risk Factors..........................................................    14

                           PART II. OTHER INFORMATION

 Item 1. Legal Proceedings............................................     19

 Item 6. Exhibits and Reports on Form 8-K.............................     19

 Signatures............................................................    20
</TABLE>
- --------
Note: Items 2, 3, 4 and 5 of Part II are omitted because they are not
applicable.

                                       1
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.

                          CONSOLIDATED BALANCE SHEETS
                  (dollars in thousands except per share data)

<TABLE>
<CAPTION>
                                                        June 30,   December 31,
                                                          2000         1999
                                                       ----------  ------------
<S>                                                    <C>         <C>
                        ASSETS
                        ------

Cash and cash equivalents............................. $  190,672   $  107,981
Accounts receivable, less allowance of $62,828, and
 $67,315, respectively................................    303,355      390,329
Inventories...........................................     19,865       32,916
Other current assets..................................     21,700       32,082
Income tax receivable.................................     25,856       45,645
Deferred income taxes.................................     44,861       45,795
                                                       ----------   ----------
    Total current assets..............................    606,309      654,748
Property and equipment, net...........................    248,033      285,449
Intangible assets, net................................    957,322    1,069,672
Investments in third-party dialysis businesses........     35,814       35,552
Deferred income taxes.................................      5,407        6,553
Other long-term assets................................      2,264        4,744
                                                       ----------   ----------
                                                       $1,855,149   $2,056,718
                                                       ==========   ==========


         LIABILITIES AND SHAREHOLDERS' EQUITY
         ------------------------------------

Accounts payable...................................... $   72,888   $  121,561
Accrued compensation and benefits.....................     50,104       47,647
Other liabilities.....................................     81,420       77,141
Current portion of long-term debt.....................    121,237       26,585
Long-term debt potentially callable under covenant
 provisions...........................................               1,425,610
                                                       ----------   ----------
    Total current liabilities.........................    325,649    1,698,544
Long-term debt, less $0 and $1,425,610 potentially
 callable classified as current.......................  1,188,134        5,696
Other long-term liabilities...........................      3,921        3,497
Minority interests....................................     17,395       22,577

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; 81,565,215 and 81,193,011 shares issued
   and outstanding)...................................         82           81
  Additional paid-in capital..........................    426,428      426,025
  Notes receivable from shareholders..................       (160)        (192)
  Accumulated other comprehensive loss................                  (4,718)
  Accumulated deficit.................................   (106,300)     (94,792)
                                                       ----------   ----------
    Total shareholders' equity........................    320,050      326,404
                                                       ----------   ----------
                                                       $1,855,149   $2,056,718
                                                       ==========   ==========
</TABLE>

           See notes to condensed consolidated financial statements.

                                       2
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.

           CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                 (dollars in thousands, except per share data)

<TABLE>
<CAPTION>
                                         Three months      Six months ended
                                        ended June 30,         June 30,
                                       ------------------  ------------------
                                         2000      1999      2000      1999
                                       --------  --------  --------  --------
<S>                                    <C>       <C>       <C>       <C>
Net operating revenues ............... $378,908  $352,819  $751,021  $705,063
Operating expenses
  Dialysis and lab facilities.........  267,714   250,548   527,012   480,188
  General and administrative..........   31,619    29,559    63,540    53,167
  Depreciation and amortization.......   29,670    26,758    57,388    53,148
  Provision for uncollectible
   accounts...........................   12,648    35,707    25,507    46,185
  Impairments and valuation
   adjustments........................    4,414    16,600     4,414    16,600
                                       --------  --------  --------  --------
    Total operating expenses..........  346,065   359,172   677,861   649,288
                                       --------  --------  --------  --------
Operating income (loss)...............   32,843    (6,353)   73,160    55,775
Other income (loss)...................  (11,984)    1,934   (10,589)    3,264
Debt expense..........................   34,482    24,905    67,647    48,208
Minority interests in income of
 consolidated subsidiaries............   (1,023)   (2,521)   (2,021)   (4,839)
                                       --------  --------  --------  --------
Income (loss) before income taxes.....  (14,646)  (31,845)   (7,097)    5,992
Income tax expense (benefit)..........      709    (9,786)    4,411     4,844
                                       --------  --------  --------  --------
    Net income (loss)................. $(15,355) $(22,059) $(11,508) $  1,148
                                       ========  ========  ========  ========
Earnings (loss) per share............. $  (0.19) $  (0.27) $  (0.14) $   0.01
                                       ========  ========  ========  ========
Earnings (loss) per share--assuming
 dilution............................. $  (0.19) $  (0.27) $  (0.14) $   0.01
                                       ========  ========  ========  ========
STATEMENTS OF COMPREHENSIVE INCOME
Net income (loss)..................... $(15,355) $(22,059) $(11,508) $  1,148
  Foreign currency translation........    4,718    (3,723)    4,718    (4,059)
                                       --------  --------  --------  --------
Comprehensive income (loss)........... $(10,637) $(25,782) $ (6,790) $ (2,911)
                                       ========  ========  ========  ========
</TABLE>


           See notes to condensed consolidated financial statements.

                                       3
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                    Six months ended June 30,
                                                    --------------------------
                                                       2000          1999
                                                    ------------ -------------
<S>                                                 <C>          <C>
Cash flows from operating activities
  Net income (loss)................................ $   (11,508) $       1,148
  Non-cash items included in net income (loss):
    Depreciation and amortization..................      57,388         53,148
    Impairment and valuation losses................       4,414         16,600
    Deferred income taxes..........................       6,057        (16,375)
    Stock option expense and tax benefits..........         941            855
    Equity investment losses (income)..............         821           (657)
    Foreign currency translation loss..............       4,718
    Minority interests in income of consolidated
     subsidiaries..................................       2,021          4,839
                                                    -----------  -------------
                                                         64,852         59,558
  (Gain) loss on sale of facility assets...........      (2,107)            17
  Changes in operating assets and liabilities, net
   of acquisitions and divestitures:
    Accounts receivable............................      37,016        (31,885)
    Inventories....................................       9,959         (1,856)
    Other current assets...........................       4,740           (136)
    Other long-term assets.........................       2,200         (1,397)
    Accounts payable...............................     (30,236)        54,549
    Accrued compensation and benefits..............       6,175         (1,242)
    Other liabilities..............................      (2,593)       (29,858)
    Income taxes...................................      19,789        (11,715)
    Other long-term liabilities....................         674          3,620
                                                    -----------  -------------
      Net cash provided by operating activities....     110,469         39,655
                                                    -----------  -------------
Cash flows from investing activities
  Additions of property and equipment, net.........     (24,651)       (61,799)
  Acquisitions and divestitures, net...............     147,300       (127,627)
  Investments in affiliates, net...................      (3,283)       (35,915)
  Intangible assets................................        (381)        (3,906)
                                                    -----------  -------------
      Net cash provided by (used in) investing
       activities..................................     118,985       (229,247)
                                                    -----------  -------------
Cash flows from financing activities
  Borrowings.......................................                  1,700,674
  Payments on long-term debt.......................    (143,117)    (1,524,437)
  Deferred financing costs.........................         628          1,071
  Net proceeds from issuance of common stock.......         263          2,033
  Distributions to minority interests..............      (4,537)        (2,504)
                                                    -----------  -------------
      Net cash provided by (used in) financing
       activities..................................    (146,763)       176,837
Foreign currency translation loss in comprehensive
 income............................................                     (4,059)
                                                    -----------  -------------
Net increase (decrease) in cash....................      82,691        (16,814)
Cash and cash equivalents at beginning of period...     107,981         41,487
                                                    -----------  -------------
Cash and cash equivalents at end of period......... $   190,672  $      24,673
                                                    ===========  =============
</TABLE>

           See notes to condensed consolidated financial statements.

                                       4
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.

             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 (dollars in thousands, except per share data)

   Unless otherwise indicated in this Form 10-Q "we," "us," "our," "TRCH,"
"the Company," and similar terms refer to Total Renal Care Holdings, 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
the interim financial statements. These adjustments are of a normal and
recurring nature. The results of operations for the three and six months ended
June 30, 2000 are not necessarily indicative of 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 1999 Form 10-K. Certain reclassifications have been made to prior
periods to conform with current reporting.

2. Earnings per share

   The reconciliation of the numerators and denominators used to calculate
earnings per share for all periods presented is as follows:

<TABLE>
<CAPTION>
                                           Three months         Six months
                                         ------------------  -----------------
                                           2000      1999      2000     1999
                                         --------  --------  --------  -------
<S>                                      <C>       <C>       <C>       <C>
Net Income (loss)....................... $(15,355) $(22,059) $(11,508) $ 1,148
                                         ========  ========  ========  =======
Applicable common shares:
Weighted average outstanding during the
 period.................................   81,479    81,176    81,415   81,149
Reduction in shares in connection with
 notes receivable from employees........      (41)      (27)      (39)     (24)
                                         --------  --------  --------  -------
Weighted average number of shares
 outstanding for earnings per share.....   81,438    81,149    81,376   81,125
Incremental shares from stock option
 plans..................................                                   894
Weighted average number of outstanding
 shares and incremental shares assumed
 to be outstanding for earnings per
 share-- assuming dilution..............   81,438    81,149    81,376   82,019
                                         ========  ========  ========  =======
Earnings (loss) per share............... $  (0.19) $  (0.27) $  (0.14) $  0.01
                                         ========  ========  ========  =======
Earnings (loss) per share--assuming
 dilution............................... $  (0.19) $  (0.27) $  (0.14) $  0.01
                                         ========  ========  ========  =======
</TABLE>

   Stock options with exercise prices greater than the average market price of
shares outstanding during the period were not included in the computation of
earnings per share assuming dilution. The stock options not included in the
computation for the three months ended June 30, 2000 and 1999 and the six
months ended June 30, 2000 and 1999, respectively, totaled 9,728,570,
8,538,123, 9,728,570, and 8,063,359 shares, respectively, at exercise prices
ranging from $3.92, $13.73, $4.07, and $15.42 respectively, to $36.13 per
share. Additionally, all remaining outstanding stock options were excluded
from the computation of loss per share for the three months and six months
ended June 30, 2000 and the three months ended June 30, 1999 because the
effect would have been antidilutive. For all periods presented, assumed
conversions of the 7% convertible subordinated notes and the 5 5/8%
convertible subordinated notes were anti-dilutive and therefore not included
in the computation of earnings per share assuming dilution.

                                       5
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                 (dollars in thousands except per share data)

3. Debt Covenants

   As of December 31, 1999, the Company was not in compliance with certain
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 is now in compliance with all credit facility
covenants. Accordingly, the long-term portion of our debt was not classified
as a current liability as of June 30, 2000.

   The major terms of the restructured credit facilities include the
collateralization of the debt with substantially all of the Company's assets,
reduction in the revolving credit availability to $150,000 together with
conversion of $299,000 of the revolving facility into a term loan, and a new
quarterly amortization schedule beginning September 30, 2000. In conjunction
with the restructuring a permanent pay down of $50,000 was made and the
associated interest rates were returned to the lower LIBOR-based rate formulas
in effect prior to the non-compliance. The new financial covenants reflect the
Company's current financial position and projected operating results and
plans.

   Long-term debt is comprised of the following:

<TABLE>
<CAPTION>
                                                        June 30,   December 31,
                                                          2000         1999
                                                       ----------  ------------
   <S>                                                 <C>         <C>
   Credit facilities.................................  $  819,996  $   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...      12,986       21,482
   Capital lease obligations.........................       6,389        6,799
                                                       ----------  -----------
                                                        1,309,371    1,457,891
   Less current portion..............................    (121,237)  (1,452,195)
                                                       ----------  -----------
                                                       $1,188,134  $     5,696
                                                       ==========  ===========
</TABLE>

4. Sale of non-continental U.S. operations

   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 $83,000 associated with the non-continental U.S.
operations. The Company completed the sales of its operations outside the
continental U.S. on June 19, 2000, with the exception of operations in Puerto
Rico and Guam. The completed sales represent approximately 90% of the total
value of the non-continental U.S. operations being divested. An additional
impairment loss of $5,200 was recognized as of June 30, 2000, principally
attributable to the completion of these sales. The definitive sale agreement
for the Puerto Rico operations has been signed. The sale of the Puerto Rico
operations will be completed upon receipt of required regulatory approvals and
third-party consents. Net cash proceeds from the completed sales totaled
$134,000, of which $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. The Company also recognized $4,718 of
foreign currency translation loss associated with non-continental U.S.
operations divested during the quarter. The foreign currency translation loss
had previously been recognized in comprehensive income.

                                       6
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                 (dollars in thousands except per share data)

5. Impairments and valuation adjustments

   The $4,400 of impairments and valuation adjustments in the second quarter
of 2000 consisted of impairment losses of $5,200 principally associated with
the completed sales of the non-continental U.S. operations, and reversal of
previously recognized stock option expense of $800 associated with the
cancellation of medical director stock options. The $16,600 of impairments and
valuation adjustments recorded in the second quarter of 1999 consisted
principally of valuation losses on loans and investments in third-party
dialysis related businesses that had experienced serious operating
difficulties and liquidity problems.

6. Income tax provision

   The tax expense for the three months and six months ended June 30, 2000
included: a) a deferred tax valuation loss of $3,000 associated with the sale
of the non-continental U.S. operations and the corresponding capital loss
carryforwards and; b) a deferred tax valuation loss of $2,700 associated with
the cancellation of medical director stock options.

7. Contingencies

   The Company's Florida-based laboratory subsidiary is the subject of a
third-party carrier review relating to claims for Medicare reimbursement. The
carrier has issued formal overpayment determinations in the amount of $5,600
for the period from January 1995 to April 1996 and $14,200 for the period from
May 1996 to March 1998. The carrier has also suspended all payments of claims
related to this laboratory since May 1998. The carrier has also asserted that
$16,100 of the withheld billings for the period April 1998 to August 1999 were
not properly supported by the prescribing physicians' medical justifications.
The carrier has recently requested additional billing records for the period
from August 1999 to May 2000. As of June 30, 2000 the accounts receivable
balance for withheld billings was approximately $38,300.

   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 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 regarding the initial review period upholding the overpayment
determination of $5,600. The Company has filed an appeal of this decision to a
federal administrative law judge. 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 regarding the second review period upholding
substantially all of the overpayment determination of $14,200. The Company has
also filed an appeal of this decision to a federal administrative law judge,
and moved to consolidate this appeal with the appeal on the first review
period. No provisions or allowances have been recorded for this matter. A
determination adverse to the Company could have a material impact on the
Company's results of operations or financial condition.

   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, several class action lawsuits were filed against the Company and
several of its now former officers in the U.S. District Court for the Central
District of California. The lawsuits were consolidated into a single action.
The consolidated complaint alleged 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. In July 2000, the Company signed a
Stipulation of Settlement with the plaintiffs. Under the terms of this
agreement, a total settlement fund of $25,000 has been established. The
Company contributed $10,800 as of June 30, 2000, and its insurance carriers
contributed the balance of the settlement fund. In addition, the Company has
agreed to implement corporate governance principles and procedures to ensure
the accountability of the

                                       7
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                 (dollars in thousands except per share data)

Company's Board and management to its shareholders. The settlement is subject
to preliminary approval by the United States District Court, notice to the
members of the class, which consists of purchasers of the Company's common
stock between March 11, 1997 and July 18, 1999, and final approval of the
settlement by the Court at a hearing. Final approval is anticipated to take
place in the fourth quarter of 2000. The Company admits to no wrongdoing or
liability in the stipulation of settlement. As a result of this settlement a
pre-tax charge of $10,800 was recorded in the second quarter, and is included
in other income (loss).

   In addition, TRCH 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 resolutions of these additional pending
proceedings, whether or not the underlying claims are covered by insurance,
will not have a material adverse effect on the Company's financial condition,
results of operations or cash flows.

8. Financial information for 5 5/8% convertible subordinated notes

   Prior to the merger with Renal Treatment Centers, Inc. (RTC) in 1998, RTC
had issued $125,000 of 5 5/8% convertible subordinated notes due 2006. These
notes are convertible into common stock, at the option of the holder, at any
time through maturity, unless previously redeemed or repurchased. The
conversion price is $25.62 principal amount per share, subject to certain
adjustments. These notes are redeemable at our 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
up to but excluding the date fixed for redemption. TRCH has guaranteed these
notes.

   Balances as of June 30, 2000 reflect the divestiture of RTC's international
operations, principally in Argentina. The following is summarized financial
information of RTC:

<TABLE>
<CAPTION>
                                                           June 30, December 31,
                                                             2000       1999
                                                           -------- ------------
   <S>                                                     <C>      <C>
   Cash and cash equivalents.............................. $  1,818   $  4,118
   Accounts receivable, net...............................   63,182    115,442
   Other current assets...................................    7,524     11,946
                                                           --------   --------
     Total current assets.................................   72,524    131,506
   Property and equipment, net............................   65,898     86,572
   Intangible assets, net.................................  290,685    346,756
   Other assets...........................................      813        167
                                                           --------   --------
     Total assets......................................... $429,920   $565,001
                                                           ========   ========
   Current liabilities, principally intercompany.......... $127,407   $274,144
   Long-term debt.........................................  125,000    125,000
   Other long-term liabilities............................               1,504
   Stockholder's equity...................................  177,513    164,353
                                                           --------   --------
     Total liabilities and stockholder's equity .......... $429,920   $565,001
                                                           ========   ========
</TABLE>

                                       8
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                 (dollars in thousands except per share data)

<TABLE>
<CAPTION>
                                              Three months    Six months ended
                                             ended June 30,       June 30,
                                            ----------------- -----------------
                                              2000     1999     2000     1999
                                            -------- -------- -------- --------
   <S>                                      <C>      <C>      <C>      <C>
   Net operating revenues.................. $127,123 $125,900 $251,857 $246,302
   Total operating expenses................  122,237  112,119  236,664  226,360
                                            -------- -------- -------- --------
   Operating income .......................    4,886   13,781   15,193   19,942
   Interest expense, net...................    2,403    1,745    4,083    3,547
                                            -------- -------- -------- --------
   Income before income taxes..............    2,483   12,036   11,110   16,395
   Income taxes............................    1,881    4,814    5,305    8,855
                                            -------- -------- -------- --------
     Net income............................ $    602 $  7,222 $  5,805 $  7,540
                                            ======== ======== ======== ========
</TABLE>

9. Recent accounting pronouncements

   In March 2000, the Financial Accounting Standard Board (FASB) issued FASB
Interpretation No. 44 (FIN 44), "Accounting for Certain Transactions involving
Stock Compensation, an interpretation of APB Opinion No. 25". FIN 44 clarifies
the application of Opinion 25 for certain issues such as the definition of
"employee", criteria for determining non-compensatory plans, as well as
accounting for modifications to fixed stock options and the exchange of stock
compensation awards in a business combination. FIN 44 became effective on July
1, 2000. Management believes that FIN 44 will have no transitional impact on
the Company's financial reporting.

   In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin No. 101 (SAB 101), "Revenue Recognition", which provides
guidance on the recognition, presentation and disclosures of revenue in
financial statements filed with the SEC. SAB 101 outlines the basic criteria
that must be met to recognize revenue and provides guidance for disclosures
related to revenue recognition policies, and will be effective starting from
the fourth quarter of 2000. Management believes that SAB 101 will have no
material impact on the Company's financial position and results of operations.

                                       9
<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.

Forward-looking statements

   This Form 10-Q contains statements that are forward-looking statements
within the meaning of the federal securities laws. These include statements
about our expectations, beliefs, intentions or strategies for the future,
which we indicate by words or phrases such as "anticipate," "expect,"
"intend," "plan," "will," "believe" and similar language. These statements
involve known and unknown risks, including risks resulting from economic and
market conditions, the regulatory environment in which we operate, competitive
activities and other business conditions, and are subject to uncertainties and
assumptions set forth elsewhere in this Form 10-Q. Our actual results may
differ materially from results in these forward-looking statements. We base
our forward-looking statements on information currently available to us, and
we assume no obligation to update these statements.

Results of operations

   The Company completed the sales of its operations outside the continental
U. S. on June 19, 2000, with the exception of operations in Puerto Rico and
Guam. The completed sales represent approximately 90% of the total value of
the non-continental U. S. operations being divested. The sale agreement for
the Puerto Rico operations has been signed. Net cash proceeds from the
completed sales totaled $134 million, of which $125 million 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. Because of
the divestiture of the non-continental U.S. operations, the revenue and
operating cost trends discussed below address only the continuing (continental
U.S.) operations.

   Operating results for our continuing operations were as follows:

                   Continuing Operations (Continental U.S.)
                             (dollars in millions)

<TABLE>
<CAPTION>
                                                            Six months ended
                                  Quarter ended                 June 30,
                           -------------------------------  ------------------
                           June 30,  March 31,   June 30,
                             2000       2000       1999       2000      1999
                           --------  ----------  ---------  --------  --------
<S>                        <C>  <C>  <C>   <C>   <C>   <C>  <C>  <C>  <C>  <C>
Net operating revenues...  $345 100% $ 339  100% $323  100% $684 100% $646 100%
Operating expenses:
  Dialysis and lab
   facilities ...........   240  70%   235   69%  224   69%  475  69%  430  67%
  General and
   administrative........    30   9%    30    9%   29    9%   60   9%   51   8%
  Depreciation and
   amortization..........    26   8%    24    7%   25    8%   50   7%   48   7%
  Provision for
   uncollectible
   accounts..............    12   3%    12    4%   34   11%   24   4%   43   7%
                           ----      -----       ----       ----      ----
                            308  89%   301   89%  312   97%  609  90%  572  89%
                           ----      -----       ----       ----      ----
Operating income--
 excluding impairments...    37  11%    38   11%   11    3%   75  11%   74  11%
Impairment and valuation
 adjustments.............     4        --          17          4        17
                           ----      -----       ----       ----      ----
Operating income (loss)--
 including impairment
 losses .................    33         38         (6)        71        57
</TABLE>

   Net operating revenues for the continental U.S. operations were $684
million for the first half of 2000, or approximately 6% higher than in the
first half of 1999 reflecting an increase in dialysis revenues of
approximately $46 million and a reduction in other revenues of approximately
$8 million. The dialysis revenue increase was principally attributable to a
nearly 7% increase in the number of equivalent hemodialysis treatments.
Approximately 5% of this increase in treatments represented internal growth,
with 2% attributable to other newly opened or acquired facilities. The average
dialysis revenue per treatment (excluding lab and pharmacy revenue

                                      10
<PAGE>

and management fee income) was approximately $248 for the first half of 2000,
compared with $247 for the same period in 1999.

   Second quarter 2000 operating revenues were $345 million, compared with
$339 million in the first quarter of 2000. The number of treatments in the
second quarter was approximately 1.4% higher than in the first quarter of
2000, with the same number of treatment days in each quarter. Net dialysis
revenue per treatment increased approximately $2 from the first quarter to the
second quarter of 2000, or approximately 1%.

   Lab and other revenue and management fee income represented approximately
3% of total continental U.S. operating revenues in the second quarter and
approximately 4% in the first quarter of 2000, compared with approximately 5%
for the first half of 1999. Second quarter lab and other revenue was
approximately $2 million lower than in the first quarter of 2000 due to the
sale of our pharmacy at the end of the first quarter.

   Facility operating expenses were approximately 69% of operating revenues
for continental U.S. operations in the first half of 2000, compared with 67%
for the same period of 1999. The increase in facility operating costs is
primarily attributable to higher labor and medical supply costs. The 2000
facility operating costs include a net price increase in erythropoietin, or
EPO, a pharmaceutical used to treat anemia which is administered in dialysis
and represents a material cost component. The EPO price increase became
effective on March 1, 2000.

   General and administrative expense was approximately 9% of operating
revenues for continental U.S. operations in the first half of 2000, compared
with 8% in the first half of 1999. The increase in general and administrative
expense is primarily attributable to increased staffing levels and
compensation expense.

   Depreciation and amortization expense was approximately 7% of revenue for
the first six months of both 2000 and 1999. Depreciation expense was higher in
the second quarter of 2000, principally due to a reduction in the estimated
useful lives of personal computer equipment, generally from five years to
three years.

   The provision for uncollectible accounts receivable for the first half of
2000 was approximately 3.5% of operating revenues, compared with approximately
7% for the same period of 1999. Bad debt write-offs were unusually high in
1999, primarily due to deficiencies in the billing and cash collection
operations. Other than the uncertainty associated with our Florida lab
receivables, as discussed in Note 7 to the condensed consolidated interim
financial statements, we believe the level of the provision for uncollectible
accounts receivable recorded in the first half of 2000 is indicative of the
level that will be required for the balance of the year. Collection trends
associated with current billings continue to track as anticipated.

   The $4.4 million of impairments and valuation adjustments in the second
quarter of 2000 consisted of impairment losses of $5.2 million, principally
associated with the completed sales of the non-continental U.S. operations,
and the reversal of previously recognized stock option expense of $0.8 million
associated with the cancellation of medical director stock options. The $16.6
million of impairments and valuation adjustments recorded in the second
quarter of 1999 consisted principally of valuation losses on loans and
investments in third-party dialysis related businesses that had experienced
serious operating difficulties and liquidity problems.

   Other income (loss) for the second quarter of 2000 included a $10.8 million
charge related to the settlement of the shareholder class action lawsuit and
recognition of the $4.7 million foreign currency translation loss associated
with the non-continental U.S. operations divested during the quarter. The
foreign currency translation loss had previously been recognized in
comprehensive income.

   Debt expense of $68 million for the first half of 2000 was approximately
$20 million higher than the same period in 1999 due to higher effective
interest rates. Debt expense for the second quarter of 2000 was $1.3 million
higher than the level in the first quarter because of higher effective
interest rates, partially offset by the approximately 9% reduction in debt
late in the second quarter.

   The tax expense for the three months and six months ended June 30, 2000
included: a) a deferred tax valuation loss of $3.0 million associated with the
sale of the non-continental U.S. operations and the

                                      11
<PAGE>

corresponding capital loss carryforwards, and b) a deferred tax valuation loss
of $2.7 million associated with the cancellation of medical director stock
options.

   As a result of the restructuring of our revolving and term loan credit
facilities in July 2000, our third quarter results will include the write-off
of certain related financing costs. These write-offs will be reflected
principally as an extraordinary loss of $3.5 million, net of tax.
Additionally, there will be $1.2 million of pre-tax costs written-off which
will be included in debt expense. Other previously disclosed potential future
charges and expenses include charges related to the unwinding of poor-
performing contracts, partnerships or investments in dialysis-related
companies, and any potential losses related to unfavorable resolution of the
ongoing payment suspension of Medicare claims at our Florida laboratory.

   Based on current conditions and recent experience, our current projections
for the remainder of the year 2000 are for normal operating earnings before
non-cash depreciation and amortization expense, impairments and valuation
adjustments, debt expense and income taxes to be in the same general range as
our first half of 2000 results for our ongoing operations in the continental
U.S. These projections assume minimal acquisitions or continental U.S.
divestitures, an internal annual growth rate in the number of dialysis
treatments of approximately 5%, limited opportunities to improve the mix of
non-Medicare treatments, and cost growth trends for medical supplies and labor
costs consistent with that of recent years. These and other underlying
assumptions involve significant risks and uncertainties, and actual results
may vary significantly from these current projections. Refer to the liquidity
and capital resources discussion, contingencies discussion, and the risk
factors included elsewhere in this Form 10-Q regarding additional risks and
uncertainties that may impact these forward-looking estimates.

Liquidity and capital resources

   As of December 31, 1999, the Company was not in compliance with certain
covenants in its credit facilities. As a result of this non-compliance, all
debt outstanding under the credit facility 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 is now in compliance with all credit facility
covenants. Accordingly, the long-term portion of our debt was not classified
as a current liability as of June 30, 2000.

   The major terms of the restructured credit facilities include the
collateralization of the debt with substantially all of the Company's assets,
reduction in the revolving credit availability to $150 million together with
conversion of $299 million of the revolving facility into a term loan, and a
new quarterly amortization schedule beginning September 30, 2000. In
conjunction with the restructuring a permanent paydown of $50 million was made
and the associated interest rates were returned to the lower Libor-based rate
formulas in effect prior to the non-compliance. The new financial covenants
reflect the Company's current financial position and projected operating
results and plans.

   The cash balance at June 30, 2000 was $191 million, an increase of $83
million during the first half of 2000. The principal positive cash flow items
included earnings of $65 million adjusted for non-cash items, a $37 million
reduction in accounts receivable, a $20 million reduction in income taxes
receivable, and $147 million from divestitures. The principal net cash
outflows included a $30 million reduction in accounts payable, $25 million in
net capital asset additions, and $143 million in long-term debt payments.

   The June 30, 2000 continental U.S. accounts receivable balance, excluding
the Florida lab withhold balance of approximately $38 million, represents
approximately 71 days of revenue, an improvement of approximately 4 days
during the second quarter, following a 9 day reduction during the first
quarter of 2000.

                                      12
<PAGE>

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Interest rate sensitivity

   The table below provides information about our derivative financial
instruments and other financial instruments, primarily borrowings under our
credit facilities, that are sensitive to changes in interest rates. The
interest rates of our financial instruments that are sensitive to changes in
interest rates are partially hedged through interest rate swap agreements for
fixed rates.

   For our debt obligations, the table presents principal repayments and
current weighted average interest rates on these obligations as of June 30,
2000. For our debt obligations with variable interest rates, the rates
presented reflect the current rates in effect following the credit facilities
restructuring. These rates are based on LIBOR plus a margin of 3.50% and 3.75%
for the revolver (including the new term portion of the revolver) and the term
debt, respectively.

<TABLE>
<CAPTION>
                             Expected maturity                         Average
                  ----------------------------------------       Fair  interest
                  2000 2001 2002 2003 2004 2005 Thereafter Total value   rate
                  ---- ---- ---- ---- ---- ---- ---------- ----- ----- --------
                                      (dollars in millions)
<S>               <C>  <C>  <C>  <C>  <C>  <C>  <C>        <C>   <C>   <C>
Long-term debt
  Fixed rate ....                                  $470    $470  $380    6.63%
  Variable rate
   .............. $96  $51  $55  $342 $70  $70     $155    $839  $839   10.40%
</TABLE>

   For our interest rate swap agreements, the table below presents the
expiration of the notional amounts of these swaps at maturity, the weighted
average fixed interest rates we must pay the swap holders according to the
swap agreements, and the weighted average variable interest rates we will
receive from the swap holders, based upon the current LIBOR. Notional amounts
are used to calculate the contracted payments we will exchange with the swap
holders under the swap agreements. The interest rates we will receive from the
swap holders are variable, and are based on the LIBOR. The fair value of the
swap agreements was approximately $18 million at June 30, 2000.

   Some of our swaps have a one-time cancellation provision for our
counterparty at varying times based upon the maturity of the underlying swaps
as presented in the table below.

<TABLE>
<CAPTION>
                                                           Weighted average
                                                           ----------------
          Swap           Cancellation     Notional       Fixed         Variable
     maturity date       Option date       amount       pay rate     receive rate
     -------------       ------------     --------      --------     ------------
                                             (in
                                          millions)
      <S>                <C>              <C>           <C>          <C>
      May 2008            May 2005          $200          5.84%          6.70%
      May 2008            May 2003           200          5.67%          6.70%
      June 2005           June 2002          100          5.61%          6.87%
      June 2005           June 2001          100          5.52%          6.87%
                                            ----          ----           ----
                                            $600          5.69%          6.76%
                                            ====          ====           ====
</TABLE>

   The average interest rate on our variable rate long-term debt has decreased
from 1999 because of changes recently made in the terms of our amended and
restated credit facilities. In addition, during the first half of 2000 two of
our swap agreement counterparties exercised their right to cancel agreements
in the aggregate notional amount of $100 million. The cancelled swap
agreements would have otherwise matured in 2003. The total outstanding amount
of our debt obligations exceeds the aggregate notional amount of our swap
agreements.

Exchange rate sensitivity

   As of June 30, 2000, we have divested all of our operations in Argentina,
Germany, Italy and the United Kingdom and are not currently exposed to
significant foreign exchange rate risk. We also recognized a foreign currency
translation loss of $4.7 million associated with these divestitures.

                                      13
<PAGE>

                                 RISK FACTORS

   In addition to the other information set forth in this Form 10-Q, you
should note the following risks related to our business.

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

   The amount of our outstanding debt is large compared to our cash flows and
the net book value of our assets. We have substantial repayment obligations
under our outstanding debt. As of June 30, 2000 we had:

  .  Total consolidated debt of approximately $1.309 billion, including $820
     million outstanding under our credit facilities;

  .  Shareholders' equity of approximately $320 million; and

  .  A ratio of earnings to fixed charges of 0.91:1.

   The following chart shows our 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 in the
future.

<TABLE>
<CAPTION>
                                                              Scheduled payments
                                                              ------------------
                                                              Interest Principal
                                                              -------- ---------
                                                                (in thousands)
     <S>                                                      <C>      <C>
     For the year ending December 31:
     2001.................................................... $107,000 $ 50,680
     2002....................................................  102,000   55,084
     2003....................................................   96,000  342,090
     2004....................................................   60,000   70,173
     2005....................................................   53,000   70,156
</TABLE>

   Due to the large amount of these principal and interest payments, we may
not generate enough cash from our operations to meet these 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, and the ability of most of our subsidiaries, to engage
in activities such as incurring additional debt, acquiring and developing new
dialysis facilities, disposing of our assets, and repurchasing our common
stock. These covenants require that we meet financial ratios including
interest coverage, net worth and leverage tests.

   Our current level of debt and the limitations our credit facilities impose
on us could have other important consequences, including:

  .  Based upon the preceding table, we will have to use much of our cash
     flow, approximately $158 million in 2001 and $157 million in 2002, for
     scheduled debt service rather than for our operations;

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

  .  We could be less able to take advantage of significant business
     opportunities, including acquisitions, and react to changes in market or
     industry conditions.

                                      14
<PAGE>

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

   Approximately 40% of our net operating revenues in the first six months of
2000 was generated from patients who had domestic 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 substantially higher than
Medicare rates. Domestic private payors, particularly managed care payors,
have become more aggressive in demanding contract rates approaching or
equivalent to Medicare reimbursement rates. We believe that the financial
pressures on private payors to decrease the rates at which they reimburse us
will continue. Additionally, the number of patients which typically pay at or
near our list prices may decline. If the percentage of patients who have
insurance that reimburses us at or near our list prices changes significantly,
it will have a material impact on our revenues, cash flows and net income.

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

   More than 50% of our net operating revenues in the first six months of 2000
was generated from patients who had Medicare as the primary payor. We are
reimbursed for dialysis services primarily at fixed rates established in
advance under the Medicare ESRD program. Unlike many other Medicare programs,
the Medicare ESRD program has not provided periodic inflation increases in its
reimbursement rates. Congress recently enacted two increases of 1.2% each,
effective January 1, 2000 and January 1, 2001, to the Medicare composite
reimbursement rate for dialysis. These were the first increases since 1991,
and are significantly less than the cumulative inflation since 1991. 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. In addition, if Medicare should
begin 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 the composite rate. We cannot
predict the nature or extent of future rate changes, if any.

   Health and Human Services, or HHS, has recommended, and the Clinton
administration has included in its fiscal year 2001 budget proposal to the
Congress, a 10% reduction in Medicare reimbursement for erythropoietin, or
EPO. We cannot predict whether Congress will enact this proposal, or whether
other future rate or reimbursement method changes will be made. Approximately
14% of our net operating revenues in the first six months of 2000 was
generated from EPO reimbursement through Medicare and Medicaid programs.
Consequently, any reduction in the rate of EPO reimbursement through Medicare
and Medicaid programs could materially reduce our revenues, cash flows and net
income.

   Medicare separately reimburses us for other outpatient prescription drugs
that we administer to dialysis patients at the rate of 95% of the average
wholesale price of each drug. The Clinton administration has also included in
its fiscal year 2001 budget proposal to the Congress a reduction in the
reimbursement rate for outpatient prescription drugs to 83% of the average
wholesale price. HCFA, or the Health Care Finance Administration, has also
proposed reductions in the average wholesale prices that it uses for many
outpatient prescription drugs should be reduced. We cannot predict whether
Congress will enact the Clinton proposal, or whether other reductions in
reimbursement rates for outpatient prescription drugs will be made. If such
changes are implemented, they could have a material adverse effect on our
revenues, cash flows and net income.

If Medicare changes its ESRD program to a capitated reimbursement system, our
revenues, cash flows and profits could be materially reduced.

   Under a Medicare demonstration project, Medicare is paying managed care
plans a capitated rate equal to 95% of Medicare's current average cost of
treating dialysis patients. Under a capitated plan our managed care plans
would receive a fixed periodic payment for servicing all of our Medicare-
eligible ESRD patients regardless of fluctuations in the number of services
provided in that period or possibly even the number of patients treated. If
HCFA considers the pilot program successful, HCFA or Congress could implement
such a capitated program more broadly or could lower the average Medicare
reimbursement for dialysis.

                                      15
<PAGE>

Over the long-term, we expect 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, particularly the
     administration of EPO;

  .  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 some of these trends have reached a plateau, particularly
the increases in ancillary services intensity and the additional profits from
the extension of the private insurance coverage period. There are also market
forces that may result in long-term industry margin compression. These forces
may include increases in labor and supply costs at a faster rate than
reimbursement rate increases, the potential for Medicare reimbursement cuts
for pharmaceuticals and ancillary services, an inability to achieve future
pricing increases for both private pay and managed care patients and any
reduction in the number of patients who have insurance plans that pay at or
near our usual and customary rates.

If our assumptions regarding the beneficial life of our goodwill prove to be
inaccurate, or subsequently change, our current earnings may be overstated and
future earnings also may be affected.

   Our balance sheet contains an amount designated as "goodwill" that
represents 43% of our assets and 255% of our shareholders' equity at June 30,
2000. Goodwill arises when an acquirer 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 periods benefited. The current
average useful life for our goodwill is 35 years. We have determined that most
acquisitions after December 31, 1996 will continue to provide a benefit to us
for no less than 40 years after the acquisition. In making this determination,
we have reviewed with our independent accountants the significant factors that
we considered in arriving at the consideration we paid for, and the expected
period of benefit from, the acquired businesses.

   We continuously review the appropriateness of the amortization periods we
are using and change them as necessary to reflect current expectations. This
information is also reviewed with our independent accountants. If the factors
we considered, and which give rise to a material portion of our goodwill,
result in an actual beneficial period shorter than our determined useful life,
earnings reported in periods immediately following some acquisitions would be
overstated. In addition, in later years, we would be burdened by a continuing
charge against earnings without the associated benefit to income. Earnings in
later years could also be affected significantly if we subsequently determine
that the remaining balance of goodwill has been impaired.

Interruption in the supply of, or cost increases in, EPO could materially
reduce our net income and cash flows and affect our ability to care for our
patients.

   In the future, Amgen may be unwilling or unable to supply us with EPO.
Additionally, Amgen is the sole supplier of EPO, and may unilaterally decide
to increase its price for EPO. For example, Amgen unilaterally decided to
increase its price for EPO by 3.9% effective March 1, 2000. Interruptions in
the supply of EPO or additional increases in the price we pay for EPO could
have a material adverse effect on our financial condition as well as our
ability to provide appropriate care to our patients.

                                      16
<PAGE>

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

   During the past two years we have seen 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, is also the largest provider of dialysis services in the
world. The number of suppliers of dialysis-specific medical supplies has
declined recently, 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 have a reduction in our net income and cash flows
due to higher medical supply costs.

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. Any of the following could adversely impact our
revenues:

  .  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; and

  .  Loss of licenses required to operate healthcare facilities in some of
     the states in which we operate.

   The regulatory scrutiny of healthcare providers, including dialysis
providers, has increased significantly in recent years. For example, the
Office of Inspector General of HHS, or OIG, has reported that it recovered
$1.2 billion in fiscal year 1997 and $480 million in fiscal year 1998 from
healthcare fraud investigations. Also, in January 2000 one of our competitors
entered into a $486 million settlement as a result of an OIG investigation
into some of its practices. Additionally, in June 2000 representatives of the
OIG testified before the Senate Special Committee on Aging regarding HCFA's
processes for external quality review of dialysis facilities. The OIG's
recommendations focused on strengthening the oversight of dialysis facilities
and the conditions of participation in the Medicare ESRD program. We expect
this regulatory scrutiny to continue, if not increase, in the near term.

We may never collect the revenues from 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. Medicare revenues from this laboratory represent
approximately 2% of our net revenues. The suspension of payments relates to
all payments due after the suspension started, regardless of when the
laboratory performed the tests. From the beginning of the suspension through
June 30, 2000, the carrier had withheld approximately $38 million, which has
adversely affected our cash flow. We may never recover the amounts withheld,
for which no reserves have been established.

If we fail to comply with federal and state fraud and abuse statutes, it could
result in sanctions or require us to restructure our relationships with
referring physicians.

   Neither our arrangements with the medical directors of our facilities nor
the minority ownership interests of referring physicians in some of our
dialysis facilities meet all of the requirements of published safe harbors to
the anti-kickback provisions of the Social Security Act and similar state
laws. These laws impose civil and criminal sanctions on anyone who receives or
makes payments for referring a patient for any service reimbursed by Medicare,
Medicaid or similar federal and state programs. Arrangements within published
safe harbors are

                                      17
<PAGE>

deemed not to violate these provisions. Enforcement agencies may subject
arrangements that do not fall within a safe harbor to greater scrutiny. If we
are challenged under these statutes, we may have to change our relationships
with our medical directors and with referring physicians holding minority
ownership interests.

   The laws of several states in which we do business prohibit a physician
from making referrals for laboratory services to entities with which the
physician, or an immediate family member, has a financial interest. We
currently operate a large number of facilities in these states, which account
for a significant percentage of our business. These state statutes could apply
to laboratory services incidental to dialysis services. If so, we may have to
change our relationships with referring physicians who serve as medical
directors of our facilities or hold minority interests in any of our
facilities.

Forward-looking statements

   This Form 10-Q contains statements that are forward-looking statements
within the meaning of the federal securities laws. These include statements
about our expectations, beliefs, intentions or strategies for the future,
which we indicate by words or phrases such as "anticipate," "expect,"
"intend," "plan," "will," "believe" and similar language. These statements
involve known and unknown risks, including risks resulting from economic and
market conditions, the regulatory environment in which we operate, competitive
activities and other business conditions, and are subject to uncertainties and
assumptions set forth elsewhere in this Form 10-Q. Our actual results may
differ materially from results anticipated in these forward-looking
statements. We base our forward-looking statements on information currently
available to us, and we assume no obligation to update these statements.

                                      18
<PAGE>

                                    PART II

                               OTHER INFORMATION

Item 1. Legal Proceedings

   The information in Note 7 of the Notes to Condensed Consolidated Financial
Statements in Part I, Item 1 of this report is incorporated by this reference
in response to this item.

Items 2, 3, 4 and 5 are not applicable.

Item 6. Exhibits and Reports on Form 8-K

   (a) Exhibits

<TABLE>
 <C>     <S>
    10.1 Amendment to Mr. Thiry's employment agreement, dated May 20, 2000.

    10.2 Second Amended and Restated Revolving Credit Agreement, dated as of
          July 14, 2000, by and among TRCH, the lenders party thereto, DLJ
          Capital Funding, Inc., as Syndication Agent, First Union National
          Bank, as Documentation Agent, and The Bank of New York, as
          Administrative Agent.

    10.3 Second Amended and Restated Term Loan Agreement, dated as of July 14,
          2000, by and among, TRCH, the lenders party thereto, DLJ Capital
          Funding, Inc., as Syndication Agent, and The Bank of New York, as
          Administrative Agent.

    10.4 Security Agreement, dated as of July 14, 2000, by and among TRCH,
          subsidiaries of TRCH, The Bank of New York, as Collateral Agent, the
          lenders under the Revolving Credit Agreement and their agent, the
          lenders under the Term Loan Agreement and their agent, and the
          Secured Interest Rate Exchangers (as defined therein).

    10.5 Amended and Restated Subsidiary Guaranty entered into as of July 14,
          2000 by subsidiaries of TRCH in favor of and for the benefit of The
          Bank of New York, as Collateral Agent, the lenders under the
          Revolving Credit Agreement and their agent, the lenders under the
          Term Loan Agreement and their agent, and the Acknowledging Interest
          Rate Exchangers (as defined therein).

    12.1 Ratio of earnings to fixed charges.

    27.1 Financial Data Schedule--three and six months ended June 30, 2000 and
          1999.
</TABLE>

   (b) Reports on Form 8-K

     None.

                                       19
<PAGE>

                                   SIGNATURES

   Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                          TOTAL RENAL CARE HOLDINGS, INC.

                                                    /s/ Gary W. Beil
                                          By: _________________________________
                                                        Gary W. Beil
                                               Vice President and Controller*

Date: August 14, 2000
- --------
* Mr. Beil has signed both on behalf of the registrant as a duly authorized
  officer and as the registrant's chief accounting officer.

                                       20
<PAGE>

                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
 Exhibit
 Number                               Description
 -------                              -----------
 <C>     <S>
  10.1   Amendment to Mr. Thiry's employment agreement, dated May 20, 2000.

  10.2   Second Amended and Restated Term Loan Agreement, dated as of July 14,
          2000, by and among, TRCH, the lenders party thereto, DLJ Capital
          Funding, Inc., as Syndication Agent, and The Bank of New York, as
          Administrative Agent.

  10.3   Second Amended and Restated Revolving Credit Agreement, dated as of
          July 14, 2000, by and among TRCH, the lenders party thereto, DLJ
          Capital Funding, Inc., as Syndication Agent, First Union National
          Bank, as Documentation Agent, and The Bank of New York, as
          Administrative Agent.

  10.4   Security Agreement, dated as of July 14, 2000, by and among TRCH,
          subsidiaries of TRCH, The Bank of New York, as Collateral Agent, the
          lenders under the Revolving Credit Agreement and their agent, the
          lenders under the Term Loan Agreement and their agent, and the
          Secured Interest Rate Exchangers (as defined therein).

  10.5   Amended and Restated Subsidiary Guaranty entered into as of July 14,
          2000 by subsidiaries of TRCH in favor of and for the benefit of The
          Bank of New York, as Collateral Agent, the lenders under the
          Revolving Credit Agreement and their agent, the lenders under the
          Term Loan Agreement and their agent, and the Acknowledging Interest
          Rate Exchangers (as defined therein).

  12.1   Ratio of earnings to fixed charges.

  27.1   Financial Data Schedule--three and six months ended June 30, 2000 and
          1999.
</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>AMENDMENT TO EMPLOYMENT AGREEMENT
<TEXT>

<PAGE>

                                                                    EXHIBIT 10.1

                       AMENDMENT TO EMPLOYMENT AGREEMENT

     This document is to amend the Employment Agreement (the "Agreement"),
entered into as of October 18, 1999, by and between Total Renal Care Holdings
Corp. and Kent J. Thiry ("Executive").  Specifically, the parties agree to
delete the following sentence from Section 1 of the Agreement:  "Executive shall
use his best efforts to establish a residence in the greater Los Angeles
metropolitan area no later than December 31, 1999, but shall establish such a
residence in any event no later than January 31, 2000."  In all other respects,
the Agreement remains unchanged and in full force and effect.

TOTAL RENAL CARE HOLDINGS, INC.



By _____________________________________                 ___________________
     Maris Andersons, Director                                  Date


EXECUTIVE



________________________________________                 ___________________
     Kent J. Thiry                                              Date
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>TERM LOAN AGREEMENT
<TEXT>

<PAGE>

                                                                    EXHIBIT 10.2


                          SECOND AMENDED AND RESTATED
                              TERM LOAN AGREEMENT

                                 by and among

                       TOTAL RENAL CARE HOLDINGS, INC.,
                           THE LENDERS PARTY HERETO,


                          DLJ CAPITAL FUNDING, INC.,
                             as Syndication Agent,

                                      and

                             THE BANK OF NEW YORK,
                            as Administrative Agent

                                     with

            BNY CAPITAL MARKETS, INC. and DLJ CAPITAL FUNDING, INC.

                             as Co-Lead Arrangers,

                           Dated as of July 14, 2000
<PAGE>

                               TABLE OF CONTENTS
                               -----------------



1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION........................ 1

 1.1. Definitions.................................................... 1
 1.2. Principles of Construction.....................................23

2. AMOUNT AND TERMS OF TERM LOANS....................................24

 2.1. Term Loans.....................................................24
 2.2. Term Notes.....................................................24
 2.3. [Intentionally Omitted]........................................25
 2.4. Prepayments of the Term Loans..................................25
 2.5. Conversions and Continuations..................................29
 2.6. Interest Rate and Payment Dates................................30
 2.7. Substituted Interest Rate......................................32
 2.8. Taxes..........................................................32
 2.9. Illegality.....................................................35
 2.10. Increased Costs...............................................35
 2.11. Indemnification for Loss......................................36
 2.12. Option to Fund................................................37
 2.13. Use of Proceeds...............................................38
 2.14. Capital Adequacy..............................................38
 2.15. Administrative Agent's Records................................39

3. FEES; PAYMENTS....................................................39

 3.1. Pro Rata Treatment and Application of Principal Payments.......39

4. REPRESENTATIONS AND WARRANTIES....................................39

 4.1. Subsidiaries; Capitalization...................................39
 4.2. Existence and Power............................................40
 4.3. Authority......................................................40
 4.4. Binding Agreement..............................................40
 4.5. Litigation.....................................................41
 4.6. Required Consents..............................................41
 4.7. No Conflicting Agreements......................................41
 4.8. Compliance with Applicable Laws................................41
 4.9. Taxes..........................................................42
 4.10. Governmental Regulations......................................42
 4.11. Federal Reserve Regulations; Use of Proceeds..................42
 4.12. Plans.........................................................43
 4.13. Financial Statements..........................................43

                                      -i-

<PAGE>

 4.14. Property......................................................44
 4.15. Franchises, Intellectual Property, Etc. ......................44
 4.16. Environmental Matters.........................................44
 4.17. Labor Relations...............................................45
 4.18. Burdensome Obligations........................................45
 4.19. Medicare Participation/Accreditation..........................45
 4.20. Fraud and Abuse...............................................46
 4.21. No Misrepresentation..........................................46
 4.22. Subordinated Indebtedness.....................................47
 4.23. Survival of Rights Created under Existing Term Agreement......47

5. CONDITIONS TO EFFECTIVENESS OF AGREEMENT..........................47

 5.1. Evidence of Action.............................................47
 5.2. This Agreement.................................................48
 5.3. Subsidiary Guaranty............................................48
 5.4. Security Agreement.............................................48
 5.5. Intercreditor Agreement........................................49
 5.6. Revolving Credit Facility......................................49
 5.7. Litigation.....................................................49
 5.8. Opinion of Counsel to the Credit Parties.......................49
 5.9. Compliance Certificate.........................................50
 5.10. Term Loan Prepayment..........................................50
 5.11. Fees..........................................................50
 5.12. Fees and Expenses of Steering Committee, Agents and
       Special Counsel...............................................50
 5.13. Documentation and Proceedings.................................50
 5.14. Required Acts and Conditions..................................50
 5.15. Approval of Special Counsel and Counsel to Syndication Agent..51
 5.16. Other Documents...............................................51
 5.17. Officers' Certificate Regarding Certain Conditions............51

6. [INTENTIONALLY OMITTED]...........................................51

7. AFFIRMATIVE COVENANTS.............................................51

 7.1. Financial Statements...........................................52
 7.2. Certificates; Other Information................................53
 7.3. Legal Existence................................................55
 7.4. Taxes..........................................................56
 7.5. Insurance......................................................56
 7.6. Payment of Indebtedness and Performance of Obligations.........57
 7.7. Condition of Property..........................................58
 7.8. Observance of Legal Requirements...............................58
 7.9. Inspection of Property; Books and Records; Discussions.........58
 7.10. Licenses, Intellectual Property...............................58
 7.11. Additional Guarantors; Additional Collateral..................59
<PAGE>

 7.12. Interest Coverage Ratio.......................................59
 7.13. Minimum Net Worth.............................................59
 7.14. Minimum Consolidated EBITDA Ratio.............................60
 7.15. Leverage Ratio................................................61
 7.16. Asset Swap Transactions.......................................61
 7.17. Cash Management...............................................62
 7.18. Further Assurances............................................62

8. NEGATIVE COVENANTS................................................63

 8.1. Indebtedness...................................................63
 8.2. Liens..........................................................64
 8.3. Merger, Consolidation and  Certain Dispositions of Property....65
 8.4. Restricted Payments............................................65
 8.5. Investments, Loans, Etc........................................66
 8.6. Business Change................................................68
 8.7. Sale of Property...............................................69
 8.8. Subsidiaries...................................................70
 8.9. Amendments, Etc. of Certain Documents..........................70
 8.10. ERISA.........................................................71
 8.11. Acquisition or Issuance of Additional Stock...................71
 8.12. Limitation on Upstream Dividends and Advances by Subsidiaries.72
 8.13. Fiscal Year...................................................72
 8.14. Transactions with Affiliates..................................72
 8.15. Limitation on Permitted Acquisitions and Development
       Capital Expenditures..........................................73
 8.16. Maintenance Capital Expenditures..............................74
 8.17. Non-Wholly-Owned Subsidiaries.................................74

9. DEFAULT...........................................................74

 9.1. Events of Default..............................................74

10. THE ADMINISTRATIVE AGENT.........................................78

 10.1. Appointment...................................................78
 10.2. Delegation of Duties..........................................78
 10.3. Exculpatory Provisions........................................78
 10.4. Reliance by Administrative Agent..............................79
 10.5. Notice of Default.............................................79
 10.6. Non-Reliance on Administrative Agent and Other Lenders........80
 10.7. Indemnification...............................................80
 10.8. Administrative Agent in Its Individual Capacity...............81
 10.9. Successor Administrative Agent................................81
 10.10. Appointment of Collateral Agent..............................81
 10.11. The Co-Arrangers.............................................82
 10.12. The Syndication Agent........................................82
<PAGE>

11. OTHER PROVISIONS.................................................82

 11.1. Amendments and Waivers........................................82
 11.2. Notices.......................................................83
 11.3. No Waiver; Cumulative Remedies................................84
 11.4. Survival of Representations and Warranties....................85
 11.5. Payment of Expenses and Taxes.................................85
 11.6. Lending Offices...............................................86
 11.7. Assignments and Participations................................86
 11.8. Counterparts; Effectiveness...................................88
 11.9. Adjustments; Set-off..........................................89
 11.10. Construction.................................................90
 11.11. Indemnity....................................................90
 11.12. GOVERNING LAW................................................91
 11.13. Headings Descriptive.........................................91
 11.14. Severability.................................................91
 11.15. Integration..................................................91
 11.16. Consent to Jurisdiction......................................91
 11.17. Service of Process...........................................92
 11.18. No Limitation on Service or Suit.............................92
 11.19. [Intentionally Omitted]......................................92
 11.20. WAIVER OF TRIAL BY JURY......................................92
 11.21. Treatment of Confidential Information........................93
 11.22. Designation as Designated Senior Indebtedness................93
 11.23. Waiver of Past Defaults and Events of Default................93
<PAGE>

EXHIBITS
- --------

Exhibit A         List of Commitments
Exhibit B         Form of Term Note
Exhibit C         Form of Compliance Certificate
Exhibit D         Form of Assignment and Acceptance Agreement
Exhibit E-1       Form of Opinion of general counsel to Credit Parties
Exhibit E-2       Form of Opinion of special counsel to Credit Parties
Exhibit F         Form of Notice of Conversion/Continuation
Exhibit G         List of Agent Payment Offices
Exhibit H         Form of Intercreditor Agreement
Exhibit I         Form of Security Agreement
Exhibit J         Form of Subsidiary Guaranty

SCHEDULES
- ---------

Schedule 1.1      List of Lending Offices
Schedule 1.1(P)   List of Excluded Pension Plans
Schedule 1.1(S)   List of Scheduled Existing Deferred Payment Obligations
Schedule 4.1      List of Subsidiaries; Capitalization
Schedule 4.5      List of Litigation
Schedule 4.9      List of Taxes
Schedule 4.12     List of Existing Pension Plans
Schedule 4.19     List of Exceptions to Medicare/Medicaid Participation
Schedule 7.17     Cash Management and Collateral Program
Schedule 8.1      List of Existing Indebtedness
Schedule 8.2      List of Existing Liens
Schedule 8.5      List of Existing Investments
<PAGE>

          SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT, dated as of July 14,
2000, by and among TOTAL RENAL CARE HOLDINGS, INC., a Delaware corporation (the
"Borrower"), the lenders party hereto (together with their respective successors
 --------
and assigns, the "Lenders", each a "Lender"), DLJ CAPITAL FUNDING, INC., as
                  -------           ------
syndication agent (the "Syndication Agent") and THE BANK OF NEW YORK, as
                        -----------------
administrative agent for the Lenders (in such capacity, the "Administrative
                                                             --------------
Agent") (the "Agreement").
- -----         ---------

                             PRELIMINARY STATEMENTS
                             ----------------------

          A.  The Borrower, the Lenders (or their predecessors), the Syndication
Agent and the Administrative Agent have heretofore entered into that certain
Amended and Restated Term Loan Agreement, dated as of April 30, 1998, as amended
by the First Amendment, dated as of August 5, 1998, the Limited Waiver and
Second Amendment, dated as of August 9, 1999, and the Limited Waiver and Third
Amendment, dated as of November 8, 1999 (as so amended, the "Existing Term Loan
                                                             ------------------
Agreement").
- ---------

          B.  The Borrower, the Lenders, the Syndication Agent and the
Administrative Agent desire to amend and restate the Existing Term Loan
Agreement in its entirety.

     NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the Borrower, the Lenders, the
Syndication Agent and the Administrative Agent agree that the Existing Term Loan
Agreement shall be amended and restated, without novation, as follows:

1.  DEFINITIONS AND PRINCIPLES OF CONSTRUCTION
    ------------------------------------------
    1.1.  Definitions
          -----------
          As used in this Agreement, terms defined in the preamble have the
meanings therein indicated, and the following terms have the following meanings:

          "ABR Advances": the Term Loans (or any portions thereof) at such time
           ------------
as they (or such portions) are made and/or being maintained in Dollars at a rate
of interest based upon the Alternate Base Rate.

          "Accountants": PriceWaterhouseCoopers LLP (or any successor thereto),
           -----------
or such other firm of certified public accountants of recognized national
standing selected by the Borrower.

          "Accumulated Funding Deficiency": as defined in Section 302 of ERISA.
           ------------------------------

          "Acquisition": the acquisition by the Borrower or any Subsidiary of
           -----------
the Borrower of 50% or more of the capital Stock of or other equity interests in
another Person, whether by purchase, merger, consolidation or otherwise (such
that, after giving effect thereto, such Person shall qualify as a Subsidiary of
the Borrower), or substantially all of the assets of another Person,

                                       1
<PAGE>

or the assets comprising a division or line of business of another Person, or
one or more facilities of an ESRD-Related Business.

          "Additional Guarantor Event": any time when any Person that is not a
           --------------------------
Guarantor becomes a wholly-owned Domestic Subsidiary of the Borrower after the
Effective Date.

          "Adjusted Net Cash Proceeds": with respect to any Asset Sale as of any
           --------------------------
date of determination, the amount equal to the difference between (i) the Net
Cash Proceeds from such Asset Sale that have not been previously applied to the
prepayment of the Term Loans and the Revolving Credit Loans pursuant to Section
2.4(f)(i) hereof and Section 2.7(f)(i) of the Revolving Credit Facility, and
(ii) the Reinvested Proceeds in connection with such Asset Sale that have been
used prior to the date prepayment is required to be made under Section
2.4(f)(ii).

          "Advance": an ABR Advance or a Eurodollar Advance, as the case may be.
           -------

          "Affected Advance": as defined in Section 2.7.
           ----------------

          "Affected Principal Amount": in the event that (i) the Borrower shall
           -------------------------
fail for any reason to borrow, convert or continue after it shall have notified
the Administrative Agent of its intent to do so in any instance in which it
shall have requested a Eurodollar Advance, an amount equal to the principal
amount of such Eurodollar Advance; (ii) a Eurodollar Advance shall terminate for
any reason prior to the last day of the Interest Period applicable thereto, an
amount equal to the principal amount of such Eurodollar Advance; and (iii) the
Borrower shall prepay or repay all or any part of the principal amount of a
Eurodollar Advance prior to the last day of the Interest Period applicable
thereto, an amount equal to the principal amount of such Eurodollar Advance so
prepaid or repaid.

          "Affiliate": as to any Person, any other Person that, directly or
           ---------
indirectly, is in control of, is controlled by, or is under common control with,
such Person.  For purposes of this definition, control of a Person shall mean
the power, direct or indirect, (i) to vote 20% or more of the securities or
other interests having ordinary voting power for the election of directors or
other managing Persons thereof or (ii) to direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.

          "Affiliate Transaction":  as defined in Section 8.14.
           ---------------------

          "Agent Payment Office": with respect to all amounts owing under the
           --------------------
Loan Documents, initially, the office, branch, affiliate, or correspondent bank
of the Administrative Agent designated as its "Domestic Payment Office" in
Exhibit G and, thereafter, such other office, branch, affiliate, or
correspondent bank thereof as it may from time to time designate in writing as
such to the Borrower and each Lender.

          "Aggregate Credit Exposure":  at any time, the sum at such time of the
           -------------------------
Credit Exposures of all Lenders.

                                      -2-
<PAGE>

          "Aggregate Revolving Credit Commitments": as defined in the Revolving
           --------------------------------------
Credit Facility.

          "Agreement": this Second Amended and Restated Term Loan Agreement, as
           ---------
the same may be amended, supplemented or otherwise modified from time to time.

          "Alternate Base Rate": on any date, a rate of interest per annum equal
           -------------------
to the higher of (i) the Federal Funds Rate in effect on such date plus 1/2 of
1% or (ii) the BNY Rate in effect on such date.

          "Ancillary Services":  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 densimetry 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": in respect of any Lender, (i) in the case
           -------------------------
of such Lender's ABR Advances, its Domestic Lending Office and (ii) in the case
of such Lender's Eurodollar Advances, its Eurodollar Lending Office.

          "Applicable Margin": at all times (i) 3.75% with respect to the unpaid
           -----------------
principal amount of Eurodollar Advances and (ii) 2.50% with respect to the
unpaid principal amount of ABR Advances.

          "Approved Fund": with respect to any Lender that is a fund that
           -------------
invests in commercial loans, any other fund that invests in commercial loans and
is advised or managed by the same investment advisor as such Lender or by an
Affiliate of such investment advisor.

          "Asset Sale": any direct or indirect sale, issuance, conveyance,
           ----------
transfer, lease (other than operating leases entered into in the ordinary course
of business), assignment or other transfer for value by the Borrower or any of
its Subsidiaries (including any sale and leaseback transaction) to any Person of
(a) any capital Stock of any Subsidiary of the Borrower, or (b) any other
Property or assets of the Borrower or any Subsidiary of the Borrower other than
in the ordinary course of business; provided that Asset Sales shall not include
                                    --------
(i) any transfer of Property or assets in connection with a dividend to holders
of capital Stock if such payment is permitted by Section 8.4, (ii) the granting
of Permitted Liens, (iii) a merger permitted under Section 8.3, (iv) the sale or
other disposition of Cash Equivalents or inventory in the ordinary course of
business or obsolete equipment in the ordinary course of business consistent
with past practices of the Borrower or (v) the lease or sublease of any real or
personal property in the ordinary course of business (provided that, for
purposes of this definition, "ordinary course of business" shall not include the
sale or disposition of any Subsidiary of the Borrower, any ESRD-Related Business
or any interest therein).

                                      -3-
<PAGE>

          "Asset Sales Application Method": With respect to the prepayment of
           ------------------------------
the Term Loans required pursuant to Section 2.4(f) (each, a "Required Asset Sale
                                                             -------------------
Prepayment"), with respect to any Asset Sale (other than the Puerto Rico Asset
- ----------
Sale), such Required Asset Sale Prepayment shall be applied to the remaining
Mandatory Scheduled Prepayments as follows: first, pro rata among each of the
                                            -----  --- ----
remaining Mandatory Scheduled Prepayments scheduled through and including
December 31, 2002 (each a "Remaining Group I Mandatory Scheduled Prepayment") in
                           ------------------------------------------------
an amount equal to such Required Asset Sale Prepayment multiplied by a fraction,
the numerator of which is the amount of such Remaining Group I Mandatory
Scheduled Prepayment (as in effect on the Effective Date) and the denominator of
which is the aggregate of all Remaining Group I Mandatory Scheduled Prepayments
(as in effect on the Effective Date), and, second, after payment in full of the
                                           ------
Remaining Group I Mandatory Scheduled Prepayments, pro rata among each of the
                                                   --- ----
remaining Mandatory Scheduled Prepayments scheduled through and including the
Maturity Date (each, a "Remaining Group II Mandatory Scheduled Prepayment") in
                        -------------------------------------------------
an amount equal to such Required Asset Sale Prepayment multiplied by a fraction,
the numerator of which is the amount of such Remaining Group II Mandatory
Scheduled Prepayment (as in effect on the Effective Date) and the denominator of
which is the aggregate of all Remaining Group II Mandatory Scheduled Prepayments
(as in effect on the Effective Date.

          "Asset Sale Prepayment Percentage": with respect to any Asset Sale,
           --------------------------------
(i) 50% or (ii) 25% if the Leverage Ratio is less than 3.75:1.00 immediately
before and after giving effect to such Asset Sale and at all times during the
immediately preceding two fiscal quarters in respect of which financial
statements and a Compliance Certificate have been delivered to the
Administrative Agent and the Lenders; provided that if a Default or Event of
Default shall exist such percentage shall be 100.

          "Asset Swap Transaction": any (i) Asset Sale (excluding the issuance
           ----------------------
of Stock) occurring after the Effective Date (excluding the Puerto Rico Asset
Sale) followed by a Permitted Acquisition or (ii) Permitted Acquisition
occurring after the Effective Date followed by an Asset Sale (excluding the
Puerto Rico Asset Sale), in either case with the same counterparty, that closes
within 365 days following the closing of the first transaction.

          "Assignment and Acceptance Agreement": an assignment and acceptance
           -----------------------------------
agreement executed by an assignor and an assignee pursuant to which the assignor
assigns to the assignee all or any portion of such assignor's Notes,
substantially in the form of Exhibit D.

          "Assignment Fee": as defined in Section 11.7(b).
           --------------

          "Authorized Signatory": as to (i) any Person that is a corporation,
           --------------------
the chairman of the board, the president, any vice president, the chief
financial officer or any other duly authorized officer (acceptable to the
Administrative Agent) of such Person and (ii) any Person that is not a
corporation, the general partner or other managing Person thereof.

          "Benefited Lender": as defined in Section 11.9.
           ----------------

                                      -4-
<PAGE>

          "BNY": The Bank of New York.
           ---

          "BNY Rate": a rate of interest per annum equal to the rate of interest
           --------
publicly announced in New York City by BNY from time to time as its prime
commercial lending rate, such rate to be adjusted automatically (without notice)
on the effective date of any change in such publicly announced rate.

          "Business Day":
           ------------

          (i)  for all purposes (other than as covered by clause (ii) below),
any day except Saturday, Sunday or a day which in New York City is a legal
holiday or a day on which banking institutions are authorized or required by law
or other government action to close, and

          (ii) with respect to all notices and determinations in connection
with, and payments of principal and interest on, a Eurodollar Advance, any day
which is a Business Day described in clause (i) above and which is also a day
for trading by and between banks in the London interbank market.

          "Capital Expenditures": of any Person means expenditures (whether paid
           --------------------
in cash or other consideration or accrued as a liability) for fixed or capital
assets (excluding any replacement assets acquired with the proceeds of
insurance) made by such Person, excluding any Permitted Acquisition.

          "Capital Lease Obligations": with respect to any Person, obligations
           -------------------------
of such Person with respect to leases that, in accordance with GAAP, are
required to be capitalized on the financial statements of such Person.

          "Cash Equivalents":  (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 Standard & Poor's Ratings Services or Aa3 by Moody's Investors Service,
Inc., 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 Standard & Poor's Ratings
Services or P-2 by Moody's Investors Service, Inc., 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 Equivalents described in clauses (a) through (d)
above, which money market accounts or funds have net assets of not less than

                                      -5-
<PAGE>

$500,000,000 and have the highest rating available of either Standard & Poor's
Ratings Services or Moody's Investors Service, Inc., or carrying an equivalent
rating by a nationally recognized rating agency if both of the two named rating
agencies cease publishing ratings of investments.

          "Change of Control":  any of the following:
           -----------------

          (i) the acquisition, directly or indirectly, by any Person or group
     (as such term is used in Section 13(d)(3) of the Exchange Act) of more than
     50% of the voting power of the Stock of the Borrower by way of merger,
     consolidation or otherwise; or

          (ii) the Continuing Directors cease for any reason to constitute a
     majority of the directors of the Borrower then in office.

          "Co-Arrangers": BNY Capital Markets, Inc. and DLJ Capital Funding,
           ------------
Inc.

          "Code": the Internal Revenue Code of 1986, as the same may be amended
           ----
from time to time, or any successor thereto, and the rules and regulations
issued thereunder, as from time to time in effect.

          "Collateral": collectively, the Collateral under and as defined in the
           ----------
Collateral Documents.

          "Collateral Agent": BNY acting in its capacity as Collateral Agent
           ----------------
under the Intercreditor Agreement, the Collateral Documents and the Subsidiary
Guaranty, and its successors in such capacity.

          "Collateral Documents": collectively, the Security Agreement, and all
           --------------------
other instruments or documents delivered by any Credit Party in order to grant
to the Collateral Agent Liens on any Collateral.

          "Compensatory Interest Payment": as defined in Section 2.6(c).
           -----------------------------

          "Compliance Certificate": a certificate substantially in the form of
           ----------------------
Exhibit C.

          "Consolidated": when applied to an accounting term used with respect
           ------------
to more than one Person, such accounting term determined on a consolidated basis
for such Persons in accordance with GAAP, including principles of consolidation
under GAAP.

          "Consolidated EBITDA": EBITDA of the Borrower and its Subsidiaries on
           -------------------
a Consolidated basis determined in accordance with GAAP.

          "Consolidated Pre-Minority EBITDA": 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.

                                      -6-
<PAGE>

          "Contingent Obligation": as to any Person (the "secondary obligor"),
           ---------------------                          -----------------
any obligation of such secondary obligor (i) guaranteeing or in effect
guaranteeing any return on any Investment made in another Person, or (ii)
guaranteeing or in effect guaranteeing any Indebtedness, lease, dividend or
other obligation ("primary obligation") of any other Person (the "primary
                   ------------------                             -------
obligor") in any manner, whether directly or indirectly, including, without
- -------
limitation, any obligation of such secondary obligor, whether contingent, (A) to
purchase any such primary obligation or any Property constituting direct or
indirect security therefor, (B) to advance or supply funds (x) for the purchase
or payment of any such primary obligation or (y) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (C) to purchase Property, securities or
services primarily for the purpose of assuring the beneficiary of any such
primary obligation of the ability of the primary obligor to make payment of such
primary obligation, (D) otherwise to assure or hold harmless the beneficiary of
such primary obligation against loss in respect thereof, and (E) in respect of
the liabilities of any partnership in which such secondary obligor is a general
partner, except to the extent that such liabilities of such partnership are
nonrecourse to such secondary obligor and its separate Property, provided,
however, that the term "Contingent Obligation" shall not include the indorsement
of instruments for deposit or collection in the ordinary course of business.
The amount of any Contingent Obligation of a Person 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 not stated or
determinable, the maximum reasonably anticipated liability in respect thereof as
determined by such Person in good faith.

          "Continuing Director": means any member of the Board of Directors of
           -------------------
the Borrower who (i) is a member of that Board of Directors on the Effective
Date or (ii) has been nominated for election by the Board of Directors a
majority of whom were directors at the Effective Date or whose election or
nomination for election has been previously approved by a majority of such
directors.

          "Conversion/Continuation Date": the date on which (i) a Eurodollar
           ----------------------------
Advance is converted to an ABR Advance, (ii) an ABR Advance is converted to a
Eurodollar Advance, or (iii) a Eurodollar Advance is continued as a new
Eurodollar Advance.

          "Credit Exposure": with respect to any Lender as at any time, the sum
           ---------------
at such time of the outstanding principal balance of such Lender's Term Loans.

          "Credit Party": the Borrower and each Guarantor.
           ------------

          "Default": any event or condition that constitutes an Event of Default
           -------
or that, with the giving of notice, the lapse of time, or any other condition,
would, unless cured or waived, become an Event of Default.

          "Designated Amount": as defined in Section 8.15.
           -----------------

                                      -7-
<PAGE>

          "Development Capital Expenditures":  Capital Expenditures attributable
           --------------------------------
to the creation of new renal treatment centers or the relocation or expansion of
existing renal treatment centers.

          "Dialysis Services":  hemodialysis services and peritoneal dialysis
           -----------------
services, hemoperfusion, plasmapheresis, continuous arteriovenous hemofiltration
and bio-medical services related to the foregoing.

          "Dollars" and "$": lawful currency of the United States of America.
           -------       -

          "Domestic Acquisition": any Acquisition that is not a Foreign
           --------------------
Acquisition.

          "Domestic Lending Office": in respect of any Lender, initially, the
           -----------------------
office or offices of such Lender designated as such on Schedule 1.1; thereafter,
such other office of such Lender through which it shall be making or maintaining
ABR Advances, as reported by such Lender to the Administrative Agent and the
Borrower.

          "Domestic Subsidiary": any Subsidiary of the Borrower that is not a
           -------------------
Foreign Subsidiary.

          "EBITDA":  for any period, for any Person, net income of such Person
           ------
for such period, determined in accordance with GAAP, plus the sum of, without
duplication, (i) Interest Expense of such Person, (ii) provision for income
taxes of such Person and (iii) depreciation, amortization and all other non-cash
charges (except minority interests in income of consolidated Subsidiaries) of
such Person, each to the extent deducted in determining net income of such
Person for such period.  EBITDA shall exclude (to the extent otherwise included
therein) (x) extraordinary gains and  losses and (y) gains and losses on the
sale, transfer or other disposition of assets (other than inventory and cash
management investments sold in the ordinary course of business) ((x) and (y),
collectively, the "Gains and Losses"), provided that this sentence shall not be
                   ----------------
applicable with respect to any fiscal quarter if the net aggregate amount of
Gains and Losses for such fiscal quarter is between ($100,000) and $100,000.
Other than for purposes of calculating the Asset Sale Prepayment Percentage and
the release and regranting of Collateral pursuant to Section 22 of the Security
Agreement and the corresponding section of any other Collateral Document, EBITDA
for any period shall further exclude the following non-recurring charges
incurred during such period: (i) charges not exceeding in the aggregate during
the period from April 1, 2000 and continuing through the term of this Agreement
$12,000,000 resulting from the settlement of shareholder class action lawsuits
existing on the Effective Date, (ii) charges 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 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, and (iii) other cash charges not exceeding in the
aggregate during the period from April 1, 2000 and continuing through the term
of this Agreement $5,000,000 (the "Non-Recurring Charges").
                                   ---------------------

                                      -8-
<PAGE>

          "Effective Date": the date upon which the conditions as set forth in
           --------------
Section 5 have been or simultaneously will be satisfied.

          "Employee Benefit Plan": an employee benefit plan within the meaning
           ---------------------
of Section 3(3) of ERISA maintained, sponsored or contributed to by the
Borrower, any of its Subsidiaries or any ERISA Affiliate.

          "Environmental Laws": any and all federal, state and local laws
           ------------------
relating to the environment, the use, storage, transporting, manufacturing,
handling, discharge, release, disposal or recycling of hazardous substances,
materials or pollutants or industrial hygiene, and including, without
limitation, (i) the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, 42 USCA (S)9601 et seq.; (ii) the Resource
                                           -- ---
Conservation and Recovery Act of 1976, as amended, 42 USCA (S)6901 et seq.;
                                                                   -- ---
(iii) the Toxic Substance Control Act, as amended, 15 USCA (S)2601 et seq.; (iv)
                                                                   -- ---
the Water Pollution Control Act, as amended, 33 USCA (S)1251 et seq.; (v) the
                                                             -- ---
Clean Air Act, as amended, 42 USCA (S)7401 et seq.; (vi) the Hazardous Materials
Transportation Authorization Act of 1994, 49 U.S.C. 5101 et seq. and (vii) all
                                                         -- ---
rules, regulations, judgments, decrees, injunctions and restrictions thereunder
and any analogous state law.

          "Equity Interests": capital Stock and all warrants, options or other
           ----------------
rights to acquire capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, capital Stock).

          "ERISA": the Employee Retirement Income Security Act of 1974, as
           -----
amended from time to time, and the rules and regulations issued thereunder, as
from time to time in effect.

          "ERISA Affiliate": when used with respect to an Employee Benefit Plan,
           ---------------
ERISA, the PBGC or a provision of the Code pertaining to employee benefit plans,
any Person that is a member of any group of organizations within the meaning of
Sections 414(b), (c), (m) or (o) of the Code of which the Borrower or any of its
Subsidiaries is a member.

          "ESRD-Related Business": the business of providing Dialysis Services
           ---------------------
and/or Ancillary Services.

          "Eurodollar Advances": collectively, the Term Loans (or any portions
           -------------------
thereof) at such time as they (or such portions) are made and/or being
maintained in Dollars at a rate of interest based upon the Eurodollar Rate.

          "Eurodollar Lending Office": in respect of any Lender, initially, the
           -------------------------
office, branch or affiliate  of such Lender designated as such on Schedule 1.1
(or, if no such office branch or affiliate is specified, its Domestic Lending
Office); thereafter, such other office, branch or affiliate of such Lender
through which it shall be making or maintaining Eurodollar Advances, as reported
by such Lender to the Administrative Agent and the Borrower.

                                      -9-
<PAGE>

          "Eurodollar Rate": with respect to the Interest Period applicable to
           ---------------
any Eurodollar Advance, a rate of interest per annum, as determined by the
Administrative Agent, obtained by dividing (and then rounding to the nearest
1/16 of 1% or, if there is no nearest 1/16 of 1%, then to the next higher 1/16
of 1%):

          (a) the rate quoted by the Administrative Agent, in its capacity as a
     Lender, to leading banks in the interbank eurodollar market as the rate at
     which it is offering Dollar deposits in an amount equal approximately to
     its Eurodollar Advance to which such Interest Period shall apply for a
     period equal to such Interest Period, as quoted at approximately 11:00 A.M.
     two Business Days prior to the first day of such Interest Period, by

          (b) a number equal to 1.00 minus the aggregate of the then stated
     maximum rates during such Interest Period of all reserve requirements
     (including, without limitation, marginal, emergency, supplemental and
     special reserves), expressed as a decimal, established by the Board of
     Governors of the Federal Reserve System and any other banking authority to
     which BNY and other major United States money center banks are subject, in
     respect of eurocurrency funding (currently referred to as "Eurocurrency
     liabilities" in Regulation D of the Board of Governors of the Federal
     Reserve System) or in respect of any other category of liabilities
     including deposits by reference to which the interest rate on Eurodollar
     Advances is determined or any category of extensions of credit or other
     assets that includes loans by non-domestic offices of any Lender to United
     States residents.  Such reserve requirements shall include, without
     limitation, those imposed under such Regulation D.  Eurodollar Advances
     shall be deemed to constitute Eurocurrency liabilities and as such shall be
     deemed to be subject to such reserve requirements without benefit of
     credits for proration, exceptions or offsets that may be available from
     time to time to any Lender under such Regulation D. The Eurodollar Rate
     shall be adjusted automatically on and as of the effective date of any
     change in any such reserve requirement.

          "Event of Default": any of the events specified in Section 9.1,
           ----------------
provided that any requirement for the giving of notice, the lapse of time, or
any other condition has been satisfied.

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

          "Excluded Contingent Obligations":  all Contingent Obligations of the
           -------------------------------
Borrower and its Subsidiaries on a Consolidated basis in accordance with GAAP
that are not in respect of Indebtedness described in items (i), (ii), (iii),
(iv)(B), (v) or (vi) of the definition of Indebtedness.

          "Existing Pension Plans": as defined in Section 4.12.
           ----------------------

          "Existing Term Loan Agreement": as defined in paragraph A of the
           ----------------------------
Preliminary Statements to this Agreement.

                                     -10-
<PAGE>

          "Federal Funds Rate": for any day, a rate per annum (expressed as a
           ------------------
decimal, rounded upwards, if necessary, to the next higher 1/100 of 1%), equal
to the weighted average of the rates on overnight federal funds transactions
with members of the Federal Reserve System arranged by federal funds brokers on
such day, as published by the Federal Reserve Bank of New York on the Business
Day next succeeding such day, provided that (i) if the day for which such rate
is to be determined is not a Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (ii) if such rate is not so
published for any day, the Federal Funds Rate for such day shall be the average
of the quotations for such day on such transactions received by the
Administrative Agent.

          "Financial Statements": as defined in Section 4.13.
           --------------------

          "First Additional Term Loan Commitment":  [Intentionally Omitted]
           -------------------------------------

          "First Additional Term Loan Pro Rata Share" with respect to each
           -----------------------------------------
Lender, the percentage obtained by dividing (x) the First Additional Term Loan
                                   --------
Commitment of that Lender by (y) the aggregate amount of First Additional Term
                          --
Loan Commitments of all Lenders, as such percentage may be adjusted by
assignments permitted pursuant to Section 11.7.  The initial First Additional
Term Loan Pro Rata Share of each Lender shall be set forth on the signature page
for such Lender.

          "Foreign Acquisition":  the Acquisition of Stock or Property of a
           -------------------
Person that is not organized under the laws of, or whose property is not located
in, a jurisdiction within the United States.

          "Foreign Subsidiary": any Subsidiary of the Borrower which is a
           ------------------
"controlled foreign corporation" within the meaning of Section 957 of the Code.

          "Funded Current Liability Percentage": as defined in Section
           -----------------------------------
401(a)(29) of the Code.

          "Funding Date": [Intentionally Omitted]
           ------------

          "GAAP": generally accepted accounting principles set forth in the
           ----
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or such other principles as may be
approved by a significant segment of the accounting profession, that are
applicable to the circumstances as of the date of determination, consistently
applied.  If at any time any change in GAAP would affect the computation of any
financial ratio or requirement set forth in this Agreement, and either the
Borrower or the Required Lenders shall so request, the Administrative Agent, the
Lenders and the Borrower shall negotiate in good faith to amend such ratio or
requirement to reflect such change in GAAP (subject to the approval of the
Required Lenders), provided that, until so amended, (i) such ratio or
requirement shall

                                     -11-
<PAGE>

continue to be computed in accordance with GAAP prior to such change therein and
(ii) the Borrower shall provide to the Administrative Agent and the Lenders
financial statements and other documents required under this Agreement or as
reasonably requested hereunder setting forth a reconciliation between
calculations of such ratio or requirement made before and after giving effect to
such change in GAAP.

          "Governmental Authority": any nation or government, any state or other
           ----------------------
political subdivision thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
and any court or arbitrator.

          "Guarantors": collectively, (i) each wholly-owned Subsidiary of the
           ----------
Borrower on the Effective Date and (ii) each other Domestic Subsidiary of the
Borrower that becomes a party to the Subsidiary Guaranty pursuant to Section
7.11; each a "Guarantor".
              ---------

          "Hazardous Substance": any hazardous or toxic substance, material or
           -------------------
waste, including, but not limited to, (i) those substances, materials, and
wastes listed in the United States Department of Transportation Hazardous
Materials Table (49 CFR 172.101) or by the Environmental Protection Agency as
hazardous substances (40 CFR Part 302) and amendments thereto and replacements
therefor and (ii) any substance, pollutant or material defined as, or designated
in, any Environmental Law as a "hazardous substance," "toxic substance,"
"hazardous material," "hazardous waste," "restricted hazardous waste,"
"pollutant," "toxic pollutant" or words of similar import.

          "Hedging Obligations": with respect to any Person, the obligations of
           -------------------
such Person under Interest Rate Agreements designed to protect such Person
against fluctuations in interest rates.

          "Highest Lawful Rate": with respect to any Lender, the maximum rate of
           -------------------
interest, if any, that at any time or from time to time may be contracted for,
taken, charged or received by such Lender on its Loans or that may be owing to
such Lender pursuant to this Agreement under the laws applicable to such Lender
and this Agreement.

          "Indebtedness": as to any Person, at a particular time, all items that
           ------------
constitute, without duplication, (i)  indebtedness for borrowed money or the
deferred purchase price of Property (other than trade payables incurred in the
ordinary course of business), (ii) indebtedness evidenced by notes, bonds,
debentures or similar instruments, (iii) obligations with respect to any
conditional sale or title retention agreement, (iv) indebtedness arising under
(A) acceptance facilities and the amount available to be drawn under all letters
of credit issued for the account of such Person, and (B) without duplication,
all drafts drawn thereunder to the extent such Person shall not have reimbursed
the issuer in respect of the issuer's payment of such drafts, (v) all
liabilities secured by any Lien on any Property owned by such Person even though
such Person has not assumed or otherwise become liable for the payment thereof
(other than carriers', warehousemen's, mechanics', repairmen's or other like
non-consensual statutory Liens arising in

                                     -12-
<PAGE>

the ordinary course of business), (vi) the principal portion of obligations
under Capital Lease Obligations and (vii) Contingent Obligations.

          "Indemnified Person": as defined in Section 11.11.
           ------------------

          "Indemnified Tax": as to any Person, any Tax, except (i) a Tax on the
           ---------------
Income imposed on such Person and (ii) any interest, fees or penalties for late
payment imposed on such Person, in each case to the extent not attributable to
the failure of the Borrower or any of its Subsidiaries to obtain any necessary
approvals or consents of, or file or cause to be filed any reports,
applications, documents, instruments or information required to be filed
pursuant to any applicable law, rule, regulation or request of, any Governmental
Authority.

          "Indemnified Tax Person": the Administrative Agent, the Collateral
           ----------------------
Agent, the Syndication Agent, a Co-Arranger, or any Lender, as the case may be.

          "Intellectual Property": all copyrights, trademarks, servicemarks,
           ---------------------
patents, trade names and service names.

          "Intercreditor Agreement": the Amended and Restated Intercreditor and
           -----------------------
Collateral Agency Agreement, substantially in the form of Exhibit H, as amended,
supplemented or otherwise modified from time to time.

          "Interest Coverage Ratio": at any date of determination, the ratio of
           -----------------------
(i)  Consolidated Pre-Minority EBITDA to (ii) Interest Expense of the Borrower
and its Subsidiaries on a Consolidated basis, in each case for (a) the two
fiscal quarter period ending June 30, 2000, if the date of determination is at
any time during the period from the Effective Date through September 29, 2000,
(b) the three fiscal quarter period ended September 30, 2000, if the date of
determination is at any time during the period from September 30, 2000 through
December 30, 2000, and (c) the immediately preceding four fiscal quarters of the
Borrower (or in the event that the date of determination is a fiscal quarter
ending date, the four fiscal quarter period then ended), if the date of
determination is at any time on or after December 31, 2000.

          "Interest Expense": for any Person, with respect to any period,
           ----------------
without duplication, the sum of all interest, including (whether in the form of
cash or Property) whether paid or required to be accrued (including, without
limitation, paid-in-kind or PIK interest) in respect of all Indebtedness of such
Person for such period determined in accordance with GAAP less capitalized
financing costs, each to the extent included in Interest Expense of such Person
for such period.

          "Interest Payment Date": (i) as to any ABR Advance, the last day of
           ---------------------
each March, June, September and December commencing on the first of such days to
occur after such ABR Advance is made or any Eurodollar Advance is converted to
an ABR Advance, (ii) as to any Eurodollar Advance in respect of which the
Borrower has selected an Interest Period of one, two or three months, the last
day of such Interest Period, and (iii) as to any Eurodollar Advance in

                                     -13-
<PAGE>

respect of which the Borrower has selected an Interest Period of six months, the
day that is three months after the first day of such Interest Period and the
last day of such Interest Period.

          "Interest Period": with respect to any Eurodollar Advance requested by
           ---------------
the Borrower, the period commencing on, as the case may be, the
Conversion/Continuation Date with respect to such Advance and ending one, two,
three or six months thereafter, as selected by the Borrower in its irrevocable
Notice of Conversion/Continuation, provided, however, that (i) if any Interest
Period would otherwise end on a day that is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless the result
of such extension would be to carry such Interest Period into another calendar
month, in which event such Interest Period shall end on the immediately
preceding Business Day, (ii) any Interest Period that begins on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of a calendar month, and (iii) the Borrower
shall select Interest Periods so as not to have more than 10 different Interest
Periods outstanding at any one time for all Term Loans.

          "Interest Rate Agreement": any interest rate swap agreement, interest
           -----------------------
rate cap agreement, interest rate collar agreement or other similar agreement or
arrangement to which the Borrower or any of its Subsidiaries is a party.

          "Investments": with respect to any Person, all investments by such
           -----------
Person in other Persons (including Affiliates of such Person) in the form of
loans, Contingent Obligations, advances or capital contributions (excluding
commission, travel and similar advances to officers and employees made in the
ordinary course of business), purchases or other acquisitions for consideration
of Indebtedness, Equity Interests or other securities and all other items that
are or would be classified as investments on a balance sheet prepared in
accordance with GAAP.  The amount of any Investment shall be the original cost
of such Investment plus the cost of all additions thereto, without any
                   ----
adjustments for increases or decreases in value, or write-ups, write-downs or
write-offs with respect to such Investment.

          "Leverage Ratio":  at any date of determination, the ratio of: (i)
           --------------
Total Debt to (ii) the sum of (A) Consolidated Pre-Minority EBITDA for (a) the
two fiscal quarter period ending June 30, 2000 multiplied by two, if the date of
determination is at any time during the period from the Effective Date through
September 29, 2000, (b) the three fiscal quarter period ended September 30, 2000
multiplied by four-thirds, if the date of determination is at any time during
the period from September 30, 2000 through December 30, 2000, and (c) the
immediately preceding four fiscal quarters (or, in the event that the date of
determination is a fiscal quarter ending date, the four fiscal quarter period
then ended), if the date of determination is at any time during the period from
and after December 31, 2000, less any Consolidated EBITDA during such period
                             ----
(multiplied by the same multiplication factors, if applicable, and adjusted
appropriately if such Permitted Acquisition occurred at any time after the first
day of such period) attributable to any Permitted Acquisition which occurred
during such period, plus (B) EBITDA attributable to any Permitted Acquisition
                    ----
which occurred during such period, calculated in the manner set forth

                                     -14-
<PAGE>

in the next sentence. For purposes of calculating the Leverage Ratio under this
clause (b), (i) Consolidated EBITDA and Consolidated Pre-Minority EBITDA shall
be adjusted to reflect any Asset Sale which occurred during such period as if it
occurred on the first day of such period and (ii) EBITDA attributable to any
Permitted Acquisition which occurred during such period as referred to in clause
(ii)(B) above shall be calculated as the EBITDA attributable to such Permitted
Acquisition for the immediately preceding four fiscal quarters (or in the event
that the date of determination is a fiscal quarter ending date, the four fiscal
quarter period then ended), which for the pre-acquisition period from the first
date of such four fiscal quarter period to the date such Permitted Acquisition
occurred shall equal the EBITDA attributable to the assets or Stock constituting
such Permitted Acquisition for such pre-acquisition period, as demonstrated to
the reasonable satisfaction of the Administrative Agent and as adjusted in a
manner reasonably satisfactory to the Administrative Agent to eliminate non-
continuing expenses included in such EBITDA.

          "Lien": any mortgage, pledge, hypothecation, assignment, deposit or
           ----
preferential arrangement, encumbrance, lien (statutory or other), or other
security agreement or security interest of any kind or nature whatsoever,
including, without limitation, any conditional sale or other title retention
agreement and any capital or financing lease having substantially the same
economic effect as any of the foregoing.

          "Loan Documents": collectively, this Agreement, the Notes, the
           --------------
Collateral Documents, the Subsidiary Guaranty, and the Intercreditor Agreement.

          "Loan": a Term Loan.
           ----

          "Loans":  the Term Loans.
           -----

          "Maintenance Capital Expenditures": all Capital Expenditures other
           --------------------------------
than Development Capital Expenditures.

          "Mandatory Scheduled Commitment Reductions": as defined in the
           -----------------------------------------
Revolving Credit Facility.

          "Mandatory Scheduled Payments": the mandatory scheduled payments of
           ----------------------------
the Term Loans required pursuant to Section 2.4(b).

          "Margin Stock": any "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": a material adverse change in (i) the
           -----------------------
financial condition, operations, business, prospects or Property of the Borrower
and its Subsidiaries taken as a whole, (ii) the ability of any Credit Party to
perform its obligations under the Loan

                                     -15-
<PAGE>

Documents to which it is a party or (iii) the ability of the Administrative
Agent, the Collateral Agent or the Lenders to enforce the Loan Documents.

          "Material Adverse Effect": a material adverse effect on (i) the
           -----------------------
financial condition, operations, business, prospects or Property of the Borrower
and its Subsidiaries taken as a whole, (ii) the ability of any Credit Party to
perform its obligations under the Loan Documents to which it is a party or (iii)
the ability of the Administrative Agent, the Collateral Agent or the Lenders to
enforce the Loan Documents.

          "Maturity Date": March 31, 2006, or such earlier date on which the
           -------------
Notes shall become due and payable, whether by acceleration or otherwise.

          "Minority Investment":  as defined in Section 8.5(g).
           -------------------

          "Multiemployer Plan": a Pension Plan that is a multiemployer plan as
           ------------------
defined in Section 4001(a)(3) of ERISA.

          "Net Cash Proceeds": with respect to any Asset Sale by any Person, the
           -----------------
excess, if any, of (i) the cash received by such Person and/or its Affiliates
(including any cash payments received by way of deferred payment pursuant to, or
monetization of, a note or installment receivable or otherwise, or release of
any sum from escrow or the deposit arrangement, but only as and when received)
in connection with such Asset Sale (provided that with respect to any Asset Sale
constituting the first transaction of an Asset Swap Transaction, the cash
proceeds received by such Person and/or any of its Affiliates shall not be
deemed received until the earliest to occur of (A) the closing date of the
Permitted Acquisition constituting the second transaction of such Asset Swap
Transaction, (B) the date on which the Borrower shall have determined that such
Permitted Acquisition will not occur, (C) the 366th day following the closing of
such Asset Sale and (D) the occurrence of an Event of Default), over (ii) the
sum of (A) the amount of any Indebtedness (other than Indebtedness under this
Agreement and the Revolving Credit Facility) that is secured by such asset and
which is required to be repaid by such Person in connection with such Asset
Sale, plus (B) the out-of-pocket expenses (1) incurred by such Person in
      ----
connection with such Asset Sale and (2) if such Person is a Subsidiary, incurred
in connection with the transfer of such amount to the parent company or entity
of such Person, plus (C) provision for taxes, including income taxes,
                ----
attributable to the Asset Sale or attributable to required prepayments or
repayments of Indebtedness with the proceeds of such Asset Sale, plus (D) a
                                                                 ----
reasonable reserve for any indemnification payments (fixed or contingent)
attributable to seller's indemnities and representations and warranties to
purchaser in respect of such Asset Sale undertaken by the Borrower or any of its
Subsidiaries in connection with such Asset Sale (which reserve amount shall be
reduced to the extent that it is reasonably determined that such reserve is in
excess of the amount reasonably required), plus (E) if such Person is a
                                           ----
Subsidiary, any dividends or distributions payable to holders of minority
interests in such Subsidiary from the proceeds of such Asset Sale, less (F) if
                                                                   ----
such Asset Sale is part of an Asset Swap Transaction, the sum of the aggregate
purchase price (to the extent paid in cash) of the Permitted Acquisition

                                     -16-
<PAGE>

constituting a part of such Asset Swap Transaction and the out-of-pocket
expenses incurred by such Person in connection with such Permitted Acquisition,
provided that Net Cash Proceeds shall not be less than $0.

          "New Subsidiary": as defined in Section 8.11.
           --------------

          "Note": a Term Loan Note.
           ----

          "Notes": the Term Loan Notes.
           -----

          "Notice of Conversion/Continuation": a notice substantially in the
           ---------------------------------
form of Exhibit F.

          "Obligations":  all obligations of every nature of the Credit Parties
           -----------
from time to time owed to the Administrative Agent, the Collateral Agent, the
Lenders or any of them under the Loan Documents, whether for principal,
interest, fees, expenses, indemnification or otherwise.

          "PBGC": the Pension Benefit Guaranty Corporation established pursuant
           ----
to Subtitle A of Title IV of ERISA, or any Governmental Authority succeeding to
the functions thereof.

          "Pension Plan": at any date of determination, any employee pension
           ------------
benefit plan (including a Multiemployer Plan) that is covered by Title IV of
ERISA or subject to the minimum funding standards under Section 412 of the Code,
the funding requirements of which (under Section 302 of ERISA or Section 412 of
the Code) are, or at any time within the five years immediately preceding such
date, were in whole or in part, the responsibility of the Borrower, any of its
Subsidiaries or any ERISA Affiliate, provided that the term Pension Plan shall
not include the employee benefit pension plans listed on Schedule 1.1(P).

          "Permitted Acquisition": any Acquisition permitted by Section 8.5(f).
           ---------------------

          "Permitted Lien": any Lien permitted under Section 8.2.
           --------------

          "Permitted Preferred Stock": preferred Stock of the Borrower that (i)
           -------------------------
is not redeemable or otherwise subject to any mandatory prepayment, repurchase,
sinking fund or other similar obligation, in whole or in part, for any reason
prior to March 31, 2007, except in the case of a change of control of the
Borrower (such definition of change of control to be not more restrictive than
the definition of "Change of Control" herein), such redemption or mandatory
prepayment, repurchase, sinking fund or other similar obligation in the event of
change of control to be fully and absolutely subordinated to the indefeasible
prior payment in full of all principal, interest and other obligations of the
Credit Parties under the Loan Documents pursuant to subordination terms
satisfactory to the Administrative Agent and the Syndication Agent, (ii) permits
dividends to be payable in additional shares of Permitted Preferred Stock or
common

                                     -17-
<PAGE>

Stock of the Borrower and does not require dividends to be payable in cash or
other Property, (iii) contains restrictions and covenants reasonably
satisfactory to the Administrative Agent and the Syndication Agent, and (iv) is
not convertible into or exchangeable for any security other than Permitted
Preferred Stock or common Stock of the Borrower.

          "Person": any individual, firm, partnership, joint venture,
           ------
corporation, association, business enterprise, joint stock company,
unincorporated association, trust, Governmental Authority or any other entity,
whether acting in an individual, fiduciary, or other capacity, and for the
purpose of the definition of "ERISA Affiliate", a trade or business.

          "Process Administrative Agent": as defined in Section 11.17.
           ----------------------------

          "Prohibited Transaction": a transaction that is prohibited under
           ----------------------
Section 4975 of the Code or Section 406 of ERISA and not exempt under Section
4975 of the Code or Section 408 of ERISA.

          "Property": all types of real, personal, tangible, intangible or mixed
           --------
property.

          "Pro Rata Share": with respect to each Lender, the percentage obtained
           --------------
by dividing (x) the Credit Exposure of that Lender by (y) the Aggregate Credit
Exposure of all Lenders, as such percentage may be adjusted by assignments
permitted pursuant to Section 11.7 and by prepayments made pursuant to Section
2.4(d).  The initial Pro Rata Share of each Lender is set forth opposite the
name of that Lender in Exhibit A.

          "Public Debt": as defined in Section 8.1.
           -----------

          "Puerto Rico Asset Sale": the sale of certain assets of Total Renal
           ----------------------
Care Puerto Rico, Inc. pursuant to the Asset Purchase Agreement, dated January
18, 2000, by and between Fresenius Medical Care Holdings, Inc. and TRC, as
amended.

          "Qualified Issuer":  (A) any Lender hereunder, (B) any lender that is
           ----------------
a party to the Revolving Credit Facility and (C) any commercial bank that has
capital and surplus in excess of $100,000,000.

          "Real Property": all real property owned or leased by the Borrower or
           -------------
any of its Subsidiaries.

          "Register":  as defined in Section 11.7(b).
           --------

          "Reinvested Proceeds": with respect to any Asset Sale as of any date
           -------------------
of determination, the amount of Net Cash Proceeds from such Asset Sale that is
not required to be immediately applied to the prepayment of the Term Loans or
the Revolving Credit Loans pursuant to Section 2.4(f)(i) hereof and Section
2.7(f)(i) of the Revolving Credit Facility and that

                                     -18-
<PAGE>

has been used by the Borrower or any of its Subsidiaries to acquire, during the
Reinvestment Period, Property that is to be used in the same or a related line
of business of the Borrower.

          "Reinvestment Period": the period beginning on, and ending 730 days
           -------------------
after, the date that proceeds from an Asset Sale are received by the Borrower or
any of its Subsidiaries, as the case may be.

          "Relevant Date":  (i) in the case of each Lender listed on the
           -------------
signature pages hereof, the Effective Date, and (ii) in the case of each other
Lender, the effective date of the Assignment and Acceptance Agreement or other
document pursuant to which it became a Lender.

          "Remaining Interest Period": (i) in the event that the Borrower shall
           -------------------------
fail for any reason to convert an Advance to, or continue an Advance as, a
Eurodollar Advance after it shall have notified the Administrative Agent of its
intent to do so, a period equal to the Interest Period that the Borrower elected
in respect of such Eurodollar Advance; or (ii) in the event that a Eurodollar
Advance shall terminate for any reason prior to the last day of the Interest
Period applicable thereto, a period equal to the remaining portion of such
Interest Period if such Interest Period had not been so terminated; or (iii) in
the event that the Borrower shall prepay or repay all or any part of the
principal amount of a Eurodollar Advance prior to the last day of the Interest
Period applicable thereto, a period equal to the period from and including the
date of such prepayment or repayment to but excluding the last day of such
Interest Period.

          "Reportable Event": with respect to any Pension Plan, (i) any event
           ----------------
set forth in Sections 4043(b) (other than a Reportable Event as to which the 30
day notice requirement is waived by the PBGC under applicable regulations),
4062(c) or 4063(a) of ERISA or the regulations thereunder or (ii) an event
requiring the Borrower, any of its Subsidiaries or any ERISA Affiliate to
provide security to a Pension Plan under Section 401(a)(29) of the Code.

          "Required Lenders": Lenders having Credit Exposure equal to at least
           ----------------
51% of the Aggregate Credit Exposure.

          "Required Payment": as defined in Section 2.8(a).
           ----------------

          "Restricted Payment": as to any Person (i) any dividend or other
           ------------------
distribution, direct or indirect, on account of any shares of any class of Stock
or other equity interest in such Person now or hereafter outstanding (other than
a dividend payable solely in shares of such Stock to the holders of such
shares), (ii) any redemption, retirement, sinking fund or similar payment,
purchase or other acquisition, direct or indirect, of any shares of any class of
Stock or other equity interest in such Person now or hereafter outstanding and
(iii) any tax sharing or similar payment payable by such Person to another
Person.

          "Revolving Credit Commitment": as defined in the Revolving Credit
           ---------------------------
Facility.

                                     -19-
<PAGE>

          "Revolving Credit Facility": the Second Amended and Restated Revolving
           -------------------------
Credit Agreement, dated as of the date hereof, by and among the Borrower, the
lenders party thereto, DLJ Capital Funding, Inc., as syndication agent, First
Union National Bank, as documentation agent, and BNY, as administrative agent,
together with all other documents executed in connection therewith, as the same
may be amended, supplemented, refinanced or otherwise modified from time to time
in accordance with Section 8.9.   Upon any amendment, supplement, refinancing or
other modification of the Revolving Credit Facility, all references herein to
definitions or sections in the Revolving Credit Facility shall be deemed to
refer to the corresponding definitions or sections in the Revolving Credit
Facility as so amended, supplemented, refinanced or modified.

          "Revolving Credit Loan" and "Revolving Credit Loans": as defined in
           ---------------------       ----------------------
the Revolving Credit Facility.

          "Revolving Credit Term Tranche Loan" and "Revolving Credit Term
           ----------------------------------       ---------------------
Tranche Loans": shall mean a "Term Tranche Loan" and the "Term Tranche Loans",
- -------------
respectively, as defined in the Revolving Credit Facility.

          "Revolving Credit Tranche Loan" and "Revolving Credit Tranche Loans":
           -----------------------------       ------------------------------
shall mean a "Revolving Tranche Loan" and the "Revolving Tranche Loans",
respectively, as defined in the Revolving Credit Facility.

          "Revolver Prepayment Fraction": a fraction equal to 1.00 minus the
           ----------------------------
Term Prepayment Fraction.

          "RTC": Renal Treatment Centers, Inc., a Delaware corporation and a
           ---
wholly-owned Subsidiary of the Borrower.

          "RTC Convertible Subordinated Guaranty": The Guaranty, dated as of
           -------------------------------------
March 31, 1998, made by the Borrower in favor of Chase Manhattan Trust Company,
N. A., as trustee, pursuant to which the Borrower guaranteed, on a subordinated
basis, the RTC Convertible Subordinated Notes, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with Section
8.9.

          "RTC Convertible Subordinated Indenture":  the Indenture, dated as of
           --------------------------------------
June 12, 1996, between RTC and Chase Manhattan Trust Company, N. A., as trustee,
pursuant to which RTC issued the RTC Convertible Subordinated Notes, as amended
by that certain First Supplemental Indenture dated as of February 27, 1998 and
that certain Second Supplemental Indenture dated as of March 31, 1998, and as
the same may be further amended, supplemented or otherwise modified from time to
time in accordance with Section 8.9.

          "RTC Convertible Subordinated Notes": the 5-5/8% Convertible
           ----------------------------------
Subordinated Notes, due 2006, issued by RTC pursuant to the RTC Convertible
Subordinated Indenture, as the

                                     -20-
<PAGE>

same may be amended, supplemented or otherwise modified from time to time in
accordance with Section 8.9.

          "Scheduled Existing Deferred Payment Obligations":  the joint venture
           -----------------------------------------------
put obligations and deferred acquisition/earnout payment obligations of the
Borrower and its Subsidiaries, in each case payable under contracts existing on
the Effective Date as set forth on Schedule 1.1(S).

          "SEC": the Securities and Exchange Commission or any Governmental
           ---
Authority succeeding to the functions thereof.

          "Security Agreement":  the Security Agreement, substantially in the
           ------------------
form of Exhibit I, as amended, supplemented or otherwise modified from time to
time.

          "Special Counsel": such counsel as the Administrative Agent may from
           ---------------
time to time consult with in connection with the Loan Documents and the
transactions contemplated hereby.

          "Stock": any and all shares, rights, interests, participations,
           -----
warrants or other equivalents (however designated) of corporate stock.

          "Subordinated Indebtedness":  any unsecured Indebtedness of the
           -------------------------
Borrower subordinated in right of payment to the payment in full of the
Obligations of the Borrower and other senior obligations of the Borrower;
provided that (i) the negative covenants in such subordinated Indebtedness are
less restrictive than the negative covenants in this Agreement as in effect at
the time such subordinated Indebtedness is incurred, (ii) the affirmative
covenants in such subordinated Indebtedness are no more restrictive that the
affirmative covenants in this Agreement as in effect at the time such
subordinated Indebtedness is incurred, (iii) the events of default in such
subordinated Indebtedness 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 Indebtedness is incurred,
(iv) such subordinated Indebtedness does not cross-default to other Indebtedness
(but may cross-accelerate to other Indebtedness of Borrower or any Guarantor
that has guarantied such subordinated Indebtedness), (v) the subordination
provisions in such subordinated Indebtedness are on market terms for
subordinated debt instruments prevailing at or around the time such subordinated
Indebtedness is incurred and (vi) such subordinated Indebtedness provides for no
scheduled payment or mandatory prepayments of principal before March 31, 2007
other than (x) redemptions made at the option of the holders of such
subordinated Indebtedness upon a change in control of the Borrower in
circumstances where the Lenders under this Agreement would have rights to
prepayment under Section 2.4(c), provided that any such redemptions are made not
fewer than 30 days after such change in control and provided that such
redemptions are 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 Indebtedness allows the Borrower to satisfy such mandatory
prepayment

                                     -21-
<PAGE>

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.

          "Subsidiary": as to any Person, any corporation, association,
           ----------
partnership, joint venture or other business entity of which such Person or any
Subsidiary of such Person, directly or indirectly, either (i) in respect of a
corporation, owns or controls more than 50% of the outstanding Stock having
ordinary voting power to elect a majority of the board of directors or similar
managing body, irrespective of whether a class or classes shall or might have
voting power by reason of the happening of any contingency, or (ii) in respect
of an association, partnership, joint venture or other business entity, is
entitled to share in more than 50% of the profits and losses, however
determined.

          "Subsidiary Guaranty": the Amended and Restated Subsidiary Guaranty,
           -------------------
substantially in the form of Exhibit J, as amended, supplemented or otherwise
modified from time to time.

          "Tax": any present or future tax, levy, impost, duty, charge, fee,
           ---
deduction or withholding of any nature and whatever called, by a Governmental
Authority, imposed, levied, collected, withheld or assessed with respect to any
payment by the Borrower pursuant to this Agreement or any other Loan Document,
and all liabilities with respect thereto.

          "Tax on the Income": as to any Person, a Tax imposed by one of the
           -----------------
following jurisdictions or by any political subdivision or taxing authority
thereof: (i) the United States, (ii) the jurisdiction in which such Person is
organized, (iii) the jurisdiction in which such Person's principal office is
located, or (iv) in the case of each Lender, any jurisdiction in which such
Person is deemed to be doing business; which Tax is an income tax (or any tax
in lieu thereof or equivalent thereto) or franchise tax imposed on all or part
of the net income or net profits of such Person or with respect to the net
increase in the shareholders' or owners' equity or capital in such Person or
which Tax represents interest, fees or penalties for payment of any such income
tax or franchise tax.

          "Termination Event": with respect to any Pension Plan, (i) a
           -----------------
Reportable Event, (ii) the termination of a Pension Plan, or the filing of a
notice of intent to terminate a Pension Plan, or the treatment of a Pension Plan
amendment as a termination, in each case under Section 4041(c) of ERISA, (iii)
the institution of proceedings to terminate a Pension Plan under Section 4042 of
ERISA, or (iv) the appointment of a trustee to administer any Pension Plan under
Section 4042 of ERISA.

          "Term Loan" and "Term Loans": as defined in Section 2.1.
           ---------       ----------

          "Term Note" and "Term Notes": as defined in Section 2.2.
           ---------       ----------

          "Term Prepayment Fraction": on any date of calculation, a fraction
           ------------------------
determined by dividing (a) the aggregate outstanding principal amount of the
Term Loans as of such date by

                                     -22-
<PAGE>

(b) the sum of (i) the aggregate outstanding principal amount of the Term Loans
as of such date plus (ii) the Aggregate Revolving Credit Commitments as of such
date.

          "Total Debt": the difference between (i) all Indebtedness (less
           ----------
Excluded Contingent Obligations) and (ii) cash and cash equivalents, in each
case, of the Borrower and its Subsidiaries on a Consolidated basis in accordance
with GAAP.

          "Transactions": the transactions contemplated under this Agreement,
           ------------
the other Loan Documents and the Revolving Credit Facility, including the
borrowing of loans, the issuances of letters of credit and other transactions
related to any of the foregoing.

          "TRC": Total Renal Care, Inc., a California corporation.
           ---

          "Unfunded Pension Liabilities": with respect to any Pension Plan, at
           ----------------------------
any date of determination, the amount determined by taking the accumulated
benefit obligation, as disclosed in accordance with Statement of Accounting
Standards No. 87, "Employers' Accounting for Pensions", over the fair market
value of Pension Plan assets.

          "United States": the United States of America (including the States
           -------------
thereof, the District of Columbia, Guam and Puerto Rico).

          "Unqualified Amount": as defined in Section 2.6(c).
           ------------------

          "Unrecognized Retiree Welfare Liability": with respect to any Employee
           --------------------------------------
Benefit Plan that provides postretirement benefits other than pension benefits,
the amount of the transition obligation, as determined in accordance with
Statement of Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," as of the most recent valuation
date, that has not been recognized as an expense in an income statement of the
Borrower and its Subsidiaries, provided that (i) prior to the date such
Statement is applicable to the Borrower, such amount shall be based on an
estimate made in good faith of such transition obligation, and (ii) for purposes
of determining the aggregate amount of the Unrecognized Retiree Welfare
Liability, Plans maintained by a Subsidiary that is not otherwise an ERISA
Affiliate shall be included.

    1.2.  Principles of Construction
          --------------------------
          (a)  All terms defined in this Agreement shall have the meanings given
such terms herein when used in the other Loan Documents or any certificate,
opinion or other document made or delivered pursuant hereto, unless otherwise
expressly provided therein.

          (b)  As used in the Loan Documents and in any certificate, opinion or
other document made or delivered pursuant thereto, accounting terms not defined
in Section 1.1, and accounting terms partly defined in Section 1.1, to the
extent not defined, shall have the respective meanings given to them under GAAP.

                                     -23-
<PAGE>

          (c)  The words "hereof", "herein", "hereto" and "hereunder" and
similar words when used in a Loan Document shall refer to such Loan Document as
a whole and not to any particular provision thereof, and Section, schedule and
exhibit references contained therein shall refer to Sections thereof or
schedules or exhibits thereto unless otherwise expressly provided therein.

          (d)  The phrase "may not" is prohibitive and not permissive.

          (e)  Unless the context otherwise requires, words in the singular
number include the plural, and words in the plural include the singular.

          (f)  Unless specifically provided in a Loan Document to the contrary,
references to a time shall refer to New York City time.

          (g)  Unless specifically provided in a Loan Document to the contrary,
in the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and "until"
each mean "to but excluding".

2.  AMOUNT AND TERMS OF TERM LOANS
    -------------------------------

    2.1.  Term Loans
          ----  ----

          The aggregate outstanding principal amount of the Term Loans (under
and as defined in the Existing Term Loan Agreement) was $338,773,386 immediately
prior to the effectiveness of this Agreement (including, without limitation,
immediately prior to the prepayment of the Term Loans referred to in Section
5.10 of this Agreement).  Simultaneously with the effectiveness of this
Agreement (and after giving effect to the prepayment of the Term Loans referred
to in Section 5.10 of this Agreement): (i) such aggregate outstanding Term Loans
shall be equal to $312,247,715 and (ii) each such Lender's outstanding Term Loan
shall be equal to its Pro Rata Share of such Term Loans (as so prepaid pursuant
to Section 5.10, a "Term Loan" and as the context may require, collectively with
                    ---------
all other Term Loans, as so prepaid pursuant to Section 5.10, of such Lender and
with the Term Loans, as so prepaid pursuant to Section 5.10, of all other
Lenders, the "Term Loans").  Term Loans, to the extent repaid or prepaid, may
              ----------
not be reborrowed.

     2.2. Term Notes
          ----------

          (a)  Each Lender's Term Loans shall be evidenced by the Term Note (as
defined in the Existing Term Loan Agreement) delivered to it pursuant to the
Existing Term Loan Agreement. Upon request of any Lender, and in exchange for
its existing Term Note, the Borrower shall execute and deliver to such Lender a
new promissory note of the Borrower, substantially in the form of Exhibit B (the
Term Note (as defined in the Existing Term Loan Agreement) and each such new
promissory note, in each case as indorsed or modified from time

                                     -24-
<PAGE>

to time, including all replacements thereof and substitutions therefor, a "Term
                                                                           ----
Note" and, collectively with the Term Notes of all other Lenders, the "Term
- ----                                                                   ----
Notes"), payable to the order of such Lender for the account of its Applicable
- -----
Lending Office and representing the obligation of the Borrower to pay the
aggregate unpaid principal balance of such Lender's Term Loans, with interest
thereon as prescribed in Section 2.6.

            (b)    The Term Loans shall be due and payable on the Maturity Date.

     2.3.   [Intentionally Omitted]
     2.4.   Prepayments of the Term Loans
            -----------------------------
            (a)    Voluntary Prepayments.
                   ---------------------

                   (i)  The Borrower may, at its option, subject to
     Section 2.4(a)(ii) below, prepay the Term Loans, without premium or
     penalty, in full at any time or in part from time to time, by notifying the
     Administrative Agent in writing at least one Business Day prior to the
     proposed prepayment date, in the case of Loans consisting of ABR Advances,
     and at least three Business Days prior to the proposed prepayment date, in
     the case of Loans consisting of Eurodollar Advances, specifying the Term
     Loans to be prepaid, whether such Loans consist of ABR Advances, Eurodollar
     Advances, or a combination thereof, the amount to be prepaid and the date
     of prepayment. Such notice shall be irrevocable and the amount specified in
     such notice shall be due and payable on the date specified, together with
     accrued interest to the date of such payment on the amount prepaid. Upon
     receipt of such notice, the Administrative Agent shall promptly notify each
     Lender thereof. Each partial prepayment made pursuant to this subsection of
     Term Loans (when added to the prepayment of the Revolving Credit Term
     Tranche Loans required by Section 2.4(a)(ii) below) shall be in an
     aggregate principal amount of $1,000,000 or such amount plus a whole
     multiple of $250,000 in excess thereof (or, if less, the outstanding
     principal balance of the Revolving Credit Term Tranche Loan and Term Loans
     being prepaid). After giving effect to any partial prepayment with respect
     to Eurodollar Advances that were made (whether as the result of a borrowing
     or a conversion) on the same date and that had the same Interest Period,
     the outstanding principal amount of such Eurodollar Advances shall equal
     (subject to Section 2.5) $5,000,000 or such amount plus a whole multiple of
     $500,000 in excess thereof.

                   (ii) The Borrower may not (x) make a voluntary prepayment of
     the Term Loans pursuant to Section 2.4(a)(i) unless, concurrently with such
     prepayment, the Borrower makes a voluntary prepayment of the Revolving
     Credit Term Tranche Loans pursuant to Section 2.7(a) of the Revolving
     Credit Facility or (y) make a voluntary prepayment of the Revolving Credit
     Term Tranche Loans pursuant to Section 2.7(a) of the Revolving Credit
     Facility unless, concurrently with such prepayment, the Borrower makes a
     voluntary prepayment of the Term Loans pursuant to this Section 2.4(a).
     Such prepayments shall be in an amount equal to (A) in the case of the
     Revolving Credit Term Tranche Loans, the aggregate amount of such voluntary
     prepayment of the Revolving Credit Term Tranche Loans and Term Loans
     multiplied

                                     -25-
<PAGE>

     by the Revolver Prepayment Fraction and (B) in the case of the Term Loans,
     the aggregate amount of such voluntary prepayment of the Revolving Credit
     Term Tranche Loans and Term Loans multiplied by the Term Prepayment
     Fraction.

          (b)  Mandatory Scheduled Prepayments.
               -------------------------------
          (i)  The Borrower shall make principal payments of the Term Loans in
installments on (or, subject to Section 2.4(b)(ii) below, at the Borrower's
option, upon three Business Days' written notice to the Administrative Agent
(which notice shall be irrevocable), at any time prior to) each of the following
dates in the amount set forth next to such date:

<TABLE>
<CAPTION>
                                                         Mandatory
                                                         Scheduled
Dates                                                    Payments
- -----                                                    ---------
- ---------------------------------------------------------------------
<S>                                                     <C>
September 30, 2000                                       $    969,000
- ---------------------------------------------------------------------
December 31, 2000                                        $  1,123,000
- ---------------------------------------------------------------------
March 31, 2001                                           $  1,146,000
- ---------------------------------------------------------------------
June 30, 2001                                            $  1,146,000
- ---------------------------------------------------------------------
September 30, 2001                                       $  1,146,000
- ---------------------------------------------------------------------
December 31, 2001                                        $  1,146,000
- ---------------------------------------------------------------------
March 31, 2002                                           $  1,253,000
- ---------------------------------------------------------------------
June 30, 2002                                            $  1,253,000
- ---------------------------------------------------------------------
September 30, 2002                                       $  1,253,000
- ---------------------------------------------------------------------
December 31, 2002                                        $  1,253,000
- ---------------------------------------------------------------------
March 31, 2003                                           $  1,425,000
- ---------------------------------------------------------------------
June 30, 2003                                            $ 15,484,000
- ---------------------------------------------------------------------
September 30, 2003                                       $ 15,484,000
- ---------------------------------------------------------------------
December 31, 2003                                        $ 15,484,000
- ---------------------------------------------------------------------
March 31, 2004                                           $ 17,489,000
- ---------------------------------------------------------------------
June 30, 2004                                            $ 17,489,000
- ---------------------------------------------------------------------
September 30, 2004                                       $ 17,489,000
- ---------------------------------------------------------------------
December 31, 2004                                        $ 17,489,000
- ---------------------------------------------------------------------
March 31, 2005                                           $ 17,489,000
- ---------------------------------------------------------------------
June 30, 2005                                            $ 17,489,000
- ---------------------------------------------------------------------
September 30, 2005                                       $ 17,489,000
- ---------------------------------------------------------------------
December 31, 2005                                        $ 17,489,000
- ---------------------------------------------------------------------
March 31, 2006                                           $112,770,715
- ---------------------------------------------------------------------
</TABLE>

; provided that the Term Loans and all other amounts owed hereunder with respect
to the Term Loans shall be paid in full no later than the Maturity Date, and the
final installment payable by the Borrower in respect of the Term Loans on such
date shall be in an amount, if such amount is

                                     -26-
<PAGE>

different from that specified above, sufficient to repay all amounts owing by
the Borrower under this Agreement with respect to the Term Loans.

     (ii) The Borrower may not (x) make a principal payment of the Term Loans
pursuant to Section 2.4(b)(i) above prior to the scheduled due date thereof
unless, concurrently with such payment, the Borrower makes a reduction of the
Aggregate Revolving Credit Commitments (and corresponding payment of the
Revolving Credit Loans) pursuant to Section 2.6(b) of the Revolving Credit
Facility or (y) make a reduction of the Aggregate Revolving Credit Commitments
(and corresponding payment of the Revolving Credit Loans) pursuant to Section
2.6(b) of the Revolving Credit Facility prior to the scheduled due date thereof
unless, concurrently with such reduction, the Borrower makes a payment of the
Term Loans pursuant to this Section 2.4(b).  In such event, (A) the Borrower
shall specify the Mandatory Scheduled Payment and Mandatory Scheduled Commitment
Reduction against which such payment and reduction shall be applied, which
Mandatory Scheduled Payment and Mandatory Scheduled Commitment Reduction shall
have been originally scheduled to have been paid and reduced on the same date,
(B) such payment of the Term Loans (when added to the concurrent reduction of
the Aggregate Revolving Credit Commitments (and corresponding payment of the
Revolving Credit Loans)) shall be in an aggregate amount of $1,000,000 or such
amount plus a whole multiple of $250,000 in excess thereof (or, if less, the
aggregate amount of the Mandatory Scheduled Payment and Mandatory Scheduled
Commitment Reduction against which such payment and reduction shall be applied),
(C) such payment of the Term Loans shall be in an amount equal to the aggregate
amount of such proposed payment of the Term Loans and reduction of the Aggregate
Revolving Credit Commitments (and corresponding payment of the Revolving Credit
Loans) multiplied by a fraction, (x) the numerator of which is the amount of the
originally scheduled Mandatory Scheduled Payment (as in effect on the Effective
Date) against which such payment is to be applied and (y) the denominator of
which is the sum of the amount of the originally scheduled Mandatory Scheduled
Payment (as in effect on the Effective Date) against which such payment is to be
applied and the amount of the originally scheduled Mandatory Scheduled
Commitment Reduction (as in effect on the Effective Date) against which such
reduction is to be applied, and (D) such reduction of the Aggregate Revolving
Credit Commitments (and corresponding payment of the Revolving Credit Loans)
shall be in an amount equal to the aggregate amount of such proposed payment of
the Term Loans and reduction of the Aggregate Revolving Credit Commitments (and
corresponding payment of the Revolving Credit Loans) multiplied by a fraction,
(x) the numerator of which is the amount of the originally scheduled Mandatory
Scheduled Commitment Reduction (as in effect on the Effective Date) against
which such payment is to be applied and (y) the denominator of which is the sum
of the amount of the originally scheduled Mandatory Scheduled Payment (as in
effect on the Effective Date) against which such payment is to be applied and
the amount of the originally scheduled Mandatory Scheduled Commitment Reduction
(as in effect on the Effective Date) against which such reduction is to be
applied.

          (c)  Mandatory Prepayments Relating to a Change of Control.  Upon the
               -----------------------------------------------------
occurrence of a Change of Control, the Borrower shall (i) prepay in full the
outstanding principal

                                     -27-
<PAGE>

balance of the Term Loans, together with accrued and
unpaid interest thereon and (ii) pay in full all fees and other amounts payable
under the Loan Documents

          (d)  Mandatory Prepayments Relating to Issuances of Public Debt.  Upon
               ----------------------------------------------------------
the date of any issuance of Public Debt by the Borrower, the Borrower shall
prepay the Term Loans in an amount equal to the Term Prepayment Fraction
multiplied by the aggregate proceeds of such issuance of Public Debt (net of
sales and other commissions and legal and other related expenses incurred in
connection with such issuance).

          (e)  Mandatory Prepayments Relating to Issuances of Subordinated
               -----------------------------------------------------------
Indebtedness. Upon the date of any issuance of Subordinated Indebtedness by the
- ------------
Borrower, the Borrower shall prepay the Term Loans in an amount equal to the
Term Prepayment Fraction multiplied by the sum of the first $100,000,000 plus
50% (100% if immediately before or after giving effect thereto a Default or
Event of Default shall exist) of the excess over $100,000,000 of the aggregate
proceeds (net of sales and other commissions and legal and other related
expenses incurred in connection with such issuance) received by the Borrower in
connection with such issuance of Subordinated Indebtedness.

          (f)  Mandatory Prepayments Relating to Sales of Property. With respect
               ---------------------------------------------------
to each Asset Sale (excluding the Puerto Rico Asset Sale), (i) the Borrower
shall prepay the Term Loans within one Business Day of each date that it shall
receive Net Cash Proceeds resulting from such Asset Sale in an amount equal to
the applicable Asset Sale Prepayment Percentage of the Term Prepayment Fraction
multiplied by such Net Cash Proceeds, and (ii) in no event later than the
earlier to occur of the first Business Day after the end of the Reinvestment
Period with respect to such Asset Sale or the occurrence of an Event of Default,
the Borrower shall prepay the Term Loans in an amount equal to the Term
Prepayment Fraction multiplied by the Adjusted Net Cash Proceeds applicable to
such Asset Sale.

          (g)  Mandatory Prepayments relating to Issuances of Preferred Stock.
               ---------------------------------------------------------------
Upon the date of any issuance of Permitted Preferred Stock, the Borrower shall
prepay the Term Loans in an amount equal to the Term Prepayment Fraction
multiplied by 50% (100% if immediately before or after giving effect thereto a
Default or Event of Default shall exist) of the aggregate proceeds (net of sales
and other commissions and legal and other related expenses incurred in
connection with such issuance) received by the Borrower in connection with such
issuance of Permitted Preferred Stock.

          (h)  Application of Term Loan Prepayments. Prepayments of the Term
               ------------------------------------
Loans made pursuant to: (A) Section 2.4(a) shall be applied to the remaining
Mandatory Scheduled Payments in inverse order of maturity, (B) Section 2.4(b)
shall be applied to the applicable Mandatory Scheduled Payment(s) being paid,
(C) Section 2.4(d) or 2.4(e) shall be applied to the remaining Mandatory
Scheduled Payments in inverse order of maturity, (D) Section 2.4(f) shall be
applied to the remaining Mandatory Scheduled Payments in accordance with the
Asset Sales

                                     -28-
<PAGE>

Application Method, and (E) Section 2.4(g) shall be applied on a pro rata
weighted basis among the remaining Mandatory Scheduled Payments.

          (i)  In General.  Each prepayment of Term Loans shall first be applied
               ----------
to the ABR Advances thereunder. If any prepayment is made in respect of any
Eurodollar Advance in whole or in part, prior to the last day of the applicable
Interest Period, the Borrower agrees to indemnify the Lenders in accordance with
Section 2.11.

    2.5.  Conversions and Continuations
          -----------------------------

          (a)  The Borrower may elect from time to time to convert Eurodollar
Advances to ABR Advances by giving the Administrative Agent at least one
Business Day's prior irrevocable notice of such election (confirmed by the
delivery of a Notice of Conversion/Continuation), specifying the amount to be so
converted. In addition, the Borrower may elect from time to time to (i) convert
ABR Advances to Eurodollar Advances and (ii) continue Eurodollar Advances by
selecting a new Interest Period therefor, in each case by giving the
Administrative Agent irrevocable notice no later than 2:00 P.M. at least three
Business Days prior to such election (confirmed by the delivery of a Notice of
Conversion/Continuation), in the case of a conversion to, or continuation of,
Eurodollar Advances, specifying the amount to be so converted or continued and
the initial Interest Period relating thereto, provided that any such conversion
of ABR Advances to Eurodollar Advances shall only be made on a Business Day and
any such continuation of Eurodollar Advances shall only be made on the last day
of the Interest Period applicable to the Eurodollar Advances that are to be
continued as such new Eurodollar Advances. The Administrative Agent shall
promptly provide the Lenders with a copy of each such Notice of
Conversion/Continuation. Advances may be converted or continued pursuant to this
Section in whole or in part, provided that conversions of ABR Advances to
Eurodollar Advances, or continuations of Eurodollar Advances, shall be in an
aggregate principal amount of $5,000,000 or such amount plus a whole multiple of
$500,000 in excess thereof.

          (b)  Notwithstanding anything in this Section to the contrary, no ABR
Advance may be converted to a Eurodollar Advance and no Eurodollar Advance may
be continued if the Borrower or the Administrative Agent has knowledge that a
Default or Event of Default has occurred and is continuing either (i) at the
time the Borrower shall notify the Administrative Agent of its election to
convert or continue or (ii) on the requested Conversion/Continuation Date. In
such event, (A) each ABR Advance shall be automatically continued as an ABR
Advance and (B) each Eurodollar Advance shall be automatically converted to an
ABR Advance on the last day of the Interest Period applicable to such Eurodollar
Advance.

          (c)  No Interest Period selected in respect of conversion or
continuation of any Eurodollar Advance shall end after the Maturity Date.
Notwithstanding anything herein to the contrary, the Borrower shall select
Interest Periods such that, on each date that a mandatory principal payment is
required to be made pursuant to Section 2.4(b), the outstanding principal

                                     -29-
<PAGE>

balance of all ABR Advances, when added to the aggregate principal amount of
each Eurodollar Advance, the applicable Interest Period of which shall end on
such date, shall equal or exceed the aggregate principal amount of the Term
Loans required to be paid on such date pursuant to Section 2.4(b).

          (d)  Each conversion or continuation shall be effected by each Lender
by applying the proceeds of its new ABR Advance or Eurodollar Advance, as the
case may be, to its Advances (or portion thereof) being converted (it being
understood that such conversion shall not constitute a borrowing for purposes of
Section 4).

          (e)  Notwithstanding anything to the contrary contained in any Loan
Document, if the Borrower shall fail, for any reason, to convert or continue a
Eurodollar Advance under this Section 2.5 in connection with the expiration of
an Interest Period with respect to any existing Eurodollar Advance, then such
Eurodollar Advance shall be converted to an ABR Advance until such time, if any,
as the Borrower shall elect a new Eurodollar Advance pursuant to this Section
2.5.

          (f)  Notices in respect of a conversion or continuation given by
telecopy shall be deemed given when received by telecopy and shall be promptly
confirmed in writing within five Business Days. The Administrative Agent and the
Lenders may rely on a telecopied notice of conversion or continuation whether
such notice is confirmed by the delivery of a Notice of Conversion/Continuation.

    2.6.  Interest Rate and Payment Dates
          -------------------------------

          (a)  Prior to Maturity. Except as otherwise provided in
               -----------------
Section 2.6(b), prior to maturity the Loans shall bear interest on the
outstanding principal balance thereof at the applicable interest rate or rates
per annum set forth below:

<TABLE>
<CAPTION>
        Loans                                          Rate
        -----                                          ----
- ---------------------------------------------------------------------------
<S>                                      <C>
Each ABR Advance                         Alternate Base Rate plus the
                                         Applicable Margin.
- ---------------------------------------------------------------------------
Each Eurodollar Advance                  Eurodollar Rate applicable to such
                                         Eurodollar Advance for the
                                         applicable Interest Period plus
                                         the Applicable Margin.
- ---------------------------------------------------------------------------
</TABLE>

          (b)  Event of Default. After the occurrence and during the continuance
               ----------------
of an Event of Default under Section 9.1(a), (b) (with respect to interest), (h)
or (i), the outstanding principal balance of the Loans shall bear interest at a
rate per annum equal to 2% plus the rate that would otherwise be applicable
under Section 2.6(a) until, in the case of Eurodollar Advances


                                     -30-
<PAGE>

the end of the applicable Interest Period therefor, and, thereafter, at the
Alternate Base Rate plus the Applicable Margin plus 2%, payable in the case of
interest on any overdue principal, on demand. Any overdue interest or other
amount payable under the Loan Documents shall bear interest at a rate per annum
equal to the Alternate Base Rate plus 2% and shall be payable on demand.

          (c)  In General. Interest on (i) ABR Advances, to the extent based on
               ----------
the BNY Rate, shall be calculated on the basis of a 365 or 366-day year (as the
case may be) and (ii) ABR Advances, to the extent based on the Federal Funds
Rate, and Eurodollar Advances shall be calculated on the basis of a 360-day
year, in each case for the actual number of days elapsed, including the first
day but excluding the last. Except as otherwise provided in Section 2.6(b),
interest shall be payable in arrears on each Interest Payment Date and upon each
payment (including prepayment) or conversion of the Loans. Any change in the
interest rate on the Loans resulting from a change in the Alternate Base Rate or
reserve requirements or charges described in clause (b) of the definition of
"Eurodollar Rate" shall become effective as of the opening of business on the
day on which such change shall become effective. The Administrative Agent shall,
as soon as practicable, notify the Borrower and the Lenders of the effective
date and the amount of each such change in the BNY Rate, but any failure to so
notify shall not in any manner affect the obligation of the Borrower to pay
interest on the Loans in the amounts and on the dates required. Each
determination of the Alternate Base Rate or a Eurodollar Rate by the
Administrative Agent pursuant to this Agreement shall be conclusive and binding
on the Borrower absent manifest error. At no time shall the interest rate
payable on the Loans, together with all other amounts payable under the Loan
Documents, to the extent the same are construed to constitute interest, exceed
the Highest Lawful Rate. If in respect of any period during the term of this
Agreement, any amount paid hereunder, to the extent the same shall (but for the
provisions of this Section) constitute or be deemed to constitute interest,
would exceed the maximum amount of interest permitted by the Highest Lawful Rate
during such period (such excess amount being hereinafter referred to as an
"Unqualified Amount"), then (i) such Unqualified Amount shall be applied or
 ------------------
shall be deemed to have been applied as a prepayment of the Loans, and (ii) if
in any subsequent period during the term of this Agreement, all amounts payable
hereunder in respect of such period that constitute or shall be deemed to
constitute interest shall be less than the maximum amount of interest permitted
by the Highest Lawful Rate during such period, then the Borrower shall pay to
the Lender in respect of such period an amount (each a "Compensatory Interest
                                                        ---------------------
Payment") equal to the lesser of (x) a sum that, when added to all such amounts,
- -------
would equal the maximum amount of interest permitted by the Highest Lawful Rate
during such period, and (y) an amount equal to the Unqualified Amount less all
other Compensatory Interest Payments made in respect thereof. The Borrower
acknowledges that to the extent interest payable on ABR Advances is based on the
BNY Rate, such Rate is only one of the bases for computing interest on loans
made by the Lenders, and by basing interest payable on ABR Advances on the BNY
Rate, the Lenders have not committed to charge, and the Borrower has not in any
way bargained for, interest based on a lower or the lowest rate at which the
Lenders may now or in the future make loans to other borrowers.

                                     -31-
<PAGE>

          2.7.   Substituted Interest Rate
                 -------------------------

          In the event that (i) the Administrative Agent shall have determined
(which determination shall be conclusive and binding upon the Borrower) that by
reason of circumstances affecting the interbank eurocurrency market either
adequate and reasonable means do not exist for ascertaining the Eurodollar Rate
applicable pursuant to Section 2.6 or (ii) the Required Lenders shall have
notified the Administrative Agent that they have determined (which determination
shall be conclusive and binding on the Borrower) that the applicable Eurodollar
Rate will not adequately and fairly reflect the cost to such Lenders of
maintaining or funding loans bearing interest based on such Eurodollar Rate with
respect to any portion of the Loans that the Borrower has requested be made as
Eurodollar Advances or Eurodollar Advances that will result from the requested
conversion or continuation of any portion of the Advances into or as Eurodollar
Advances (each, an "Affected Advance"), the Administrative Agent shall promptly
                    ----------------
notify the Borrower and the Lenders (by telephone or otherwise, to be promptly
confirmed in writing) of such determination and the reasons therefor, on or, to
the extent practicable, prior to the requested Conversion/Continuation Date for
such Affected Advances.  If the Administrative Agent shall give such notice, (A)
any Affected Advances shall be made as ABR Advances, (B) the Advances (or any
portion thereof) that were to have been converted to or continued as Affected
Advances shall be converted to or continued as ABR Advances and (C) any
outstanding Affected Advances shall be converted, on the last day of the then
current Interest Period with respect thereto, to ABR Advances.  Until any notice
under clauses (i) or (ii), as the case may be, of this Section has been
withdrawn by the Administrative Agent (by notice to the Borrower and the Lenders
promptly upon either (x) the Administrative Agent having determined that such
circumstances affecting the interbank eurocurrency market no longer exist and
that adequate and reasonable means do exist for determining the Eurodollar Rate
pursuant to Section 2.6 or (y) the Administrative Agent having been notified by
such Required Lenders that circumstances no longer render the Advances (or any
portion thereof) Affected Advances), (1) no further Eurodollar Advances shall be
required to be made by the Lenders and (2) the Borrower shall not have the right
to convert or continue all or any portion of the Loans to or as Eurodollar
Advances.

          2.8.  Taxes
                -----
          (a) Payments to Be Free and Clear. Subject to Sections 2.8(d), 2.8(e)
              -----------------------------
and 2.8(f), all payments by each Credit Party under the Loan Documents shall be
made free and clear of, and without any deduction or withholding for, any
Indemnified Tax.  If any Credit Party or any other Person is required by any
law, rule, regulation, order, directive, treaty or guideline to make any
deduction or withholding (which deduction or withholding would constitute an
Indemnified Tax) from any amount required to be paid by any Credit Party to or
on behalf of any Indemnified Tax Person under any Loan Document (each a
"Required Payment"), then:
 ----------------


                                     -32-
<PAGE>

                 (i)    such Credit Party shall notify the Administrative Agent
and such Indemnified Tax Person of any such requirement or any change in any
such requirement as soon as such Credit Party becomes aware thereof;

                 (ii)   such Credit Party shall pay such Indemnified Tax prior
to the date on which penalties attach thereto, such payment to be made (to the
extent that the liability to pay is imposed on such Credit Party) for its own
account or (to the extent that the liability to pay is imposed on such
Indemnified Tax Person) on behalf and in the name of such Indemnified Tax
Person;

                 (iii)  such Credit Party shall pay to such Indemnified Tax
Person an additional amount such that such Indemnified Tax Person shall receive
on the due date therefor an amount equal to the Required Payment had no such
deduction or withholding been required; and

                 (iv)   such Credit Party shall, within 30 days after paying
such Indemnified Tax, deliver to the Administrative Agent and such Indemnified
Tax Person satisfactory evidence of such payment to the relevant Governmental
Authority.

            (b) Other Indemnified Taxes. If any Indemnified Tax Person or any
                -----------------------
affiliate thereof is required by any law, rule, regulation, order, directive,
treaty or guideline to pay any Indemnified Tax (excluding an Indemnified Tax
which is subject to Section 2.8(a)) with respect to any sum paid or payable by
any Credit Party to such Indemnified Tax Person under the Loan Documents, then,
within five days after such Indemnified Tax Person shall have notified such
Credit Party thereof (which notice shall be accompanied by a statement setting
forth the reasonable calculation thereof), such Credit Party shall pay to such
Indemnified Tax Person the amount of such Indemnified Tax.

            (c) Tax on Indemnified Taxes. If any amounts are payable by any
                ------------------------
Credit Party in respect of Indemnified Taxes pursuant to Section 2.8(a) or (b),
such Credit Party agrees to pay to the applicable Indemnified Tax Person, within
five days of written request therefor (which request shall set forth the
reasonable calculations thereof), an amount equal to all Taxes imposed with
respect to such amounts as such Indemnified Tax Person shall determine in good
faith are payable by such Indemnified Tax Person or any affiliate thereof in
respect of such amounts and in respect of any amounts paid to or on behalf of
such Indemnified Tax Person pursuant to this Section 2.8(c).

            (d)  Exception for Existing Taxes. No amount shall be required to be
                 ----------------------------
paid to any Indemnified Tax Person under Section 2.8(a) or (b) with respect to
any Indemnified Tax to the extent that such Indemnified Tax would have been
required to have been paid under any law, rule, regulation, order, directive,
treaty or guideline in effect on the Relevant Date.

                                      -33-
<PAGE>

             (e) U.S. Tax Certificates. Each Lender that is organized under the
                 ---------------------
laws of any jurisdiction other than the United States or any political
subdivision thereof shall deliver to the Administrative Agent for transmission
to the Borrower, on or prior to the Relevant Date, and at such other times as
may be necessary in the determination of the Borrower, any other Credit Party or
the Administrative Agent (each in the reasonable exercise of its discretion),
such certificates, documents or other evidence, properly completed and duly
executed by such Lender (including Internal Revenue Service Form 1001 or Form
4224 (or, in each case, any equivalent or successor form)) to establish that
such Lender is not subject to deduction or withholding of United States federal
income tax under Section 1441 or 1442 of the Code or otherwise (or under any
comparable provisions of any successor statute) with respect to any payments to
such Lender of principal, interest, fees or other amounts payable under the Loan
Documents or in the case of a Lender that is claiming an 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" two accurate and complete
signed original Forms W-8 (or any successor form prescribed by the Internal
Revenue Service, certifying that such Lender is exempt from United States
withholding tax on payments under this Agreement or the Notes) and, if such
Lender delivers such Forms W-8 (or successor form), two signed certificates that
such Lender is not (1) a "bank" for purposes of Section 881(c) of the Internal
Revenue Code, (2) is not a 10% shareholder (within the meaning of Section
871(h)(3)(B) of the Internal Revenue Code) of the Borrower and (3) is not a
controlled foreign corporation related to the Borrower (within the meaning of
Section 864(d)(4) of the Internal Revenue Code). No Credit Party shall be
required to pay any additional amount to any such Lender under Section
2.8(a)(iii) if such Lender shall have failed to satisfy the requirements of the
immediately preceding sentence; provided that, if such Lender shall have
satisfied such requirements on the Relevant Date, nothing in this Section 2.8(e)
shall relieve any Credit Party of its obligation to pay any additional amounts
pursuant to Section 2.8(a)(iii) in the event that, as a result of any change in
applicable law (including any change in the interpretation thereof), such Lender
is no longer properly entitled to deliver certificates, forms, documents or
other evidence at a subsequent date establishing the fact that such Lender is
not subject to deduction or withholding as described in the immediately
preceding sentence.

             (f) Other Tax Certificates. Each Indemnified Tax Person agrees to
                 ----------------------
use reasonable efforts to deliver to any Credit Party or the Administrative
Agent, promptly upon any reasonable request therefor from time to time by such
Credit Party or the Administrative Agent, such certificates, forms, documents
and information as may be required by applicable law, regulation, order,
directive, guideline or treaty from time to time, provided, however, that if
                                                  --------  -------
such Indemnified Tax Person is or becomes unable by virtue of any change in
applicable law, regulation or treaty, to establish such exemption or reduction,
such Credit Party shall nonetheless remain obligated under Section 2.8(a) to pay
the amounts described therein, and provided further that no Indemnified Tax
                                   -------- -------
Person shall be required to take any action under this Section 2.8(f) which, in
the sole discretion of such Indemnified Tax Person, would cause such Indemnified
Tax Person or any affiliate thereof to suffer a material economic, legal or
regulatory disadvantage.

                                      -34-
<PAGE>

             (g) Other Taxes. Each Credit Party agrees to pay any current or
                 -----------
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies that arise from any payment made hereunder or from the
execution, delivery or registration of, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, the Loan
Documents or otherwise with respect to, the Loan Documents.

             (h) Refunds.  Upon the reasonable request of a Credit Party, and at
                 -------
such Credit Party's expense, each Indemnified Tax Person shall cooperate with
the such Credit Party in seeking to obtain refunds of Taxes paid by such Credit
Party, provided that each such Indemnified Tax Person shall have no obligation
to (i) engage in any litigation, hearing or proceeding with respect thereto or
(ii) disclose any tax return or other confidential information other than
information reasonably requested by the applicable taxing authority which, in
the opinion of such Indemnified Tax Person, is not detrimental to such
Indemnified Tax Person.  If an Indemnified Tax Person shall receive a refund (or
a refund in the form of a credit) from a taxing authority (as a result of any
error in the imposition of Tax by such taxing authority) of any Taxes paid by
such Credit Party pursuant to this Section 2.8, such Indemnified Tax Person, so
long as no Event of Default shall then exist, shall promptly pay to such Credit
Party the amount so received.

     2.9.    Illegality
             ----------

             Notwithstanding any other provisions herein, if any law,
regulation, treaty or directive, or any change therein or in the interpretation
or application thereof, in each case enacted, adopted, promulgated, approved or
issued after the date hereof, shall make it unlawful for any Lender to make or
maintain its Eurodollar Advances as contemplated by this Agreement, (i) the
commitment of such Lender hereunder to (A) make Eurodollar Advances, (B) convert
ABR Advances to Eurodollar Advances or (C) continue Eurodollar Advances to new
Eurodollar Advances, shall forthwith be suspended and (ii) such Lender's Loans
then outstanding as Eurodollar Advances affected hereby, if any, shall be
converted automatically to ABR Advances on the last day of the then current
Interest Period applicable thereto or within such earlier period as required by
law. If the commitment of any Lender with respect to Eurodollar Advances is
suspended pursuant to this Section and such Lender shall notify the
Administrative Agent and the Borrower that it is once again legal for such
Lender to make or maintain Eurodollar Advances, such Lender's commitment to make
or maintain Eurodollar Advances shall be reinstated.

     2.10.   Increased Costs
             ---------------

             In the event that any law, regulation, treaty or directive
hereafter enacted, adopted, promulgated, approved or issued or any change in any
existing law, regulation, treaty or directive or in the interpretation or
application thereof by any Governmental Authority charged with the
administration thereof or compliance by any Lender (or any Person directly or
indirectly owning

                                      -35-
<PAGE>

or controlling such Lender) with any request or directive from any central bank
or other Governmental Authority made or issued after the date hereof:

             (a)  does or shall subject any Lender to any Taxes of any kind
whatsoever with respect to any Eurodollar Advances or its obligations under this
Agreement to make Eurodollar Advances, or change the basis of taxation of
payments to any Lender of principal, interest or any other amount payable
hereunder in respect of its Eurodollar Advances, including any Taxes required to
be withheld from any amounts payable under the Loan Documents (except for
imposition of, or change in the rate of, Tax on the Income of such Lender or its
Applicable Lending Office for any of such Advances by the jurisdiction in which
such Lender is incorporated or has its principal office or such Applicable
Lending Office, including, in the case of Lenders incorporated in any State of
the United States, such tax imposed by the United States); or

             (b)  does or shall impose, modify or make applicable any reserve,
special deposit, compulsory loan, assessment, increased cost or similar
requirement against assets held by, or deposits of, or advances or loans by, or
other credit extended by, or any other acquisition of funds by, any office of
such Lender in respect of its Eurodollar Advances that is not otherwise included
in the determination of a Eurodollar Rate; and the result of any of the
foregoing is to increase the cost to such Lender of making, renewing,
converting, continuing or maintaining its Eurodollar Advances or its commitment
to make such Eurodollar Advances, or to reduce any amount receivable hereunder
in respect of its Eurodollar Advances then, in any such case, the Borrower shall
pay such Lender, upon its demand, any additional amounts necessary to compensate
such Lender for such additional cost or reduction in such amount receivable that
such Lender deems to be material as determined by such Lender; provided,
however, that nothing in this Section shall require the Borrower to indemnify
the Lenders with respect to Taxes for which the Borrower has no obligation under
Section 2.8. No failure by any Lender to demand compensation for any increased
cost during any Interest Period shall constitute a waiver of such Lender's right
to demand such compensation at any time. A statement setting forth the
calculations of any additional amounts payable pursuant to the foregoing
sentence submitted by a Lender to the Borrower shall be conclusive absent
manifest error.

     2.11.   Indemnification for Loss
             ------------------------

             Notwithstanding anything contained herein to the contrary, if (i)
the Borrower shall fail to borrow or convert or continue a Eurodollar Advance on
the Funding Date or Conversion/Continuation Date after it shall have given
notice to do so in which it shall have requested a Eurodollar Advance, (ii) a
Eurodollar Advance shall be terminated or repaid or prepaid for any reason prior
to the last day of the Interest Period applicable thereto, or (iii) while a
Eurodollar Advance is outstanding, any repayment or prepayment of such
Eurodollar Advance is made for any reason (including, without limitation, as a
result of acceleration or illegality) on a date which is prior to the last day
of the Interest Period applicable thereto, the Borrower agrees to indemnify each
Lender against, and to pay on demand directly to such Lender, any loss or

                                      -36-
<PAGE>

expense suffered by such Lender as a result of such failure to borrow, convert
or continue, termination, repayment or prepayment, including, without
limitation, an amount, if greater than zero, equal to:

                              A x (B-C) x  D/360

where:

"A" equals, in the case of a Eurodollar Advance, such Lender's Pro Rata Share of
the Affected Principal Amount;

"B" equals the Eurodollar Rate (expressed as a decimal), applicable to such
Eurodollar Advance;

"C" equals the applicable Eurodollar Rate (expressed as a decimal), in effect on
or about the first day of the applicable Remaining Interest Period, based on the
applicable rates offered or bid, as the case may be, on or about such date, for
deposits in an amount equal approximately to such Lender's Pro Rata Share of the
Affected Principal Amount, in each case, with an Interest Period equal
approximately to the applicable Remaining Interest Period, as determined by such
Lender; and

"D" equals the number of days from and including the first day of the applicable
Remaining Interest Period to but excluding the last day of such Remaining
Interest Period;

and any other out-of-pocket loss or expense (including any internal processing
charge customarily charged by such Lender) suffered by such Lender in connection
with such Eurodollar Advance, including, without limitation, in liquidating or
employing deposits acquired to fund or maintain the funding of its Pro Rata
Share of the Affected Principal Amount, or redeploying funds prepaid or repaid,
in amounts that correspond to its Pro Rata Share of the Affected Principal
Amount.  Each determination by the Administrative Agent or a Lender pursuant to
this Section shall be conclusive and binding on the Borrower absent manifest
error.

     2.12.   Option to Fund
             --------------

          Each Lender has indicated that, if the Borrower requests a Eurodollar
Advance, such Lender may wish to purchase one or more deposits in order to fund
or maintain its funding of such Eurodollar Advance during the Interest Period in
question; it being understood that the provisions of this Agreement relating to
such funding are included only for the purpose of determining the rate of
interest to be paid on such Eurodollar Advance and for purposes of determining
amounts owing under Sections 2.10, 2.11, and 2.14.  Each Lender shall be
entitled to fund and maintain its funding of all or any part of each Eurodollar
Advance made by it in any manner it sees fit, but all such determinations shall
be made as if such Lender had actually funded and maintained its funding of such
Eurodollar Advance during the applicable Interest

                                      -37-
<PAGE>

Period through the purchase of deposits in an amount equal to such Eurodollar
Advance and having a maturity corresponding to such Interest Period. The
obligations of the Borrower under Sections 2.7, 2.8, 2.9, 2.10, 2.11, and 2.14
shall survive the termination of the Aggregate Term Loan Commitments, the
payment of the Notes, and all other amounts payable under the Loan Documents.

     2.13.   Use of Proceeds
             ---------------

          The proceeds of the Loans have been and shall be used for the general
corporate purposes of the Borrower and its Subsidiaries.  Notwithstanding
anything to the contrary contained in any Loan Document, the Borrower agrees
that no part of the proceeds of any Loan has been or will be used, directly or
indirectly, for a purpose that violates any law, including, without limitation,
the provisions of Regulations T, U or X of the Board of Governors of the Federal
Reserve System, as amended.

     2.14.   Capital Adequacy
             ----------------

             If (i) the enactment or promulgation of, or any change or phasing
in of, any United States or foreign law or regulation or in the interpretation
thereof by any Governmental Authority charged with the administration thereof
after the date hereof or (ii) compliance with any directive or guideline from
any central bank or United States or foreign Governmental Authority (whether
having the force of law) promulgated or made after the date hereof, affects or
would affect the amount of capital required to be maintained by a Lender (or any
lending office of such Lender) or any Person directly or indirectly owning or
controlling such Lender, or imposes any restriction on or otherwise adversely
affects such Lender (or any lending office of such Lender) or any Person
directly or indirectly owning or controlling such Lender, and such Lender shall
have determined that such enactment, promulgation, change or compliance has the
effect of reducing the rate of return on such Lender's (or such Person's)
capital or the asset value to such Lender of any Loan made by such Lender as a
consequence, directly or indirectly, of its obligations to make and maintain the
funding of its Loans at a level below that which such Lender (or such Person)
could have achieved but for such enactment, promulgation, change or compliance
(after taking into account such Lender's (or such Person's) policies regarding
capital adequacy) by an amount deemed by such Lender to be material, then, upon
demand by such Lender, the Borrower shall promptly pay to such Lender such
additional amount or amounts as shall be sufficient to compensate such Lender
(or such Person) for such reduction in such rate of return or asset value. A
certificate in reasonable detail as to such amounts submitted to the Borrower
and the Administrative Agent setting forth the determination of such amount or
amounts that will compensate such Lender for such reductions shall be presumed
correct absent manifest error.

                                      -38-
<PAGE>

     2.15.   Administrative Agent's Records
             ------------------------------

             The Administrative Agent's records regarding the amount of each
Loan each payment by the Borrower of principal and interest on the Loans and
other information relating to the Loans shall be presumptively correct absent
manifest error.

3.   FEES; PAYMENTS
     --------------

     3.1.    Pro Rata Treatment and Application of Principal Payments
             --------------------------------------------------------

             Each payment, including each prepayment, of principal and interest
on the Loans shall be made by the Borrower without set-off or counterclaim and
shall be made to the Administrative Agent in Dollars at the applicable Agent
Payment Office in funds immediately available to the Administrative Agent at
such office by 1:30 P.M. on the due date for such payment, and, promptly upon
receipt thereof by the Administrative Agent, shall be remitted by the
Administrative Agent, in like funds as received, to the Lenders according to the
Pro Rata Share of each Lender. The failure of the Borrower to make any such
payment by such time shall not constitute a default hereunder, provided that
such payment is made on such due date, but any such payment made after 1:30 P.M.
on such due date shall be deemed to have been made on the next Business Day for
the purpose of calculating interest on amounts outstanding on the Loans. If any
payment hereunder or under the Notes shall be due and payable on a day that is
not a Business Day, the due date thereof (except as otherwise provided in the
definition of Interest Period) shall be extended to the next Business Day and
interest shall be payable at the applicable rate specified herein during such
extension. If any payment is made with respect to any Eurodollar Advance prior
to the last day of the applicable Interest Period, the Borrower shall indemnify
each Lender in accordance with Section 2.11.

4.   REPRESENTATIONS AND WARRANTIES
     ------------------------------

             In order to induce the Administrative Agent and the Lenders to
enter into this Agreement, the Borrower makes the following representations and
warranties to the Administrative Agent and each Lender as of the date of this
Agreement :

     4.1.    Subsidiaries; Capitalization
             ----------------------------

             The Borrower has only the Subsidiaries permitted by this Agreement.
Schedule 4.1 sets forth the Subsidiaries of the Borrower as of the Effective
Date.  The shares of each corporate Subsidiary are duly authorized, validly
issued, fully paid and nonassessable and are owned free and clear of any Liens
(except for Liens created in favor of the Collateral Agent by the Collateral
Documents).  The interest of the Borrower in each non-corporate Subsidiary is
owned free and clear of any Liens (except for Liens created in favor of the
Collateral Agent by the Collateral Documents).  The outstanding capital Stock of
each corporate Subsidiary of the

                                      -39-
<PAGE>

Borrower on the Effective Date and the ownership interest in each non-corporate
Subsidiary are as set forth on Schedule 4.1. As of the Effective Date, the owner
of each issue of capital Stock listed on Schedule 4.1 is the registered and
beneficial owner thereof. No Subsidiary has issued any securities convertible
into Stock (or other equity interest) of such Subsidiary and there are no
outstanding options or warrants to purchase Stock of such Subsidiary of any
class or kind, and there are no voting trusts or similar agreements with respect
thereto or other agreements or understandings with respect thereto which would
restrict or limit the sale, pledge, assignment or other disposition thereof,
including, without limitation, any right of first refusal, option, redemption,
call or other rights with respect thereto, whether similar or dissimilar to any
of the foregoing, or which would dilute the interest of the Borrower therein.

     4.2.    Existence and Power
             -------------------

             Each of the Borrower, its Subsidiaries and the Credit Parties is
duly organized or formed and validly existing in good standing under the laws of
the jurisdiction of its incorporation or formation, has all requisite power and
authority to own its Property and to carry on its business as now conducted, and
is in good standing and authorized to do business as a foreign corporation in
each jurisdiction in which the nature of the business conducted therein or the
Property owned therein makes such qualification necessary, except in each case
where such failure so to qualify, and, in the case of East End Dialysis Center,
Inc., Elberton Dialysis Facility, Inc., Carroll County Dialysis Facility, Inc.
and RTC Texas Acquisition, Inc., where such failure so to be in good standing
under the laws of the jurisdiction of its incorporation or formation (which such
failure to be in good standing shall be promptly remedied following the
Effective Date), could not reasonably be expected to have a Material Adverse
Effect.

     4.3.    Authority
             ---------

             Each of the Borrower, its Subsidiaries and the Credit Parties has
full legal power and authority to enter into, execute, deliver and perform the
terms of the Loan Documents to which it is a party, and the transactions
contemplated thereby (including the Transactions) and, in the case of the
Borrower, to make the borrowings contemplated hereby and by the Notes, to
execute, deliver and carry out the terms of the Notes and to incur the
obligations provided for herein and therein, all of which have been duly
authorized by all proper and necessary corporate or other applicable action and
are in full compliance with its Certificate of Incorporation or By-Laws or its
other organization documents.

     4.4.    Binding Agreement
             -----------------

             The Loan Documents (other than the Notes) constitute, and the
Notes, when issued and delivered pursuant hereto for value received, will
constitute, the valid and legally binding obligations of the Credit Parties in
each case, to the extent it is a party thereto, enforceable in accordance with
their respective terms, except as such enforceability may be

                                      -40-
<PAGE>

limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally.

     4.5.    Litigation
             ----------

             Except as set forth on Schedule 4.5, there are no actions, suits or
proceedings at law or in equity or by or before any Governmental Authority
(whether purportedly on behalf of the Borrower, any of its Subsidiaries or any
Credit Party) pending or, to the knowledge of the Borrower, threatened against
the Borrower, any of its Subsidiaries or any Credit Party or any of their
respective Properties or rights, that (i) if adversely determined, could
reasonably be expected to have a Material Adverse Effect, (ii) expressly call
into question the validity or enforceability of any of the Loan Documents, or
(iii) could reasonably be expected to result in the rescission, termination or
cancellation of any material franchise, right, license, permit or similar
authorization held by the Borrower or any of its Subsidiaries or any Credit
Party.

     4.6.    Required Consents
             -----------------

             Except for information filings required to be made in the ordinary
course of business that are not a condition to the Borrower's performance under
the Loan Documents, no consent, authorization or approval of, filing with,
notice to, or exemption by, stockholders, any Governmental Authority or any
other Person is required to authorize, or is required in connection with the
execution, delivery and performance of the Loan Documents and the transactions
contemplated thereby (including the Transactions), or is required as a condition
to the validity or enforceability of the Loan Documents.

     4.7.    No Conflicting Agreements
             -------------------------

             Neither the Borrower, any of its Subsidiaries nor any Credit Party
is in default under any mortgage, indenture, contract or agreement to which it
is a party, or by which it or any of its Property is bound, the effect of which
default could reasonably be expected to have a Material Adverse Effect. The
execution, delivery or carrying out of the terms of the Loan Documents and the
transactions contemplated hereby and thereby (including the Transactions), will
not constitute a default under, or result in the creation or imposition of, or
obligation to create, any Lien upon any Property of the Borrower or any of its
Subsidiaries or result in a breach of or require the mandatory repayment of or
other acceleration of payment under or pursuant to the terms of any such
mortgage, indenture, contract or agreement.

     4.8.    Compliance with Applicable Laws
             -------------------------------

             Neither the Borrower, any of its Subsidiaries nor any Credit Party
is in default with respect to any judgment, order, writ, injunction, decree or
decision of any Governmental Authority the effect of which default could
reasonably be expected to have a Material Adverse Effect. The Borrower, each of
its Subsidiaries and each Credit Party is complying in all material respects
with all statutes, regulations, rules and orders applicable to Borrower, such
Subsidiary or

                                      -41-
<PAGE>

such Credit Party of all Governmental Authorities, including, without
limitation, Environmental Laws and ERISA, the violation of which could
reasonably be expected to have a Material Adverse Effect, provided that this
sentence shall not extend to matters relating to compliance with federal
Medicaid and Medicare statutes or the regulations promulgated pursuant to such
statutes or related state or local statutes or regulations to the extent such
matters are covered by Sections 4.19 and 4.20.

    4.9.    Taxes
            -----

            Except as provided on Schedule 4.9, all tax returns required to be
filed by or on behalf of the Borrower, its Subsidiaries and each Credit Party
have been filed and payment, and adequate provision for the payment, has been
made for all taxes shown to be due and payable on said returns or in any
assessments made against the Borrower, its Subsidiaries or any Credit Party
(other than those being contested as required under Section 7.4) that would be
material to the Borrower or its Subsidiaries taken as a whole, and no tax liens
(other than a Permitted Lien described in Section 8.2(i)) have been filed with
respect to the Borrower, its Subsidiaries or any Credit Party.  The charges,
accruals and reserves on the books of the Borrower, each of its Subsidiaries and
each Credit Party with respect to all federal, state, local and other taxes are,
to the best knowledge of the Borrower, adequate for the payment of all such
material taxes, and the Borrower knows of no unpaid assessment that is due and
payable against it, any of its Subsidiaries or any Credit Party or any claims
being asserted that could reasonably be expected to have a Material Adverse
Effect, except such thereof as are being contested as required under Section
7.4, and for which adequate reserves have been set aside in accordance with
GAAP.

     4.10.   Governmental Regulations
             ------------------------

             Neither the Borrower, any of its Subsidiaries nor any Credit Party
is subject to regulation under the Public Utility Holding Company Act of 1935,
as amended, the Federal Power Act or the Investment Company Act of 1940, as
amended, and neither the Borrower, any of its Subsidiaries nor any Credit Party
is subject to any statute or regulation that prohibits or restricts the
incurrence of Indebtedness under the Loan Documents, including, without
limitation, statutes or regulations relative to common or contract carriers or
to the sale of electricity, gas, steam, water, telephone, telegraph or other
public utility services.

     4.11.   Federal Reserve Regulations; Use of Proceeds
             --------------------------------------------

             Neither the Borrower, any of its Subsidiaries nor any Credit Party
is engaged principally, or as one of its important activities, in the business
of extending credit for the purpose of purchasing or carrying any Margin Stock.
No part of the proceeds of the Loans has been or will be used, directly or
indirectly, for a purpose that violates any law, rule or regulation of any
Governmental Authority, including, without limitation, the provisions of
Regulations T, U or X of the Board of Governors of the Federal Reserve System,
as amended. No part of the proceeds of the Loans has been or will be used,
directly or indirectly, to purchase or carry Margin Stock or to extend credit to
others for the purpose of purchasing or carrying Margin Stock.

                                      -42-
<PAGE>

     4.12.   Plans
             -----

             The only Pension Plans in effect as of the Effective Date (the
"Existing Pension Plans") are listed on Schedule 4.12.  Each Employee Benefit
- -----------------------
Plan of the Borrower, its Subsidiaries, the Credit Parties and the ERISA
Affiliates is in compliance with ERISA and the Code, where applicable, in all
material respects.  As of the Effective Date (i) the amount of all Unfunded
Pension Liabilities under the Pension Plans, excluding any plan that is a
Multiemployer Plan, does not exceed $0, and (ii) the amount of the aggregate
Unrecognized Retiree Welfare Liability under all applicable Employee Benefit
Plans does not exceed $100,000.  Each of the Borrower, its Subsidiaries, the
Credit Parties and the ERISA Affiliates has complied with the requirements of
Section 515 of ERISA with respect to each Pension Plan that is a Multiemployer
Plan.  As of the Effective Date, the aggregate potential annual withdrawal
liability payments, as determined in accordance with Title IV of ERISA, of the
Borrower, its Subsidiaries, the Credit Parties and the ERISA Affiliates with
respect to all Pension Plans that are Multiemployer Plans is approximately $0.
Each of the Borrower, its Subsidiaries, the Credit Parties and/or any ERISA
Affiliate has, as of the Effective Date, made all material contributions or
payments to or under each such Pension Plan required by law or the terms of such
Pension Plan or any contract or agreement with respect thereto.  No material
liability to the PBGC has been, or is expected by the Borrower, any of its
Subsidiaries, any Credit Party or any ERISA Affiliate to be, incurred by the
Borrower, such Subsidiary, such Credit Party or any ERISA Affiliate.  Liability,
as referred to in this Section includes any joint and several liability.  Each
Employee Benefit Plan that is a group health plan within the meaning of Section
5000(b)(1) of the Code is in material compliance with the continuation of health
care coverage requirements of Section 4980B of the Code.

     4.13.   Financial Statements
             --------------------

             The Borrower has heretofore delivered to the Administrative Agent
and the Lenders copies of (i) the audited consolidated balance sheet of the
Borrower as of December 31, 1999 and the related consolidated statements of
income, stockholders' equity and cash flows for the fiscal year then ended and
(ii) the unaudited consolidated balance sheet of the Borrower as of March 31,
2000 and the related consolidated statements of income and cash flows for the
fiscal quarter then ended (with the related notes and schedules, the "Financial
                                                                      ---------
Statements"). The Financial Statements fairly present the consolidated financial
- ----------
condition and results of the operations of the Borrower and its Subsidiaries, as
the case may be, as of the dates and for the periods indicated therein and have
been prepared in conformity with GAAP (except that the March 31, 2000 Financial
Statements are subject to customary year end adjustments and do not include all
footnotes required by GAAP). As of the Effective Date, except as reflected in
the Financial Statements or in the notes thereto, neither the Borrower nor any
of its Subsidiaries has any obligation or liability of any kind (whether fixed,
accrued, contingent, unmatured or otherwise) that, in accordance with GAAP,
should have been shown on the Financial Statements and was not. Since March 31,
2000 there has been no Material Adverse Change.

                                      -43-
<PAGE>

     4.14.   Property
             --------

             Each of the Borrower, its Subsidiaries and each Credit Party has
good and marketable title to all of its Property, title to which is material to
the Borrower and its Subsidiaries taken as a whole, subject to no Liens, except
for Permitted Liens.

     4.15.   Franchises, Intellectual Property, Etc.
             ---------------------------------------

             Each of the Borrower, its Subsidiaries and each Credit Party
possesses or has the right to use all franchises, Intellectual Property,
licenses and other rights as are material and necessary for the conduct of its
business, and with respect to which it is in compliance, with no known conflict
with the valid rights of others that would reasonably be expected to have a
Material Adverse Effect. No event has occurred that permits or, to the best
knowledge of the Borrower, after notice or the lapse of time or both, or any
other condition, could reasonably be expected to permit, the revocation or
termination of any such franchise, Intellectual Property, license or other right
which revocation or termination could reasonably be expected to have a Material
Adverse Effect.

     4.16.   Environmental Matters
             ---------------------

             (a)  The Borrower, each of its Subsidiaries and each Credit Party
is in material compliance with the requirements of all applicable Environmental
Laws.

             (b)  No Hazardous Substances have been generated or manufactured
on, transported to or from, treated at, stored at or discharged from any Real
Property in material violation of any Environmental Laws; no Hazardous
Substances have been discharged into subsurface waters under any Real Property
in material violation of any Environmental Laws; no Hazardous Substances have
been discharged from any Real Property on or into Property or waters (including
subsurface waters) adjacent to any Real Property in material violation of any
Environmental Laws; and there are not now, nor ever have been, on any Real
Property any underground or above ground storage tanks in material violation of
any Environmental Laws.

             (c)  Neither the Borrower, nor any of its Subsidiaries or any
Credit Party (i) has received notice (written or oral) or otherwise learned of
any claim, demand, suit, action, proceeding, event, condition, report,
directive, Lien, violation, non-compliance or investigation indicating or
concerning any potential or actual material liability (including, without
limitation, potential material liability for enforcement, investigatory costs,
cleanup costs, government response costs, removal costs, remedial costs, natural
resources damages, Property damages, personal injuries or penalties) arising in
connection with: (x) any non-compliance with or violation of the requirements of
any applicable Environmental Laws, or (y) the presence of any Hazardous
Substance on any Real Property (or any Real Property previously owned by the
Borrower, any of its Subsidiaries or any Credit Party) or the release or
threatened release of any Hazardous Substance into the environment, (ii) has
knowledge of any threatened or actual material liability in connection with the
presence of any Hazardous Substance on any Real Property (or any Real Property
previously owned by the Borrower, any of its Subsidiaries or any Credit Party)
or the release or threatened release of any Hazardous Substance into the
environment, (iii) has received notice of any federal or state investigation
evaluating whether any material remedial action is needed to respond to the
presence of any Hazardous Substance on any Real

                                      -44-
<PAGE>

Property (or any Real Property previously owned by the Borrower, any of its
Subsidiaries or any Credit Party) or a release or threatened release of any
Hazardous Substance into the environment for which the Borrower, any of its
Subsidiaries or any Credit Party is or may be liable, or (iv) has received
notice that the Borrower, any of its Subsidiaries or any Credit Party is or may
be liable for a material amount to any Person under any Environmental Law.

             (d)  For purposes of subsections (a), (b) and (c) of this Section
4.16 "material" shall mean any liability or potential liability of the Borrower
and its Subsidiaries on a Consolidated basis for an aggregate amount in excess
of $1,000,000.

     4.17.   Labor Relations
             ---------------

             There are no material controversies pending between the Borrower,
any of its Subsidiaries or any Credit Party and any of their respective
employees, that could reasonably be expected to have a Material Adverse Effect.

     4.18.   Burdensome Obligations
             ----------------------

             Neither the Borrower, any of its Subsidiaries nor any Credit Party
is a party to or bound by any franchise, agreement, deed, lease or other
instrument, or subject to any restriction that, in the opinion of the management
of the Borrower, is so unusual or burdensome, in the context of its business, as
in the foreseeable future might materially and adversely affect or impair the
revenue or cash flow of the Borrower and its Subsidiaries taken as a whole, or
the ability of the Borrower or its Subsidiaries taken as a whole to perform its,
or their, obligations under the Loan Documents to which it is, or they are, a
party. The Borrower does not presently anticipate that future expenditures by
the Borrower, any of its Subsidiaries or any Credit Party needed to meet the
provisions of federal or state statutes, orders, rules or regulations will be so
burdensome as to result in a Material Adverse Effect or Material Adverse Change.

     4.19.   Medicare Participation/Accreditation
             ------------------------------------

             Except as set forth in Schedule 4.19, the facilities operated by
each of the Borrower and its Subsidiaries (the "Facilities") are qualified for
                                                ----------
participation in the Medicare and Medicaid programs (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 it participates or has participated. There is no pending or,
to Borrower's knowledge, threatened proceeding or investigation by any of the
Government Reimbursement Programs in which it participates or has participated
with respect to (i) the Borrower's or any of its Subsidiaries'

                                      -45-
<PAGE>

qualification or right to participate in any Government Reimbursement Program in
which it participates or has 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, 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 it participates or has
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.

     4.20.   Fraud and Abuse
             ---------------

             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 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 third-party 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 third-
party 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.

     4.21.   No Misrepresentation
             --------------------

             The information provided by the Borrower, any of its Subsidiaries
or any Credit Party in connection with the transactions contemplated hereby,
taken as a whole does not contain a misstatement of material fact, or, to the
best knowledge of the Borrower, omit to state a material fact required to be
stated in order to make the statements therein contained not

                                      -46-
<PAGE>

misleading in the light of the circumstances under which made. All financial
projections, if any, delivered by the Borrower to the Administrative Agent and
the Lenders were based on good faith estimates and assumptions believed by the
Borrower to be reasonable at the time made.

     4.22.   Subordinated Indebtedness
             -------------------------

             The subordination provisions of (i) the RTC Convertible
Subordinated Indenture, (ii) the RTC Convertible Subordinated Notes, (iii) the
RTC Convertible Subordinated Guaranty, (iv) any Subordinated Indebtedness now
existing or hereafter incurred or assumed by the Borrower and (v) any guarantee
by any Subsidiary of the Borrower of any Subordinated Indebtedness will be
enforceable against the holders thereof, and the Loans 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.

     4.23.   Survival of Rights Created under Existing Term Agreement
             --------------------------------------------------------

             The Borrower acknowledges and agrees that any choses in action or
other rights created in favor of any Lender and their respective successors and
assigns arising out of the representations and warranties of the Borrower
contained in or delivered (including representations and warranties delivered in
connection with the making of loans thereunder) in connection with the Existing
Term Loan Agreement, shall survive the execution and delivery of this Agreement.
The Borrower and Lenders acknowledge that certain representations and warranties
made by the Borrower under the Existing Term Loan Agreement (including
representations and warranties as to the future consequences of certain events
which occurred prior to the date of this Agreement) were made subject to changes
in the facts and conditions on which such representations and warranties were
based, which such changes were permitted or required under the Existing Term
Loan Agreement or this Agreement and any such representations and warranties
incorporated herein are so incorporated subject to such changes permitted or
required under the Existing Term Loan Agreement or this Agreement.


5.   CONDITIONS TO EFFECTIVENESS OF AGREEMENT
     ----------------------------------------

            The effectiveness of this Agreement shall be subject to the
fulfillment of the following conditions precedent:

     5.1.   Evidence of Action
            ------------------

            (a)  The Borrower. The Administrative Agent shall have received a
                 ------------
certificate, dated the Effective Date, of the Secretary or Assistant Secretary
of the Borrower (i) attaching a true and complete copy of the resolutions of its
Board of Directors and of all documents evidencing other necessary corporate
action (in form and substance satisfactory to the Administrative Agent) taken by
it to authorize the Loan Documents to which it is a party and the

                                      -47-
<PAGE>

transactions contemplated thereby, (ii) attaching a true and complete copy of
its Certificate of Incorporation and By-Laws, (iii) setting forth the incumbency
of its officer or officers who may sign such Documents, including therein a
signature specimen of such officer or officers and (iv) attaching a certificate
of good standing of the Secretary of State of the States of Delaware and
California.

             (b)  The Guarantors. The Administrative Agent shall have received a
                  --------------
certificate, dated the Effective Date, of the Secretary or Assistant Secretary
of each Guarantor (i) attaching a true and complete copy of the resolutions of
its Board of Directors and of all documents evidencing other necessary corporate
action (in form and substance satisfactory to the Administrative Agent) taken by
it to authorize the Loan Documents to which it is a party and the transactions
contemplated thereby, (ii) attaching a true and complete copy of its Articles of
Incorporation and By-Laws, (iii) setting forth the incumbency of its officer or
officers who may sign such Documents, including therein a signature specimen of
such officer or officers and (iv) attaching a certificate of good standing of
the Secretary of State of such Guarantor's jurisdiction of organization and
principal place of business.

     5.2.    This Agreement
             --------------

             The Administrative Agent shall have received counterparts of this
Agreement signed by each of the Borrower, the Administrative Agent, the
Syndication Agent and the Required Lenders (or receipt by the Administrative
Agent from a party hereto of a fax signature page signed by such party which
shall have agreed to promptly provide the Administrative Agent with originally
executed counterparts hereof).

     5.3.    Subsidiary Guaranty
             -------------------

             The Administrative Agent shall have received counterparts of the
Subsidiary Guaranty duly signed by each Guarantor.

     5.4.    Security Agreement
             ------------------

             The Administrative Agent shall have received counterparts of the
Security Agreement duly signed by the Borrower and each Guarantor, together with
the following:

             (a)  any stock certificates representing shares of capital stock
owned by or on behalf of any Credit Party constituting Collateral as of the
Effective Date;

             (b)  any promissory notes and other instruments evidencing all
loans, advances and other debt owed or owing to any Credit Party constituting
Collateral as of the Effective Date;

             (c)  stock powers and instruments of transfer, endorsed in blank,
with respect to such stock certificates, promissory notes and other instruments;
and

                                      -48-
<PAGE>

             (d)  all instruments and other documents, including Uniform
Commercial Code financing statements and grants of intellectual property
interests as required by the Security Agreement, required by law or reasonably
requested by the Collateral Agent to be filed, registered or recorded to create
or perfect the Liens intended to be created under the Security Agreement.

     5.5.    Intercreditor Agreement
             -----------------------

             The Intercreditor Agreement shall have been executed and delivered
by the Administrative Agent, the Administrative Agent (under and as defined in
the Revolving Credit Facility), the Collateral Agent and the Credit Parties.

     5.6.    Revolving Credit Facility
             -------------------------

             The Revolving Credit Facility shall have been duly executed and
shall have become effective, and the Administrative Agent shall have received a
certificate of an Authorized Signatory of the Borrower attaching a true and
correct copy of the executed Revolving Credit Facility. The Lenders hereby
consent to the Revolving Credit Facility as in effect on the Effective Date.

     5.7.    Litigation
             ----------

             There shall be no injunction, writ, preliminary restraining order
or other order of any nature issued by any Governmental Authority in any respect
affecting the transactions provided for herein and no action or proceeding by or
before any Governmental Authority shall have been commenced and be pending or,
to the knowledge of the Borrower, threatened, seeking to prevent or delay the
transactions contemplated by the Loan Documents or challenging any other terms
and provisions thereof or seeking any damages in connection therewith, and the
Administrative Agent shall have received a certificate of an Authorized
Signatory of the Borrower to the foregoing effects.

     5.8.    Opinion of Counsel to the Credit Parties
             ----------------------------------------

             The Administrative Agent shall have received opinions of (i) the
general counsel to the Borrower and the other Credit Parties, addressed to the
Administrative Agent, the Collateral Agent, the Syndication Agent and the
Lenders, and dated the Effective Date, substantially in the form of Exhibit E-1,
and (ii) Riordan & McKinzie, special counsel to the Borrower and the other
Credit Parties, addressed to the Administrative Agent, the Collateral Agent, the
Syndication Agent and the Lenders, and dated the Effective Date, substantially
in the form of Exhibit E-2.  It is understood that such opinions are being
delivered to the Administrative Agent, the Collateral Agent, the Syndication
Agent and the Lenders upon the direction of the Borrower and the Credit Parties
and that the Administrative Agent, the Collateral Agent, the Syndication Agent
and the Lenders may and will rely upon such opinions.

                                      -49-
<PAGE>

     5.9.    Compliance Certificate
             ----------------------

             The Administrative Agent shall have received a compliance
certificate, dated the Effective Date, certified by an Authorized Signatory of
the Borrower to the effect that the Borrower is in compliance with Sections 7.12
through 7.15 and 8.17 on the Effective Date (after giving effect to this
Agreement).

     5.10.   Term Loan Prepayment
             --------------------

             Immediately prior to the effectiveness of this Agreement, the
Borrower shall have made a prepayment of the Term Loans (as defined in the
Existing Term Loan Agreement) in an amount equal to $26,525,671 which prepayment
shall be deemed to have been applied to the scheduled prepayments of such Term
Loans required by Section 2.4(b) of the Existing Term Loan Agreement in direct
order of their maturity.

     5.11.   Fees
             ----

             All fees payable to the Administrative Agent, the Co-Arrangers, the
Syndication Agent and the Lenders on or prior to the Effective Date shall have
been paid.

     5.12.   Fees and Expenses of Steering Committee, Agents and Special Counsel
             -------------------------------------------------------------------

             The reasonable fees and expenses of the steering committee, its
counsel, the Administrative Agent, the Special Counsel, the Syndication Agent
and counsel to the Syndication Agent in connection with the preparation,
negotiation and closing of the Loan Documents shall have been paid.

     5.13.   Documentation and Proceedings
             -----------------------------

             All corporate or other organizational and legal proceedings and all
documents and papers in connection with the transactions contemplated by the
Loan Documents shall be satisfactory in form and substance to the Administrative
Agent, and the Administrative Agent shall have received all information and
copies of all documents that the Administrative Agent or the Required Lenders
may reasonably have requested in connection therewith, such documents (where
appropriate) to be certified by an Authorized Signatory of the Borrower or
proper Governmental Authorities.

     5.14.   Required Acts and Conditions
             ----------------------------

             All acts, conditions and things (including, without limitation, the
obtaining of any necessary regulatory approvals and the making of any filings,
recordings or registrations) required to be done, performed and to have happened
on or prior to the Effective Date and that are necessary for the continued
effectiveness of the Loan Documents shall have been done and performed and shall
have happened in due compliance with all applicable laws.

                                      -50-
<PAGE>

     5.15.   Approval of Special Counsel and Counsel to Syndication Agent
             ------------------------------------------------------------

             All legal matters in connection with the effectiveness of this
Agreement shall be reasonably satisfactory to Special Counsel and counsel to the
Syndication Agent.

     5.16.   Other Documents
             ---------------

             The Administrative Agent shall have received such other documents
as the Administrative Agent, the Syndication Agent or the Required Lenders shall
reasonably request.

     5.17.   Officers' Certificate Regarding Certain Conditions.
             --------------------------------------------------

             The following conditions shall be satisfied and the Borrower shall
have delivered to the Administrative Agent a certificate of an Authorized
Signatory of the Borrower in form and substance satisfactory to the
Administrative Agent, to the following effect:

             (a)  Representations and Warranties. The representations and
                  ------------------------------
warranties contained herein and in the other Loan Documents shall be true,
correct and complete in all material respects on and as of the Effective Date
(after giving effect to this Agreement) to the same extent as though made on and
as of that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case such representations and
warranties shall have been true, correct and complete in all material respects
on and as of such earlier date.

             (b)  No Event of Default. No event shall have occurred and be
                  -------------------
continuing as of the Effective Date (after giving effect to this Agreement) that
would constitute a Default or an Event of Default.

             (c)  Performance of Agreements. Each Credit Party shall have
                  -------------------------
performed in all material respects all agreements and satisfied all conditions
which the Loan Documents provide shall be performed or satisfied by such Credit
Party on or before the Effective Date.

6.   [INTENTIONALLY OMITTED]
     -----------------------

7.   AFFIRMATIVE COVENANTS
     ---------------------

             The Borrower agrees that, so long as this Agreement is in effect,
any Loan remains outstanding and unpaid, or any other amount is owing under any
Loan Document to any Lender or the Administrative Agent, the Borrower shall:

                                      -51-
<PAGE>

     7.1.    Financial Statements
             --------------------

             Maintain a standard system of accounting in accordance with sound
business practices sufficient to permit preparation of financial statements in
conformity with GAAP, and furnish or cause to be furnished to the Administrative
Agent and each Lender:

             (a)  As soon as available, but in any event within 90 days after
the end of each fiscal year, (i) a copy of the consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such fiscal year, together with
the related consolidated statements of income, stockholders' equity and cash
flows as of and through the end of such fiscal year, setting forth in each case
in comparative form the figures for the preceding fiscal year, (ii) a copy of
the letter (such letter to conform to the then existing AICPA reporting
guidelines) of the Accountants addressed to the board of directors of the
Borrower to the effect that, in connection with the procedures performed in
obtaining a basis for certification of the audited consolidated financial
statements of the Borrower, the Accountants obtained no knowledge, in the course
of performing their audit, that would indicate that the Borrower was in
violation of any financial covenant contained in this Agreement or of the
existence of any Default by the Borrower under this Agreement, and (iii) a copy
of any management letter delivered by the Accountants. The consolidated balance
sheet and consolidated statements of income, stockholders' equity and cash flows
shall be audited and certified without qualification by the Accountants, which
certification shall (i) state that the examination by such Accountants in
connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards and, accordingly, included
such tests of the accounting records and such other auditing procedures as were
considered necessary in the circumstances, and (ii) include the opinion of such
Accountants that such consolidated financial statements have been prepared in
accordance with GAAP in a manner consistent with prior fiscal periods, except as
otherwise specified in such opinion.

             (b)  As soon as available, but in any event within 45 days after
the end of each fiscal quarter (90 days after the end of the fourth quarter), a
copy of the consolidated and consolidating balance sheets of the Borrower and
its Subsidiaries as at the end of each such quarterly period, together with the
related consolidated and consolidating statements of income and cash flows for
such period and for the elapsed portion of the fiscal year through such date,
setting forth in each case in comparative form the figures for the corresponding
periods of the preceding fiscal year, certified by the chief financial officer
of the Borrower (or such other officer acceptable to the Administrative Agent),
as being complete and correct in all material respects and as presenting fairly
the consolidated and consolidating financial condition and the consolidated and
consolidating results of operations of the Borrower and its Subsidiaries;
provided that such consolidating financial statements shall not be required when
the Leverage Ratio shall be less than 3.75:1.00 at all times during the
immediately preceding two fiscal quarters in respect of which financial
statements and a Compliance Certificate have been delivered to the
Administrative Agent and the Lenders pursuant to this Section 7.1.

                                      -52-
<PAGE>

             (c)  Within 45 days after the end of each of the first three fiscal
quarters in each year and within 90 days after the end of the last fiscal
quarter in each year, a Compliance Certificate, certified by the chief financial
officer of the Borrower (or such other officer as shall be acceptable to the
Administrative Agent).

             (d)  Within 90 days after the end of each fiscal year, updated
projections in reasonable detail prepared on a quarterly basis for the current
fiscal year and on an annual basis for each fiscal year thereafter through the
Maturity Date, and at least once each year hold an annual meeting for the
Lenders regarding the Borrower's performance, projections and business plan.

             (e)  Such other information as the Administrative Agent, the
Syndication Agent or any Lender may reasonably request from time to time.

     7.2.    Certificates; Other Information
             -------------------------------

             Furnish to the Administrative Agent and each Lender:

             (a)  Prompt written notice if: (i) any Indebtedness of the Borrower
and/or any of its Subsidiaries in excess of $1,000,000 on an aggregate basis is
declared or shall become due and payable prior to its stated maturity, or is
called and not paid when due, (ii) a default shall have occurred under any note
(other than the Notes) or the holder of any such note, or other evidence of
Indebtedness, certificate or security evidencing any such Indebtedness or any
obligee with respect to any other Indebtedness of the Borrower and/or any of its
Subsidiaries in excess of $1,000,000 on an aggregate basis has the right to
declare any such Indebtedness due and payable prior to its stated maturity, or
(iii) there shall occur and be continuing a Default or an Event of Default;

             (b)  Prompt written notice of: (i) 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, (ii) 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 (iii) any refusal by any Person or Governmental
Authority to renew or extend any 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;

             (c)  Promptly upon becoming available, copies of all (i) regular,
periodic or special reports, schedules and other material that the Borrower or
any of its Subsidiaries may now or hereafter be required to file with or deliver
to any securities exchange or the SEC, or any

                                      -53-
<PAGE>

other Governmental Authority succeeding to the functions thereof and (ii)
material news releases and annual reports relating to the Borrower or any of its
Subsidiaries;

             (d)  Prompt written notice in the event that the Borrower, any of
its Subsidiaries or any ERISA Affiliate knows, or has reason to know, that (i)
any Termination Event with respect to a Pension Plan has occurred or will occur,
(ii) any condition exists with respect to a Pension Plan that presents a
material risk of termination of the Pension Plan, imposition of an excise tax,
requirement to provide security to the Pension Plan or other liability on the
Borrower, any of its Subsidiaries or any ERISA Affiliate, (iii) the Borrower,
any of its Subsidiaries or any ERISA Affiliate has applied for a waiver of the
minimum funding standard under Section 412 of the Code with respect to a Pension
Plan, (iv) the aggregate amount of the Unfunded Pension Liabilities under all
Pension Plans is in excess of $500,000, (v) the aggregate amount of Unrecognized
Retiree Welfare Liability under all applicable Employee Benefit Plans is in
excess of $500,000, (vi) the Borrower, any of its Subsidiaries or any ERISA
Affiliate has engaged in a Prohibited Transaction with respect to an Employee
Benefit Plan in which the aggregate "amount involved" (as defined in Section
4975(f) of the Code) is in excess of $500,000, (vii) the imposition of any tax
in excess of $500,000 in the aggregate on the Borrower, its Subsidiaries and
ERISA Affiliates under Section 4980B(a) of the Code or (viii) the assessment of
a civil penalty under Section 502(c) of ERISA in excess of $500,000 in the
aggregate on the Borrower, its Subsidiaries and ERISA Affiliates, together with
a certificate of the president or chief financial officer of the Borrower (or
such other officer as shall be acceptable to the Administrative Agent) setting
forth the details of such event and the action that the Borrower, such
Subsidiary or such ERISA Affiliate proposes to take with respect thereto,
together with a copy of all notices and filings with respect thereto.

             (e)  Prompt written notice in the event that the Borrower, any of
its Subsidiaries or any ERISA Affiliate shall receive a demand letter from the
PBGC notifying the Borrower, such Subsidiary or such ERISA Affiliate of any
final decision finding liability in an aggregate amount in excess of $500,000
and the date by which such liability must be paid, together with a copy of such
letter and a certificate of the president or chief financial officer of the
Borrower (or such other officer as shall be acceptable to the Administrative
Agent) setting forth the action that the Borrower, such Subsidiary or such ERISA
Affiliate proposes to take with respect thereto.

             (f)  Promptly upon the same becoming available, and in any event by
the date such amendment is adopted, a copy of any Pension Plan amendment that
the Borrower, any of its Subsidiaries or any ERISA Affiliate proposes to adopt
that would require the posting of security under Section 401(a)(29) of the Code,
together with a certificate of the president or chief financial officer of the
Borrower (or such other officer as shall be acceptable to the Administrative
Agent) setting forth the reasons for the adoption of such amendment and the
action that the Borrower, such Subsidiary or such ERISA Affiliate proposes to
take with respect thereto.

                                      -54-
<PAGE>

             (g)  As soon as possible and in any event by the tenth Business Day
after any required installment or other payment under Section 412 of the Code
owed to a Pension Plan shall have become due and owing and remain unpaid, a copy
of the notice of failure to make required contributions provided to the PBGC by
the Borrower, any of its Subsidiaries or any ERISA Affiliate under Section
412(n) of the Code, together with a certificate of the president or chief
financial officer of the Borrower (or such other officer as shall be acceptable
to the Administrative Agent) setting forth the action that the Borrower, such
Subsidiary or such ERISA Affiliate proposes to take with respect thereto.

             (h)  Prompt written notice of any order, notice, claim or
proceeding received by, or brought against, the Borrower or any of its
Subsidiaries, or with respect to any of the Real Property, under any
Environmental Law that could have a Material Adverse Effect.

             (i)  Prompt written notice of any loss, forfeiture, non-renewal or
termination, or the commencement of any action or proceeding or the issuance of
any notice to effect any of the foregoing, with respect to any license,
agreement or authorization that could reasonably be expected to have a Material
Adverse Effect.

             (j)  A certificate no later than three Business Days prior to the
consummation of any Permitted Acquisition: (i) identifying such Permitted
Acquisition, (ii) specifying the total consideration to be paid with respect to
such Permitted Acquisition, the aggregate total consideration paid with respect
to all Permitted Acquisitions (including such proposed Permitted Acquisition)
made after the Effective Date and such other information as the Administrative
Agent shall reasonably require, and (iii) certifying that immediately before and
after giving effect thereto no Default or Event of Default shall exist.

             (k)  Within 40 days after the end of each calendar month, a report
specifying (in a format reasonably acceptable to the Administrative Agent): (i)
Permitted Acquisitions made (A) during such calendar month and (B) during the
period from July 1, 2000 through the end of such calendar month, (ii)
Maintenance Capital Expenditures and Development Capital Expenditures (stated
separately) of the Borrower and its Subsidiaries (on a Consolidated basis
determined in accordance with GAAP) made (A) during such calendar month and (B)
during the period from July 1, 2000 through the end of such calendar month, and
(iii) an accounts receivable aging summary by account debtor group as at the end
of such month, provided that this subsection (k) shall not be applicable when
the Leverage Ratio shall be less than 3.75:1.00 at all times during the
immediately preceding two fiscal quarters in respect of which financial
statements and a Compliance Certificate have been delivered to the
Administrative Agent and the Lenders pursuant to Section 7.1.

     7.3.    Legal Existence
             ---------------

             Maintain, and cause each of its Subsidiaries so to maintain, its
corporate, partnership or other existence, as the case may be, in good standing
in the jurisdiction of its incorporation or formation and in each other
jurisdiction in which it is required to do so, except,

                                      -55-
<PAGE>

in each case, where the failure to do so could not reasonably be expected to
have a Material Adverse Effect.

     7.4.    Taxes
             -----

             Pay and discharge when due, and cause each of its Subsidiaries so
to do, all Taxes, assessments and governmental charges, license fees and levies
upon, or with respect to the Borrower or such Subsidiary and all Taxes upon the
income, profits and Property of the Borrower and its Subsidiaries, that, if
unpaid, could reasonably be expected to have a Material Adverse Effect or become
a Lien on the Property of the Borrower or such Subsidiary (other than a Lien
described in Section 8.2(i)), unless and to the extent only that such Taxes,
assessments, charges, license fees and levies shall be contested in good faith
and by appropriate proceedings diligently conducted by the Borrower or such
Subsidiary, provided that the Borrower shall give the Administrative Agent
prompt notice of such contest and that such reserve or other appropriate
provision as shall be required by the Accountants in accordance with GAAP shall
have been made therefor.

     7.5.    Insurance
             ---------

             (a)  Maintain, and cause each of its Subsidiaries to maintain, (i)
insurance with financially sound insurance carriers on such of its Property,
against at least such risks, and in at least such amounts, as are usually
insured against by similar businesses, including, without limitation, public
liability (bodily injury and property damage), fidelity, and workers'
compensation, and file with the Administrative Agent within ten Business Days
after request therefor a detailed list of such insurance then in effect, stating
the names of the carriers thereof, the policy numbers, the insureds thereunder,
the amounts of insurance, dates of expiration thereof, and the Property and
risks covered thereby, together with a certificate of the chief financial
officer of the Borrower (or such other officer as shall be acceptable to the
Administrative Agent) certifying that in the opinion of such officer such
insurance is adequate in nature and amount, complies with the obligations of the
Borrower under this Section, and is in full force and effect, and (ii) such
other insurance as is required under the Collateral Documents.

             (b)  Maintain, and cause each of its Subsidiaries to maintain,
insurance covering (i) physical loss or damage to the Collateral against all
risks and (ii) liability arising from the use or intended use, or otherwise
attributable or relating to, the Collateral, in each case in accordance with
Section 7.5(a). The policies covering such insurance (A) shall, in the case of
each policy under clause (i) of this subsection, contain a standard loss payable
clause and shall name the Collateral Agent as loss payee (and, if required by
the Collateral Agent, sole loss payee) in respect of each claim relating to the
Collateral and resulting in a payment thereunder in excess of $100,000, (B)
shall, in the case of each policy under clause (ii) of this paragraph, be
indorsed to provide, in respect of the interests of the Collateral Agent and the
other secured parties under the Collateral Documents, that the Collateral Agent
shall be an additional insured and (C) shall, in the case of each policy under
clauses (i) and (ii) of this subsection, provide (if

                                      -56-
<PAGE>

required by the Collateral Agent) that 30 days' prior written notice of any
cancellation or modification thereof or any reduction of amounts payable
thereunder shall be given to the Collateral Agent and in the event that the
Borrower at any time or times shall fail to pay any premium in whole or part
relating thereto, the Administrative Agent or the Collateral Agent may, in its
sole discretion, pay such premium. The Borrower, on behalf of itself and each of
its Subsidiaries, irrevocably makes, constitutes and appoints each of the
Administrative Agent and the Collateral Agent (and all officers, employees or
agents designated by the Administrative Agent or the Collateral Agent) as its
true and lawful agent (and attorney-in-fact) for the purpose, during the
continuance of an Event of Default, of making, settling and adjusting claims in
respect of Collateral under policies of insurance, endorsing the name of the
Borrower or such Subsidiary on any check, draft, instrument or other item of
payment for the proceeds of such policies of insurance and for making all
determinations and decisions with respect thereto. In the event that the
Borrower or any Subsidiary at any time or times shall fail to obtain or maintain
any of the policies of insurance required hereby or to pay any premium in whole
or part relating thereto, the Administrative Agent or the Collateral Agent may,
without waiving or releasing any obligation or liability of the Borrower
hereunder or any Event of Default, in its sole discretion, obtain and maintain
such policies of insurance and pay such premium and take any other actions with
respect thereto as the Administrative Agent or the Collateral Agent deems
advisable. All sums disbursed by the Administrative Agent or the Collateral
Agent in connection with this subsection, including reasonable attorneys' fees,
court costs, expenses and other charges relating thereto, shall be payable, upon
demand, by the Borrower to the Administrative Agent or the Collateral Agent, as
applicable, and shall be additional Obligations secured by the Collateral.
Provided that no Event of Default shall exist, the Collateral Agent, upon its
receipt thereof, shall pay over to the Borrower the proceeds of any such
insurance payment received by the Collateral Agent in its capacity as Collateral
Agent to enable the Borrower to repair or replace the Property in respect of
which such insurance payment was received. To the extent that the Borrower shall
not repair or replace such Property within 365 days from its receipt of such
insurance payment or if an Event of Default shall exist, the Borrower, at the
request of the Administrative Agent, shall prepay the Revolving Credit Term
Tranche Loans (and if no Revolving Credit Term Tranche Loans are outstanding,
the Revolving Credit Tranche Loans) and the Term Loans (based on the Revolver
Prepayment Fraction and the Term Prepayment Fraction thereof) in an amount equal
to the total amount of such insurance payment less any amounts previously
applied to the repair or replacement of the Property in respect of which such
property insurance proceeds were received and, until such time, any such amount
held by the Collateral Agent shall continue to be held by the Collateral Agent
as Collateral.

     7.6.    Payment of Indebtedness and Performance of Obligations
             ------------------------------------------------------

             Pay and discharge when due, and cause each of its Subsidiaries to
pay and discharge when due, all lawful Indebtedness, obligations and claims for
labor, materials and supplies or otherwise that, if unpaid, could reasonably be
expected to (i) have a Material Adverse Effect or (ii) become a Lien upon
Property of the Borrower or any of its Subsidiaries in excess of $1,000,000 on
an aggregate consolidated basis for the Borrower and its Subsidiaries, other
than a

                                      -57-
<PAGE>

Permitted Lien, unless and to the extent only that the validity of such
Indebtedness, obligation or claim shall be contested in good faith and by
appropriate proceedings diligently conducted by it, provided that the Borrower
shall give the Administrative Agent prompt notice of any such contest and that
such reserve or other appropriate provision as shall be required by the
Accountants in accordance with GAAP shall have been made therefor.

     7.7.    Condition of Property
             ---------------------

             At all times, maintain, protect and keep in good repair, working
order and condition (ordinary wear and tear excepted), and cause each of its
Subsidiaries so to do, all Property necessary to the operation of the Borrower's
or such Subsidiary's business.

     7.8.    Observance of Legal Requirements
             --------------------------------

             Observe and comply in all respects, and cause each of its
Subsidiaries so to do, with all laws, ordinances, orders, judgments, rules,
regulations, certifications, franchises, permits, licenses, directions and
requirements of all Governmental Authorities, that now or at any time hereafter
may be applicable to it, including, without limitation, ERISA and all
Environmental Laws, a violation of which could reasonably be expected to have a
Material Adverse Effect, except such thereof as shall be contested in good faith
and by appropriate proceedings diligently conducted by it, provided that the
Borrower shall give the Administrative Agent prompt notice of such contest and
that such reserve or other appropriate provision as shall be required by the
Accountants in accordance with GAAP shall have been made therefor.

     7.9.   Inspection of Property; Books and Records; Discussions
            ------------------------------------------------------

            Keep proper books of record and account in which full, true and
correct entries sufficient to permit preparation of financial statements in
conformity with GAAP and all requirements of law shall be made of all dealings
and transactions in relation to its business and activities and permit
representatives of the Administrative Agent, the Syndication Agent and any
Lender to visit its offices, to inspect any of its Property and examine and make
copies or abstracts from any of its books and records at any reasonable time and
as often as may reasonably be desired, and to discuss the business, operations,
prospects, licenses, Property and financial condition of the Borrower and its
Subsidiaries with the officers thereof and the Accountants (provided that the
Borrower is given reasonable notice and an opportunity to attend or participate
in any such discussion).

     7.10.   Licenses, Intellectual Property
             -------------------------------

             Maintain, and cause each of its Subsidiaries to maintain, in full
force and effect, all licenses, franchises, Intellectual Property, permits,
licenses, authorizations and other rights as are necessary for the conduct of
its business, the failure of which to maintain could reasonably be expected to
have a Material Adverse Effect.

                                      -58-
<PAGE>

     7.11.   Additional Guarantors; Additional Collateral
             --------------------------------------------

             Within 30 days after the occurrence of an Additional Guarantor
Event, (i) cause such Person that became a wholly-owned Domestic Subsidiary of
the Borrower and that is not a Guarantor to become a party to the Subsidiary
Guaranty and the Security Agreement, and (ii) deliver or cause to be delivered
to the Administrative Agent with respect to each such Subsidiary, simultaneously
with the execution and delivery of the same, (A) a certificate, dated the date
such Subsidiary shall have become a party to the Subsidiary Guaranty and the
Security Agreement, executed by such Subsidiary and substantially in the form
of, and with substantially the same attachments as, the certificate which would
have been required under Section 5.1 if such Subsidiary had become a party to
the Subsidiary Guaranty and the Security Agreement on or before the Effective
Date, (B) an opinion of counsel to such Subsidiary, in form and substance
satisfactory to the Administrative Agent, (C) for delivery by the Administrative
Agent to the Collateral Agent, 100% of the issued and outstanding capital Stock
of such Subsidiary owned directly or indirectly, by the Borrower, together with
an undated stock power, executed in blank by an Authorized Signatory of each
applicable owner of such Stock, and (D) such UCC-1 forms and such other
documents as may by required by the Security Agreement and as the Administrative
Agent or the Collateral Agent shall request.

     7.12.   Interest Coverage Ratio
             -----------------------

             Maintain at all times an Interest Coverage Ratio of not less than
the applicable ratio set forth below with respect to the applicable period set
forth below:

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
                Period                                 Ratio
                ------                                 -----
- ---------------------------------------------------------------------------
<S>                                                  <C>
Effective Date through
September 30, 2000                                   1.80:1.00
- ---------------------------------------------------------------------------
October 1, 2000 through
June 30, 2001                                        2.00:1.00
- ---------------------------------------------------------------------------
July 1, 2001 through
September 30, 2002                                   2.25:1.00
- ---------------------------------------------------------------------------
October 1, 2002 and
thereafter                                           2.50:1.00
- ---------------------------------------------------------------------------
</TABLE>


     7.13.    Minimum Net Worth
              -----------------

              Maintain at all times a Consolidated net worth of the Borrower and
its Subsidiaries of not less than $261,385,000, less (i) the after-tax effect of
                                                ----
any Non-Recurring

                                      -59-
<PAGE>

Charges (as defined in the definition of EBITDA) excluded in the calculation of
Consolidated EBITDA, plus (ii) the sum of 85% of quarterly Consolidated net
                     ----
income of the Borrower and its Subsidiaries (excluding net losses in any fiscal
quarter) and 85% of the net cash proceeds received by the Borrower from its
issuance of Stock, in each case for clauses (i) and (ii) determined on a
cumulative basis for the period commencing April 1, 2000.

     7.14.   Minimum Consolidated EBITDA Ratio
             ---------------------------------

             Maintain at all times a ratio of (i) Consolidated EBITDA to (ii)
Consolidated Pre-Minority EBITDA of not less than 0.80:1.00, in each case for
(a) the two fiscal quarter period ending June 30, 2000, if the date of
determination is at any time during the period from the Effective Date through
September 29, 2000, (b) the three fiscal quarter period ended September 30,
2000, if the date of determination is at any time during the period from
September 30, 2000 through December 30, 2000, and (c) the immediately preceding
four fiscal quarters (or, in the event that the date of determination is a
fiscal quarter ending date, the four fiscal quarter period then ended), if the
date of determination is at any time during the period from and after December
31, 2000.

                                      -60-
<PAGE>

     7.15.   Leverage Ratio
             --------------

             Maintain at all times a Leverage Ratio not greater than the
applicable ratio set forth below with respect to the applicable period set forth
below:

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
                Period                                 Ratio
                ------                                 -----
- ---------------------------------------------------------------------------
<S>                                              <C>
Effective Date through
September 30, 2000                                    5.25:1.00
- ---------------------------------------------------------------------------
October 1, 2000 through
March 31, 2001                                        5.00:1.00
- ---------------------------------------------------------------------------
April 1, 2001 through
December 31, 2001                                     4.75:1.00
- ---------------------------------------------------------------------------
January 1, 2002 through
September 30, 2002                                    4.50:1.00
- ---------------------------------------------------------------------------
October 1, 2002 through
June 30, 2003                                         4.25:1.00
- ---------------------------------------------------------------------------
July 1, 2003 through March
31, 2004                                              4.00:1.00
- ---------------------------------------------------------------------------
April 1, 2004 and thereafter                          3.75:1.00
- ---------------------------------------------------------------------------
</TABLE>

     7.16.    Asset Swap Transactions
              -----------------------

              (a)  Deliver to the Administrative Agent, no later than three
Business Days prior to the consummation of the first transaction constituting a
part of an Asset Swap Transaction, a certificate in reasonable detail describing
such first transaction and stating the intent of the Borrower with regard to the
second transaction, together with such other information as the Administrative
Agent shall reasonably request in connection therewith.

              (b) If the first transaction constituting a part of an Asset Swap
Transaction is an Asset Sale, the Borrower shall deposit the Net Cash Proceeds
(without giving effect to clause (ii)(F) and the proviso contained in clause (i)
of the definition of Net Cash Proceeds) thereof with the Collateral Agent to be
held as Collateral, which Collateral shall be eligible for release to the extent
necessary to close the Permitted Acquisition constituting the second transaction
of such Asset Swap transaction, provided that at the time of such release, and
immediately before and after giving effect to the consummation of such Permitted
Acquisition, no Default or Event of Default shall exist. Alternatively, with
respect to the Revolver Prepayment Fraction of such Net Cash Proceeds, the
Borrower shall be permitted to prepay the Revolving Credit Tranche Loans up to
an amount equal to such Revolver Prepayment Fraction of such Net

                                      -61-
<PAGE>

Cash Proceeds, provided that the Borrower shall be permitted to prepay the
Revolving Credit Tranch Loans up to an amount equal to such Revolver Prepayment
Fraction of such Net Cash Proceeds, provided that the Borrower may not reborrow
the amount prepaid under the Revolving Tranche Commitments (as defined in the
Revolving Credit Facility) until the consummation of such Permitted Acquisition.
Substantially simultaneously with the consummation of such Permitted
Acquisition, the Borrower shall prepay the Term Loans and the Revolving Credit
Loans to the extent required by Section 2.4(f) hereof and Section 2.7(f) of the
Revolving Credit Facility.

     7.17.   Cash Management
             ---------------

     Establish and maintain the cash management and collateral program required
by Schedule 7.17 in the manner and at the times required therein.

     7.18.   Further Assurances
             ------------------

             (a)  Execute, and will cause each Guarantor to execute, any and all
further documents, financing statements, agreements (including guarantee
agreements and security agreements) and instruments, and take all such further
actions (including the filing and recording of financing statements, fixture
filings and other documents), that may be required under any applicable law, or
which the Collateral Agent, the Administrative Agent or the Required Lenders may
reasonably request, to effectuate the transactions contemplated by the Loan
Documents or to grant, preserve, protect or perfect (including as a result of
any change in applicable law) the Liens created or intended to be created by the
Collateral Documents or the validity or priority of any such Lien, all at the
expense of the Borrower, and provide to the Collateral Agent and the
Administrative Agent, from time to time upon request, evidence reasonably
satisfactory to the Collateral Agent and the Administrative Agent as to the
perfection and priority of the Liens created or intended to be created by the
Collateral Documents.

             (b) If any material assets (including any real property or
improvements thereto or any interest therein other than leasehold interests in
real property) are acquired by the Borrower or any Guarantor after the Effective
Date (other than assets constituting Collateral under the Collateral Documents
that automatically become subject to the Lien of the Collateral Documents upon
acquisition thereof), the Borrower will notify the Administrative Agent thereof,
and, subject to the provisions of the Collateral Documents, if requested by the
Administrative Agent or the Required Lenders, the Borrower will cause such
assets to be subjected to a Lien securing the Obligations and will take, and
cause the Subsidiary Guarantors to take, such actions as shall be necessary or
reasonably requested by the Administrative Agent to grant and perfect such
Liens, including actions described in subsection (a) of this Section, all at the
expense of the Borrower.

                                      -62-
<PAGE>

8.   NEGATIVE COVENANTS
     ------------------

             The Borrower agrees that, so long as this Agreement is in effect,
any Loan remains outstanding and unpaid, or any other amount is owing under any
Loan Document to any Lender or the Administrative Agent, the Borrower shall not,
directly or indirectly:

     8.1.    Indebtedness
             ------------

             Create, incur, assume or suffer to exist any liability for
Indebtedness, or permit any of its Subsidiaries so to do, except (i)
Indebtedness due under the Loan Documents, (ii) Indebtedness of the Borrower or
any of its Subsidiaries existing on the date hereof as set forth on Schedule
8.1, as the same may be refinanced from time to time, containing repayment terms
and conditions no less favorable to the Borrower or such Subsidiary than the
Indebtedness being refinanced, (iii) purchase money Indebtedness and Capital
Lease Obligations of the Borrower or its Subsidiaries, as the case may be,
incurred after the Effective Date in connection with the purchase or lease of
Property (including Permitted Acquisitions), in an aggregate outstanding
principal amount not to exceed $25,000,000 at any one time, in the case of the
Borrower, and $25,000,000 at any one time, in the case of TRC and its
Subsidiaries taken as a whole, as the same may be refinanced from time to time,
containing repayment terms and conditions no less favorable to the Borrower or
its Subsidiaries, as the case may be, than the Indebtedness being refinanced,
(iv) other Contingent Obligations of the Borrower or TRC in an aggregate amount
not exceeding $20,000,000 at any one time, (v) other Contingent Obligations of
the Borrower and its Subsidiaries for the benefit of one or more of the Borrower
or its Subsidiaries in an aggregate outstanding amount not exceeding
$30,000,000, (vi) unsecured Indebtedness of the Domestic Subsidiaries of the
Borrower provided that the aggregate outstanding principal amount of such
Indebtedness shall not exceed $20,000,000 at any one time, (vii) [Intentionally
Omitted], (viii) Indebtedness of TRC (excluding Indebtedness incurred under
clause (iii)) assumed in connection with a Permitted Acquisition, provided that
the aggregate outstanding principal amount of such Indebtedness shall not exceed
$40,000,000 at any one time, (ix) [Intentionally Omitted], (x) Hedging
Obligations that are incurred by the Borrower or any of its Subsidiaries for the
purpose of fixing or hedging foreign currency exchange risks or interest rate
risks with respect to any floating rate Indebtedness that is permitted by the
terms of this Agreement to be outstanding, (xi) unsecured Indebtedness of the
Borrower in an aggregate outstanding principal amount not to exceed $25,000,000
at any one time, provided that immediately before and after giving effect to the
incurrence thereof no Default or Event of Default shall exist, (xii) unsecured
Indebtedness of the Borrower to one or more investors under an indenture subject
to the Trust Indenture Act of 1939, as amended ("Public Debt"), provided that
                                                 -----------
(A) such Indebtedness shall be designated by the Borrower in a certificate
delivered to the Administrative Agent as constituting Public Debt covered under
this Section 8.1(xii), (B) immediately before and after giving effect to the
incurrence thereof no Default or Event of Default shall exist, (C) such
Indebtedness shall require no payment or prepayment prior to one year after the
Maturity Date, (D) the terms, conditions and covenants of such Indebtedness
shall be less restrictive as to the Borrower and its Subsidiaries than the
terms, covenants and conditions of this Agreement and the terms, amount,

                                      -63-
<PAGE>

covenants and conditions of such Indebtedness shall be reasonably satisfactory
to the Required Lenders, and (E) the Borrower shall make the prepayment as
required by Section 2.4(d) upon the issuance of such Public Debt, (xiii)
Subordinated Indebtedness, provided that immediately before and after giving
effect to the incurrence thereof no Default or Event of Default shall exist,
provided that the Borrower shall make the prepayment as required by Section
2.4(e) upon the issuance of such Subordinated Indebtedness, (xiv) subordinated
guaranties by any Guarantor of the Borrower's obligations under any Subordinated
Indebtedness permitted hereunder, provided that (A) all Obligations of the
Borrower are guarantied by such Guarantor under the Subsidiary Guaranty, (B)
each such Guaranty is subordinated to at least the same extent as the
Subordinated Indebtedness guarantied thereby is subordinated to the Obligations
of the Borrower, (C) each such subordinated guaranty contains a limitation as to
the maximum amount guarantied thereby similar to that set forth in subsection
2.2(a) of the Subsidiary Guaranty, provided that in no event shall the liability
of the Guarantor under such subordinated guaranty exceed the maximum amount
permissible under applicable fraudulent conveyance or similar law, and (D) each
such subordinated guaranty is otherwise on market terms for guaranties of
subordinated debt instruments prevailing at or around the time that such
subordinated guaranty is entered into, (xv) Indebtedness permitted under Section
8.5(d), (xvi) Indebtedness under the Revolving Credit Facility, (xvii)
Indebtedness of RTC under the RTC Convertible Subordinated Indenture and the RTC
Convertible Subordinated Notes, (xviii) other Indebtedness of RTC and its
Subsidiaries existing on February 27, 1998 and (xix) Indebtedness under the RTC
Convertible Subordinated Guaranty.

     8.2.    Liens
             -----

             Create, incur, assume or suffer to exist any Lien upon any of its
Property, whether now owned or hereafter acquired, or permit any of its
Subsidiaries so to do, or enter into any agreement, other than this Agreement,
the Revolving Credit Facility and secured purchase money Indebtedness and
Capital Lease Obligations permitted by this Agreement (in which cases, any
prohibition or limitation shall only be effective against the Property acquired
or leased thereby), or permit any Subsidiary so to do, which prohibits or limits
the ability of the Borrower or such Subsidiary to create, incur, assume or
suffer to exist any Lien upon any of its Property or revenues, whether now owned
or hereafter acquired, except (i) Liens for Taxes, assessments or similar
charges incurred in the ordinary course of business that are not delinquent or
that are being contested in accordance with Section 7.4, provided that
enforcement of such Liens is stayed pending such contest, (ii) Liens in
connection with workers' compensation, unemployment insurance or other social
security obligations (but not ERISA), (iii) deposits or pledges to secure bids,
tenders, contracts (other than contracts for the payment of money), leases,
statutory obligations, surety and appeal bonds and other obligations of like
nature arising in the ordinary course of business, (iv) zoning ordinances,
easements, rights of way, minor defects, irregularities, and other similar
restrictions affecting Real Property that do not adversely affect the value of
such Real Property or the financial condition of the Borrower or such Subsidiary
or impair its use for the operation of the business of the Borrower or such
Subsidiary, (v) Liens arising by operation of law such as mechanics',
materialmen's, carriers', and warehousemen's liens incurred

                                      -64-
<PAGE>

in the ordinary course of business that are not delinquent or that are being
contested in accordance with Section 7.6, provided that enforcement of such
Liens is stayed pending such contest, (vi) Liens arising out of judgments or
decrees that are being contested in accordance with Section 7.6, provided that
enforcement of such Liens is stayed pending such contest, (vii) purchase money
Liens and Liens arising out of Capital Lease Obligations on Property of the
Borrower or any of its Subsidiaries acquired after the date hereof to secure
Indebtedness (and replacement Liens on such Property to secure refinancings of
such Indebtedness in accordance with Section 8.1(iii)) of the Borrower or its
Subsidiaries permitted by Section 8.1(iii), incurred in connection with the
acquisition or lease of such Property, provided that each such Lien is limited
to such Property so acquired or leased, (viii) Liens on Property of the Borrower
and its Subsidiaries existing on the Effective Date as set forth on Schedule
8.2, (ix) [Intentionally Omitted], (x) Liens to secure Indebtedness permitted by
Section 8.1(viii), provided that such Liens shall be limited to Liens on the
Property acquired in connection with such Permitted Acquisition, (xi) Liens
created under the Collateral Documents, and (xii) Liens to secure Indebtedness
permitted by Section 8.1(xviii), provided that such Liens shall be limited to
Liens on the Property acquired in connection with the merger contemplated by the
RTC Merger Agreement.

    8.3.  Merger, Consolidation and  Certain Dispositions of Property
          -----------------------------------------------------------

          Consolidate with, be acquired by, or merge into or with any Person, or
sell, lease or otherwise dispose of all or substantially all of its Property, or
permit any of its Subsidiaries so to do, except (i) as permitted by Section 8.7,
(ii) any wholly-owned Subsidiary of the Borrower (other than TRC) may merge into
the Borrower or another wholly-owned Subsidiary of the Borrower, provided that
(a) no Event of Default shall exist immediately before or after giving effect
thereto, (b) the representations and warranties contained herein shall be true
and correct immediately before and after giving effect hereto, (c) the Borrower,
TRC or such wholly-owned Subsidiary is the survivor of such merger, (d) the
Borrower is the survivor in the case of any such merger involving the Borrower
and TRC is the survivor in the case of any such merger involving TRC, and (e)
the Borrower shall have delivered a certificate to the Administrative Agent on
the day of the merger as to its compliance with each of the requirements set
forth in clauses (a) through (d) above, and (iii) any Permitted Acquisition;
provided that, in the case of clauses (i) and (ii) above, neither the Borrower
nor TRC shall sell, lease or otherwise dispose of all or substantially all of
its Property and to the extent that the Borrower or TRC is a party to any merger
or consolidation, the Borrower or TRC shall be the survivor, and to the extent
that the Borrower is a party to any merger or consolidation, the Borrower shall
be the survivor.

    8.4.  Restricted Payments
          -------------------

          Declare or pay any Restricted Payments payable in cash or otherwise or
apply any of its Property thereto or set apart any sum therefor, or permit any
of its Subsidiaries so to do, except that: (i) a wholly-owned Subsidiary of the
Borrower may declare and pay Restricted Payments to the Borrower or any other
wholly-owned Subsidiary of the Borrower, (ii) provided

                                      -65-
<PAGE>

that no Default or Event of Default exists immediately before or after giving
effect thereto, a non-wholly-owned Subsidiary of the Borrower may declare and
pay Restricted Payments in cash provided that such Restricted Payments are
ratable in accordance with the respective equity ownership interests in such
Subsidiary, (iii) each Subsidiary may pay Restricted Payments in the form of tax
sharing payments to the Borrower, and (iv) provided that no Default or Event of
Default exists immediately before and after giving effect thereto, the Borrower
may repurchase its capital Stock owned by management or employees and physicians
under contract with the Borrower or its Subsidiaries, such payments under this
clause not to exceed $5,000,000 in the aggregate (net of cash received by the
Borrower from management or employees and physicians under contract with the
Borrower or its Subsidiaries in exchange for capital Stock of the Borrower) in
any twelve month period, provided that such $5,000,000 amount shall be increased
to $10,000,000 at any time when the Leverage Ratio is less than 3.75:1.00
immediately before and after giving effect to the applicable Acquisition and at
all times during the immediately preceding two fiscal quarters in respect of
which financial statements and a Compliance Certificate have been delivered to
the Administrative Agent and the Lenders pursuant to Section 7.1; provided that
in no event shall the Borrower declare or pay, or become obligated to declare or
pay, any Restricted Payment in respect of Permitted Preferred Stock other than
Restricted Payments payable in Permitted Preferred Stock or common Stock.

    8.5.  Investments, Loans, Etc.
          ------------------------

          At any time, purchase or otherwise acquire, hold or make any
Investment in or with any Person, or make an Acquisition, or permit any of its
Subsidiaries so to do, except:

          (a)  Investments in Cash Equivalents;

          (b)  Investments in accounts and notes payable acquired in the
ordinary course of business;

          (c)  Investments (i) existing on the date hereof in wholly-owned
Subsidiaries set forth on Schedule 4.1, (ii) existing on the date hereof in non-
wholly-owned Subsidiaries and otherwise as set forth on Schedule 8.5, and (iii)
acquired after the Effective Date and approved by the Board of Directors of the
Borrower and reasonably acceptable to the Administrative Agent, the Syndication
Agent and the Required Lenders;

          (d)  Investments of the Borrower or any of its Subsidiaries in any
Subsidiary of the Borrower for working capital and capital expenditure purposes
of such Subsidiary or to enable such Subsidiary to make Investments permitted by
subsections (f) and (g) below, provided that (i) such Investments in non-wholly
owned Subsidiaries shall be made in the form of demand loans, the aggregate
outstanding principal amount of which shall not exceed $20,000,000 at any one
time, and (ii) such Investments in wholly-owned Subsidiaries shall be made
either in the form of (x) demand loans or (y) additional paid in equity provided
that the aggregate amount of all such additional paid in equity shall not exceed
$20,000,000 at any one time;

                                      -66-
<PAGE>

           (e) Investments by the Borrower or TRC (i) in ESRD-Related Businesses
existing on the date hereof as set forth on Schedule 8.5, and (ii) in ESRD-
Related Businesses of Persons (other than the Borrower and its Subsidiaries)
made after the Effective Date an aggregate amount not exceeding $20,000,000 at
any one time, provided that immediately before and after giving effect thereto
no Event of Default shall exist;

           (f) Domestic Acquisitions by the Borrower or any wholly-owned
Subsidiary of the Borrower, provided that (i) no Default or Event of Default
shall exist immediately before or after giving effect to such Acquisition, (ii)
each such Acquisition was initially approved by the board of directors (or other
Person performing similar functions) of each of the parties thereto, and (iii)
the following conditions shall have been satisfied:

               (A) in the case of stock Acquisitions, the Person whose stock is
           to be acquired shall not be a publicly held Person,

               (B) upon the consummation of each stock Acquisition, more than
           50% of the Stock or other equity interest of the Person so acquired
           shall be owned by the Borrower or its Subsidiaries,

               (C) the Person acquired in such Domestic Acquisition is in an
           ESRD-Related Business, or the assets acquired in such Domestic
           Acquisition have been and are to be used in an ESRD-Related Business,

               (D) within fifteen Business Days after the consummation of any
           Acquisition in respect of which the total consideration therefor
           exceeds $30,000,000, the Administrative Agent and the Lenders shall
           have received (x) a sources and uses analysis, an equity interest
           breakdown and a copy of the historical and pro-forma EBITDA analysis
           as provided to the Board of Directors of the Borrower, and (y) a
           certificate signed by an Authorized Signatory of the Borrower to the
           effect that, immediately before and after giving effect to such
           Acquisition, no Event of Default shall exist and setting forth
           calculations on a pro-forma basis showing compliance with Sections
           7.12 through 7.15 and 8.17,

               (E) [Intentionally Omitted]

               (F) in the event the total consideration to be paid in connection
           with any one Acquisition (or series of related Acquisitions) shall
           exceed $40,000,000 ($75,000,000 if the consideration to be paid for
           such Acquisition is comprised solely of the common Stock of the
           Borrower), the Required Lenders shall have consented thereto,
           provided that the $40,000,000 amount shall be increased to
           $50,000,000 at any time when the Leverage Ratio is less than
           3.75:1.00 immediately before and after giving effect to the
           applicable Acquisition and at all times during the immediately
           preceding two fiscal quarters in respect of which financial
           statements and a Compliance Certificate have been delivered to the

                                      -67-
<PAGE>

           Administrative Agent and the Lenders pursuant to Section 7.1,

               (G)  in the case of stock Acquisitions, TRC shall have full
           control over all bank accounts of the Person so acquired, and

               (H)  the Administrative Agent shall have received such other
           information or documents as the Administrative Agent shall have
           reasonably requested;

           (g)  Investments by the Borrower or TRC in 50%
or less of the voting Stock or other equity interest in another Person (the
"Minority Investment"), provided that (i) the Borrower or TRC owns at least 20%
 -------------------
(on a fully diluted basis) of the issued and outstanding Stock or other equity
interest in such Person, (ii) the aggregate outstanding amount of Minority
Investments made by the Borrower and TRC shall not exceed $60,000,000 at any one
time, (iii) the Borrower or TRC shall have full control over all bank accounts
of such Person if the Borrower or TRC is the largest holder of voting Stock or
other equity interests in such Person, (iv) the Borrower or TRC shall control or
act as the managing general partner of such Person if such Person is a
partnership and if the Borrower or TRC is the largest holder of equity interests
in such Person, and (v) immediately before and after giving effect thereto, no
Event of Default shall exist;

           (h)  Investments in notes permitted by Section 8.7(ii);

           (i)  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 in an aggregate
amount at any time outstanding not to exceed $10,000,000;

           (j)  Investments in Hedging Obligations permitted by Section 8.1(x);
and

           (k)  Contingent Obligations to the extent permitted by Section 8.1.

           For purposes of this Section 8.5, the amount of any Investment shall
be the original cost of such Investment plus the cost of all additions thereto,
without any adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment.

    8.6.   Business Change
           ---------------
           Materially change the nature of the business of the Borrower and its
Subsidiaries as conducted on the Effective Date.

                                      -68-
<PAGE>

    8.7.   Sale of Property
           ----------------

           Consummate any Asset Sale, or permit any of its Subsidiaries so to
do, except the Puerto Rico Asset Sale, and except any other Asset Sale by the
Borrower or any of its Subsidiaries as to which the following conditions have
been satisfied:

                (i)  no Default or Event of Default shall exist immediately
before or after giving effect thereto,

               (ii)  the consideration received or to be received therefor by
the Borrower or any of its Subsidiaries shall be payable (a) at least 75% in
cash (for purposes of this clause (a), cash shall be deemed to include (i)
amounts deposited in escrow or subject to holdback, in each case to secure
customary indemnification and similar obligations, and (ii) any related
forgiveness or assumption of Indebtedness of the Borrower or any of its
Subsidiaries, provided that, in the case of any such assumption, the Borrower
and its Subsidiaries shall be fully and unconditionally released from the
Indebtedness assumed), by the purchaser on or before the closing thereof, and
such cash consideration shall be in an amount greater than the product of (A)
that portion of Consolidated Pre-Minority EBITDA attributable to the assets sold
in such Asset Sale multiplied by (B) the Leverage Ratio at the end of the last
fiscal quarter in respect of which the Borrower delivered financial statements
and a Compliance Certificate to the Administrative Agent and the Lenders
pursuant to Section 7.1 (provided that this clause (a) shall not be applicable
with respect to any Asset Swap Transaction in which the Asset Sale and Permitted
Acquisition shall occur substantially simultaneously if the Borrower shall have
demonstrated to the reasonable satisfaction of the Administrative Agent that
such Asset Swap Transaction will result in a reduction of the Leverage Ratio
from that in effect as at the end of the last fiscal quarter in respect of which
the Borrower delivered financial statements and a Compliance Certificate to the
Administrative Agent and the Lenders pursuant to Section 7.1), and (b) not
greater than 25% in senior notes, provided that each such note shall be due and
payable within three years, and shall not be less than the fair market value
thereof as reasonably determined by the Board of Directors of the Borrower,

              (iii) the aggregate sales price of all Asset Sales (excluding the
Puerto Rico Asset Sale) shall not exceed $300,000,000, provided that (a) with
respect to any Asset Sale constituting a part of an Asset Swap Transaction, the
aggregate sales price of such Asset Sale shall be deemed decreased (but not
below zero) by an amount equal to the purchase price of the Permitted
Acquisition constituting a part of such Asset Swap Transaction and (b) this
clause (iii) shall not be applicable when the Leverage Ratio is less than
3.75:1.00 immediately before and after giving effect to such Asset Sale and at
all times during the immediately preceding two fiscal quarters in respect of
which the Borrower delivered financial statements and a Compliance Certificate
to the Administrative Agent and the Lenders pursuant to Section 7.1, and

                                      -69-
<PAGE>

               (iv)  within fifteen Business Days after each such Asset Sale,
the Administrative Agent and the Lenders shall have received a certificate with
respect thereto signed by an Authorized Signatory of the Borrower identifying
the Property sold and stating (a) that immediately before and after giving
effect thereto, no Default or Event of 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 Board of Directors thereof to be not
less than the fair market value of such Property and (c) the total consideration
to be paid in respect of such Asset Sale and (d) the Net Cash Proceeds
(including a calculation in reasonable detail thereof) resulting from such Asset
Sale.

    8.8.   Subsidiaries
           ------------
           Create or acquire any other Subsidiary, or permit any of its
Subsidiaries so to do, unless the provisions of Sections 7.11, 8.11 and 8.17 are
satisfied.

    8.9 .  Amendments, Etc. of Certain Documents
           -------------------------------------

           (a)  Amend or otherwise modify its Articles of Incorporation or By-
Laws in any way that would adversely affect the interests of the Administrative
Agent and the Lenders under any of the Loan Documents, or permit any of its
Subsidiaries so to do.

           (b)  Amend or otherwise modify (i) the Revolving Credit Facility by
shortening the scheduled final maturity of the Revolving Credit Facility,
increasing the amount or shortening the date of any scheduled reduction of the
Revolving Credit Commitments pursuant to Section 2.6(b) of the Revolving Credit
Facility, or increasing the Aggregate Revolving Credit Commitments, (ii) the
definition of "Required Lenders" in the Revolving Credit Facility, (iii) any
mandatory prepayment required pursuant to the Revolving Credit Facility
(including, without limitation, the provisions of Sections 2.6 and 2.7 of the
Revolving Credit Facility and any definition used in such Sections) in any way
that, with respect to this clause (iii), would adversely affect the interests of
the Lenders under any of the Loan Documents, (iv) any affirmative covenant,
negative covenant or default or event of default contained in the Revolving
Credit Facility (including, without limitation, the provisions contained in
Sections 7, 8 and 9 of the Revolving Credit Facility and any definition used in
such Sections), in any way that, with respect to this clause (iv), would
adversely affect the interests of the Lenders under any of the Loan Documents,
or (v) Section 2.6(b) or Section 2.7(a) of the Revolving Credit Facility in any
way that, with respect to this clause (v), would adversely affect the interests
of the Lenders under any of the Loan Documents.

           (c)  Refinance the Revolving Credit Facility unless the terms and
provisions of such refinancing would be permitted under Section 8.9(b) as if the
Revolving Credit Facility were not being refinanced but were instead being
amended to contain such terms and provisions.

           (d)  Amend or otherwise modify, or permit RTC or any other Subsidiary
so to do, the RTC Convertible Subordinated Indenture, the RTC Convertible
Subordinated Notes, the

                                      -70-
<PAGE>

RTC Convertible Subordinated Guaranty or any other indenture, instrument or
other agreement evidencing any Subordinated Indebtedness or any guaranties
thereof in any way that would adversely affect the interests of the
Administrative Agent and the Lenders under any of the Loan Documents.

           (e) The Borrower will not, and will not permit any of its
Subsidiaries to, voluntarily prepay, redeem or repurchase any Subordinated
Indebtedness, except that if such Subordinated Indebtedness is convertible into
common stock of the Borrower, the Borrower may exercise any right it may have to
redeem at any time after November 1, 2001 all or any part of such Subordinated
Indebtedness if on the Determination Date the Applicable Premium is at least
1.05. For purposes of this subsection 8.9(e):

           "Determination Date" shall mean, as applicable, either (i) the date
            ------------------
    on which such Subordinated Indebtedness is redeemed if no prior notice of
    redemption must be given or (ii) if the Borrower is required under the
    terms of such Subordinated Indebtedness to give prior irrevocable notice of
    redemption, the date (which date shall not be more than 45 days prior to
    the redemption date) on which such notice is given;

           "Applicable Premium" shall mean the fraction (i) the numerator of
            ------------------
    which is the "Average Market Value" and (ii) the denominator of which is
    the then applicable conversion price under the terms of such Subordinated
    Indebtedness; and

          "Average Market Value" shall mean the average of the last sale price
           --------------------
    of the Borrower's common stock as reported on the New York Stock Exchange
    (or if not listed for trading thereon, then on the principal national
    securities exchange or the principal automated quotation system on which
    such common stock is listed or admitted to trading) for the period of 10
    trading days ended two trading days prior to the date of redemption or the
    date on which notice of redemption is given, whichever is applicable with
    respect to such Subordinated Indebtedness.

    8.10.          ERISA
                   -----

           Permit any Pension Plan to have a Funded Current Liability Percentage
of less than 60 percent.

    8.11.          Acquisition or Issuance of Additional Stock
                   -------------------------------------------

                   (a) Create or acquire the stock or other equity or ownership
in, or Property of, any Person that shall thereupon become a Foreign Subsidiary

                   (b) Create or acquire the Stock or other equity or ownership
in, or Property of, any Person that shall thereupon become a Domestic Subsidiary
(each, a "New Subsidiary"), or issue any additional Stock or other equity or
          --------------
ownership interest, or permit any Subsidiary so to do, except as follows:

                                      -71-
<PAGE>

                (i)    in connection with a Permitted Acquisition;

                (ii)   any Subsidiary may issue additional Stock to the Borrower
or TRC;

                (iii)  a non-wholly-owned Subsidiary of the Borrower may issue
additional Stock to its management or to physicians under contract, provided
that after giving effect to such issuance, such Subsidiary shall remain a
Subsidiary of the Borrower;

                (iv)   The Borrower and its wholly-owned Subsidiaries may create
new wholly-owned Subsidiaries and non-wholly-owned Subsidiaries of the Borrower
may create new Subsidiaries;

                (v)    the Borrower may issue additional common stock or
Permitted Preferred Stock, provided that the Borrower shall make the prepayment
as required by Section 2.4(g) upon the issuance of such Permitted Preferred
Stock; and

                (vi)   pursuant to the terms of the RTC Convertible
Subordinated Indenture and the RTC Convertible Subordinated Notes;

           Provided, however, that, except for Permitted Preferred Stock issued
pursuant to subsection (b)(v) above, all Stock issued pursuant to this Section
shall constitute common stock with no mandatory dividend, redemption or similar
requirement, or warrants, options or other equivalents (however designated) to
acquire such common stock.

    8.12.  Limitation on Upstream Dividends and Advances by Subsidiaries
           -------------------------------------------------------------

           Permit any Subsidiary to enter into or agree, or otherwise become
subject, to any restriction in any agreement, contract or other arrangement with
any Person pursuant to the terms of which (a) such Subsidiary is or would be
prohibited from or otherwise restricted in declaring or paying any cash
dividends or distributions on or on account of any class of its stock or other
equity interest owned directly or indirectly by the Borrower or (b) such
Subsidiary is or would be prohibited from or otherwise restricted in making
advances to the Borrower.

    8.13.  Fiscal Year
           -----------
           Change its fiscal year from that in effect on the Effective Date, or
permit any of its Subsidiaries so to do.

    8.14.  Transactions with Affiliates
           ----------------------------

           Sell, lease, transfer or otherwise dispose of any of its Properties
to, or purchase any Property from, or enter into any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, (i) any
Affiliate of the Borrower or any Subsidiary of the Borrower or (ii) any Person
directly or indirectly owning 5% or more of the voting Stock or other voting

                                      -72-
<PAGE>

equity interests of the Borrower or any of its Subsidiaries (each of the
foregoing, an "Affiliate Transaction"), or permit any of its Subsidiaries so to
               ---------------------
do, unless such Affiliate Transaction is on terms that are no less favorable to
the Borrower or the relevant Subsidiary than those that would have been obtained
in a comparable arm's-length transaction by the Borrower or such Subsidiary with
an unrelated Person; provided that this Section 8.14 shall not restrict the
                     --------
ability of the Borrower or any of its Subsidiaries to make Restricted Payments
otherwise permitted under Section 8.4.

    8.15.  Limitation on Permitted Acquisitions and Development Capital
           ------------------------------------------------------------
Expenditures
- ------------

           Permit the sum of all Permitted Acquisitions (including any Permitted
Acquisitions made during a Reinvestment Period) and Development Capital
Expenditures to exceed $55,000,000 during the period from the Effective Date
through December 31, 2000 and $110,000,000 during each fiscal year thereafter
(the "Designated Amount"), of which no more than $30,000,000 during the period
      -----------------
from the Effective Date through December 31, 2000 and $60,000,000 during each
fiscal year thereafter shall be permitted for Development Capital Expenditures,
provided that this Section 8.15 shall not be applicable at any time when the
Leverage Ratio is less than 3.50:1.00 immediately before and after giving effect
to such Permitted Acquisition or Development Capital Expenditure and at all
times during the immediately preceding two fiscal quarters in respect of which
financial statements and a Compliance Certificate have been delivered to the
Administrative Agent and the Lenders pursuant to Section 7.1.  The Designated
Amount for any fiscal year shall be increased by an amount equal to 100% of the
portion of net cash proceeds received by the Borrower in such fiscal year from
the issuance of Permitted Preferred Stock and 75% of the portion of Net Cash
Proceeds received by the Borrower or any of its Subsidiaries in such fiscal year
from Asset Sales, in each case that  is not required to be used to prepay the
Revolving Credit Loans and the Term Loans.  The unused amount of the Designated
Amount in any fiscal year (including the period from the Effective Date through
December 31, 2000) may be carried forward for the next two fiscal years, but not
thereafter, and such unused amount shall be added to the sublimits set forth
above proportionately with the sources of the unused amount.  In calculating the
utilization of the Designated Amount with respect to a Permitted Acquisition
that is part of an Asset Swap Transaction, the amount of such utilization shall
be the difference, if positive, between the purchase price of such Permitted
Acquisition and the sale consideration with respect to the Asset Sale
constituting a part of such Asset Swap Transaction.  For purposes of calculating
the Designated Amount, the payment when due (without any acceleration of the due
date) of the Scheduled Existing Deferred Payment Obligations shall not be deemed
a usage of the Designated Amount; provided that the payment of the Scheduled
Existing Deferred Payment Obligations made in respect of IHS of New York, Inc.,
if accelerated, shall constitute a usage of the Designated Amount for the
applicable period when paid (i) in the case of the period from the Effective
Date through December 31, 2000, in an amount equal to the amount by which such
Scheduled Existing Deferred Payment Obligations made during such period shall
exceed $7,000,000, provided that, to the extent that such Scheduled Existing
Deferred Payment Obligations made during such period shall exceed $7,000,000,
the Borrower may elect to carry

                                      -73-
<PAGE>

forward such excess as a usage of the Designated Amount for fiscal year 2001,
and (ii) in the case of fiscal year 2001, in an amount equal to the sum of such
payments made during fiscal year 2001 and the amount carried forward by the
Borrower pursuant to (i) above.

    8.16.  Maintenance Capital Expenditures
           --------------------------------
           Permit Maintenance Capital Expenditures to exceed the applicable
amount set forth below during the applicable fiscal year set forth below:

- ------------------------------------------------------------------------------
          Fiscal Year                                      Amount
          -----------                                      ------
- ------------------------------------------------------------------------------
             2000                                        $35,600,000
- ------------------------------------------------------------------------------
             2001                                         36,100,000
- ------------------------------------------------------------------------------
             2002                                         38,600,000
- ------------------------------------------------------------------------------
             2003                                         41,200,000
- ------------------------------------------------------------------------------

Unused amounts in any fiscal year may be carried forward to the next fiscal
year, but not thereafter.

    8.17.  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 8.5(f) to
the extent the proceeds thereof were used to acquire Stock or assets included in
(x) above) by the Credit 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.

9.        DEFAULT
          -------

          9.1.  Events of Default
                -----------------

                The following shall each constitute an "Event of Default"
                                                        ----------------
hereunder:

                (a)  The failure of the Borrower to pay any installment of
principal on any Loan on the date when due and payable; or

                                      -74-
<PAGE>

                (b)  The failure of the Borrower to pay any installment of
interest, fees, expenses or other amounts payable under any Loan Document or
otherwise to the Administrative Agent, or to any other Person to whom such
payment is to be made, with respect to the loan facilities established hereunder
within three Business Days of the date when due and payable; or

                (c)  The use of the proceeds of any Loan in a manner
inconsistent with or in violation of Section 2.13; or

                (d)  The failure of the Borrower to observe or perform any
covenant or agreement contained in Section 7.3, 7.11, 7.12, 7.13, 7.14, 7.15,
7.16 or 7.17 or Section 8; or

                (e)  The failure of any Credit Party to observe or perform any
other term, covenant, or agreement contained in any Loan Document and such
failure shall have continued unremedied for a period of 30 days after the
Borrower shall have obtained knowledge thereof; or

                (f)  Any representation or warranty made in any Loan Document or
in any certificate, report, opinion (other than an opinion of counsel) or other
document delivered or to be delivered pursuant thereto, shall prove to have been
incorrect or misleading (whether because of misstatement or omission) in any
material respect when made; or

                (g)  Any obligation or obligations of the Borrower (other than
its obligations under the Notes) and/or any of its Subsidiaries (whether as
principal, guarantor, surety, lessee or other obligor) in excess of $5,000,000
on an aggregate basis for the payment of any Indebtedness or operating leases
(i) shall become or shall be declared to be due and payable prior to the
expressed maturity or expiry thereof, or (ii) shall not be paid when due or
within any grace period for the payment thereof, or (iii) any holder of any such
obligation shall have the right, immediately or with the passage of time or the
giving of notice, to declare such obligation due and payable prior to the
expressed maturity thereof;

                (h)  An involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation, reorganization or
other relief in respect of the Borrower or any of its Subsidiaries or its debts,
or of a substantial part of its assets, under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect
or (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any of its Subsidiaries or
for a substantial part of its assets, and, in any such case, such proceeding or
petition shall continue undismissed for 45 days or an order or decree approving
or ordering any of the foregoing shall be entered; or

                (i)  The Borrower or any of its Subsidiaries shall (i)
voluntarily commence any proceeding or file any petition seeking liquidation,
reorganization or other relief under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect, (ii) consent
to the institution of, or fail to contest in a timely and appropriate manner,
any proceeding or petition described in clause (h) above, (iii) apply for or
consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or

                                      -75-
<PAGE>

any of its Subsidiaries or for a substantial part of its assets, (iv) file an
answer admitting the material allegations of a petition filed against it in any
such proceeding, (v) make a general assignment for the benefit of creditors,
(vi) take any action for the purpose of effecting any of the foregoing or become
unable, admit in writing its inability or fail generally to pay its debts as
they become due; or

                (j)  Judgments or decrees against the Borrower and/or any of its
Subsidiaries in excess of $3,500,000 on an aggregate basis shall remain unpaid,
unstayed on appeal, undischarged, unbonded or undismissed for a period of 30
days; or

                (k)  The occurrence of an Event of Default under and as defined
in (i) any Loan Document, or (ii) the Revolving Credit Facility; or

                (l)  Any Loan Document shall cease, for any reason, to be in
full force and effect, or any Credit Party shall so assert in writing or shall
disavow any of its Obligations thereunder; or

                (m)  (i) Any Termination Event (other than an event which
constitutes a Termination Event solely because it is a Reportable Event) shall
occur that could reasonably be expected to result in a liability to the
Borrower, any of its Subsidiaries or any ERISA Affiliate in excess of $2,500,000
in the aggregate; (ii) any Accumulated Funding Deficiency in excess of
$2,500,000 in the aggregate, whether waived, shall exist with respect to any
Pension Plan; (iii) the Borrower, any of its Subsidiaries or any ERISA Affiliate
shall fail to pay when due an amount in excess of $2,500,000 in the aggregate
that is payable by it to the PBGC or to a Pension Plan under Title IV of ERISA;
or

                (n)  (i) Any Guarantor shall not be a wholly-owned Subsidiary of
the Borrower, or (ii) any Guarantor that was a wholly-owned Subsidiary of the
Borrower on the date such Guarantor became a party to the Subsidiary Guaranty
shall no longer be a wholly-owned Subsidiary of the Borrower, except as a result
of a transaction permitted under Section 8.3(ii); or

                (o)  (i) A judgment creditor of the Borrower or any of its
Subsidiaries shall obtain possession of any material portion of the Collateral
under the Collateral Documents by any means, including, without limitation,
levy, distraint, replevin or self-help, (ii) any of the Collateral Documents
shall cease for any reason to be in full force and effect, or any party thereto
shall purport to disavow its obligations thereunder or shall declare that it
does not have any further obligations thereunder or shall contest the validity
or enforceability thereof or the Collateral Agent, for the benefit of the
Lenders and others, shall cease to have a valid and perfected first priority
security interest in any material Collateral therein, or (iii) the Collateral
Agent's security interests or liens on any material portion of the Collateral
under the Collateral Documents shall become otherwise impaired or unenforceable;
or

                (p)  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,

                                      -76-
<PAGE>

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.

           Upon the occurrence of an Event of Default or at any time thereafter
during the continuance thereof, (a) if such event is an Event of Default
specified in clause (h) or (i) above, the Loans, all accrued and unpaid interest
thereon, and all other amounts owing under the Loan Documents shall immediately
become due and payable, and the Administrative Agent may, and, upon the
direction of the Required Lenders shall, exercise any and all remedies and other
rights provided in the Loan Documents, and (b) if such event is any other Event
of Default, any or all of the following actions may be taken: with the consent
of the Required Lenders, the Administrative Agent may, and upon the direction of
the Required Lenders shall, by notice of default to the Borrower, declare the
Loans, all accrued and unpaid interest thereon, and all other amounts owing
under the Loan Documents to be due and payable forthwith, whereupon the same
shall immediately become due and payable, and the Administrative Agent may, and
upon the direction of the Required Lenders shall, exercise any and all remedies
and other rights provided pursuant to the Loan Documents.  Except as otherwise
provided in this Section, presentment, demand, protest and all other notices of
any kind are hereby expressly waived.  To the extent permitted by applicable
law, each Credit Party hereby further expressly waives and covenants not to
assert any appraisement, valuation, stay, extension, redemption or similar laws,
now or at any time hereafter in force, that might delay, prevent or otherwise
impede the performance or enforcement of any Loan Document.

           In the event that the Loans shall have been declared due and payable
pursuant to the provisions of this Section, any funds received by the
Administrative Agent and the Lenders from or on behalf of the Borrower shall be
applied by the Administrative Agent and the Lenders, subject to the
Intercreditor Agreement, in liquidation of the Loans and the obligations of the
Borrower under the Loan Documents and the applicable Interest Rate Agreements in
the following manner and order: (i) first, to the payment of any fees or
expenses due the Administrative Agent and the Syndication Agent from the
Borrower; (ii) second, to reimburse the Administrative Agent, and the Lenders
for any expenses (to the extent not paid pursuant to clause (i) above) due from
the Borrower pursuant to the provisions of Section 11.5; (iii) third, to the
payment of all other fees, expenses and amounts due under the Loan Documents
(other than principal and interest on the Loans); (iv) fourth, pro rata
according to the outstanding principal amount of the Loans, to the payment of
interest due on the Loans; (v) fifth, pro rata according to the outstanding
principal amount of the Loans and the Secured Interest Rate Obligations (as such

                                      -77-
<PAGE>

term is defined in the Intercreditor Agreement) of the Lenders and their
Affiliates, to the payment of principal outstanding on the Loans and such
Secured Interest Rate Obligations; and (vi) sixth, to the payment of any other
amounts owing to the Administrative Agent, the Syndication Agent and the Lenders
under any Loan Document.

    10.  THE ADMINISTRATIVE AGENT
         ------------------------

         10.1.  Appointment
                -----------

           Each Lender hereby irrevocably designates and appoints BNY as the
Administrative Agent of such Lender under the Loan Documents and each such
Lender hereby irrevocably authorizes BNY, as the Administrative Agent for such
Lender, to take such action on its behalf under the provisions of the Loan
Documents (including, without limitation, the Intercreditor Agreement) and to
exercise such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of the Loan Documents, together with such
other powers as are reasonably incidental thereto.  Notwithstanding any
provision to the contrary elsewhere in any Loan Document, the Administrative
Agent shall not have any duties or responsibilities other than those expressly
set forth therein, or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into the Loan Documents or otherwise exist against the Administrative
Agent.

         10.2.  Delegation of Duties
                --------------------

           The Administrative Agent may execute any of its duties under the Loan
Documents by or through agents or attorneys-in-fact and shall be entitled to
rely upon the advice of counsel concerning all matters pertaining to such
duties.

         10.3.  Exculpatory Provisions
                ----------------------

          Neither the Administrative Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any
action lawfully taken or omitted to be taken by the Administrative Agent or such
Person under or in connection with the Loan Documents (except the Administrative
Agent or such Person for its own gross negligence or willful misconduct), or
(ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by any Credit Party or any
officer thereof contained in the Loan Documents or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Administrative Agent under or in connection with, the Loan Documents or for the
value, validity, effectiveness, genuineness, perfection, enforceability or
sufficiency of any of the Loan Documents or for any failure of any Credit Party
or any other Person to perform its obligations thereunder.  The Administrative
Agent shall not be under any obligation to any Lender to ascertain or to inquire
as to the observance or performance of any of the agreements contained in, or
conditions of, the Loan Documents, or to inspect the properties, books or
records of any Credit Party.  The Administrative Agent shall not be under

                                      -78-
<PAGE>

any liability or responsibility whatsoever, as Administrative Agent, to any
Credit Party or any other Person as a consequence of any failure or delay in
performance, or any breach, by any Lender of any of its obligations under any of
the Loan Documents.

    10.4.  Reliance by Administrative Agent
           --------------------------------

           The Administrative Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, opinion, letter, cablegram, telegram, fax, telex or
teletype message, email communication, statement, order or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to any Credit Party),
independent accountants and other experts and advisors selected by the
Administrative Agent. The Administrative Agent may treat each Lender, or the
Person designated in the last notice filed with it under this Section, as the
holder of all of the interests of such Lender in its Loans and in its Notes
until written notice of transfer, signed by such Lender (or the Person
designated in the last notice filed with the Administrative Agent) and by the
Person designated in such written notice of transfer, in form and substance
satisfactory to the Administrative Agent, shall have been filed with the
Administrative Agent. The Administrative Agent shall not be under any duty to
examine or pass upon the validity, effectiveness, enforceability, perfection or
genuineness of the Loan Documents or any instrument, document or communication
furnished pursuant thereto or in connection therewith, and the Administrative
Agent shall be entitled to assume that the same are valid, effective and
genuine, have been signed or sent by the proper parties and are what they
purport to be. The Administrative Agent shall be fully justified in failing or
refusing to take any action under the Loan Documents unless it shall first
receive such advice or concurrence of the Required Lenders as it deems
appropriate. The Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, under the Loan Documents in accordance
with a request or direction of the Required Lenders (or, when expressly required
by a Loan Document, all the Lenders), and such request or direction and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Notes.

    10.5.  Notice of Default
           -----------------

           The Administrative Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default unless the
Administrative Agent has received written notice thereof from a Lender or the
Borrower.  In the event that the Administrative Agent receives such a notice,
the Administrative Agent shall promptly give notice thereof to the Lenders and
the Borrower.  The Administrative Agent shall take such action with respect to
such Default or Event of Default as shall be directed by the Required Lenders,
provided, however, 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 to be in the best interests
of the Lenders.

                                      -79-
<PAGE>

    10.6.  Non-Reliance on Administrative Agent and Other Lenders
           ------------------------------------------------------

          Each Lender expressly acknowledges that neither the Administrative
Agent nor any of its respective officers, directors, employees, agents,
attorneys-in-fact or affiliates has made any representations or warranties to it
and that no act by the Administrative Agent hereafter, including any review of
the affairs of any Credit Party, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any Lender.  Each
Lender represents to the Administrative Agent that it has, independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it has deemed appropriate, made its own
evaluation of and investigation into the business, operations, Property,
financial and other condition and creditworthiness of the Credit Parties and
made its own decision to enter into this Agreement.  Each Lender also represents
that it will, independently and without reliance upon the Administrative Agent
or any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
evaluations and decisions in taking or not taking action under any Loan
Document, and to make such investigation as it deems necessary to inform itself
as to the business, operations, Property, financial and other condition and
creditworthiness of the Credit Parties.  Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, Property, financial and other condition or
creditworthiness of the Credit Parties that may come into the possession of the
Administrative Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates.

    10.7.  Indemnification
           ---------------

          Each Lender agrees to indemnify and reimburse the Administrative Agent
in its capacity as such (to the extent not promptly reimbursed by the Borrower
and without limiting the obligation of any Credit Party to do so), according to
its Pro Rata Share, from and against any and all liabilities, obligations,
claims, losses, damages, penalties, actions, judgments, suits, costs, expenses
or disbursements of any kind whatsoever, including, without limitation, any
amounts paid to the Lenders (through the Administrative Agent) by the Borrower
pursuant to the terms of the Loan Documents that are subsequently rescinded or
avoided or must otherwise be restored or returned, that may at any time
(including, without limitation, at any time following the payment of the Loans)
be imposed on, incurred by or asserted against the Administrative Agent in any
way relating to or arising out of the Loan Documents or any other documents
contemplated by or referred to therein or the transactions contemplated thereby
or any action taken or omitted to be taken by the Administrative Agent under or
in connection with any of the foregoing; provided, however, that no Lender shall
be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements to the extent resulting from the gross negligence or willful
misconduct of the Administrative Agent.  The agreements in this Section shall
survive the payment of all amounts payable under the Loan Documents.

                                      -80-
<PAGE>

    10.8.  Administrative Agent in Its Individual Capacity
           -----------------------------------------------

           BNY and its respective affiliates may make loans to, accept deposits
from, issue letters of credit for the account of, and generally engage in any
kind of business with, any Credit Party as though BNY were not Administrative
Agent hereunder.  With respect to the Notes issued to BNY, BNY shall have the
same rights and powers under the Loan Documents as any Lender and may exercise
the same as though it were not the Administrative Agent, and the terms "Lender"
and "Lenders" shall in each case include BNY.

    10.9.  Successor Administrative Agent
           ------------------------------

           If at any time the Administrative Agent deems it advisable, in its
sole discretion, it may submit to each of the Lenders a written notice of its
resignation as Administrative Agent under the Loan Documents, such resignation
to be effective upon the earlier of (i) the written acceptance of the duties of
the Administrative Agent under the Loan Documents by a successor Administrative
Agent and (ii) on the 30th day after the date of such notice.  Upon any such
resignation, the Required Lenders shall have the right to appoint from among the
Lenders a successor Administrative Agent.  If no successor Administrative Agent
shall have been so appointed by the Required Lenders and accepted such
appointment in writing within 30 days after the retiring Administrative Agent's
giving of notice of resignation, then the retiring Administrative Agent may, on
behalf of the Lenders, appoint a successor Administrative Agent, which successor
Administrative Agent shall be a commercial bank organized under the laws of the
United States or any State thereof and having a combined capital, surplus, and
undivided profits of at least $100,000,000.  Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent's rights, powers,
privileges and duties as Administrative Agent under the Loan Documents shall be
terminated.  The Borrower and the Lenders shall execute such documents as shall
be necessary to effect such appointment.  After any retiring Administrative
Agent's resignation as Administrative Agent, the provisions of the Loan
Documents shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Administrative Agent under the Loan Documents.  If at
any time there shall not be a duly appointed and acting Administrative Agent,
the Borrower agrees to make each payment due under the Loan Documents directly
to the Persons entitled thereto during such time.

    10.10. Appointment of Collateral Agent
           -------------------------------

           Each Lender hereby authorizes the Administrative Agent to enter into
the Intercreditor Agreement on behalf of and for the benefit of that Lender and
agrees to be bound by the terms of the Intercreditor Agreement.  Each Lender
hereby authorizes the Collateral Agent to enter into the Collateral Documents
and the Intercreditor Agreement and to accept the Subsidiary Guaranty and to
take all action contemplated by the Intercreditor Agreement, the Collateral
Documents, and Subsidiary Guaranty.  Each Lender agrees that no Lender shall
have any right

                                      -81-
<PAGE>

individually to seek or to enforce the Subsidiary Guaranty or to realize upon
the security granted by any Collateral Document, it being understood and agreed
that such rights and remedies may be exercised by the Collateral Agent for the
benefit of the Lenders and the parties to the Intercreditor Agreement upon the
terms of the Subsidiary Guaranty, the Collateral Documents and the Intercreditor
Agreement.

    10.11. The Co-Arrangers
           ----------------

           The Co-Arrangers shall have no duties or obligations under the Loan
Documents in their capacity as Co-Arrangers.  The Co-Arrangers, in their
capacity as Co-Arrangers, shall have the same rights, protections, immunities
and indemnities as the Administrative Agent.

    10.12. The Syndication Agent
           ---------------------

           The Syndication Agent shall have no duties or obligations under the
Loan Documents in its capacity as Syndication Agent. The Syndication Agent, in
its capacity as Syndication Agent, shall have the same rights, protections,
immunities and indemnities as the Administrative Agent.

11.            OTHER PROVISIONS
               -----------------

    11.1.  Amendments and Waivers
           ----------------------

           With the written consent of the Required Lenders, the Administrative
Agent and the appropriate Credit Parties may, from time to time, enter into
written amendments, supplements or modifications of this Agreement, the Notes
and the Intercreditor Agreement and, with the consent of the Required Lenders,
the Administrative Agent on behalf of the Lenders may execute and deliver to any
such parties a written instrument waiving or a consent to a departure from, on
such terms and conditions as the Administrative Agent may specify in such
instrument, any of the requirements of this Agreement, the Notes and the
Intercreditor Agreement or any Default or Event of Default and its consequences;
provided that:

           (a) no such amendment, supplement, modification, waiver or consent
shall, without the consent of all of the Lenders, (i) extend the Maturity Date;
(ii) decrease the rate or prepayment penalty or premium, or extend the time of
payment, of interest on, or change or forgive the principal amount of, or change
the pro rata allocation of payments under, any Loan, (iii) except as provided in
Section 11.1(c), release or discharge any Credit Party or release any
Collateral; (iv) change the provisions of Sections 2.8, 2.10, 2.11, 2.12, 2.14,
11.1 or 11.7(a), (v) change the definition of Required Lenders, Pro Rata Share
or First Additional Term Loan Pro Rata Share, (vi) change the several nature of
the obligations of the Lenders, (vii) extend the date or decrease the amount of
any scheduled payment of Term Loans pursuant to Section 2.4(b), (viii) add any
new borrower under this Agreement or (ix) waive Section 5.23;

                                      -82-
<PAGE>

           (b)  without the written consent of the Administrative Agent, no such
amendment, supplement, modification or waiver shall amend, modify or waive any
provision of Section 10 or otherwise change any of the rights or obligations of
the Administrative Agent hereunder or under the other Loan Documents;

           (c)  notwithstanding anything to the contrary contained in this
Section 11.1, (i) the Collateral Documents, the Intercreditor Agreement, and the
Subsidiary Guaranty may only be amended in accordance with the terms thereof and
of the Intercreditor Agreement, and (ii) the Collateral Agent may, at any time
and from time to time without the consent of any of the Lenders, release all or
any of the obligations of any one or more Subsidiaries under the Collateral
Documents in connection with a disposition of such Subsidiary as permitted by
Section 8.3 or 8.7, and release any Collateral or any security interest therein
in connection with any release specifically provided for in the Collateral
Documents; and

           (d)  no such amendment, supplement, modification, waiver or consent
shall increase the aggregate principal amount of Term Loans or commitments to
make Term Loans hereunder without the consent of Required Lenders and each
Lender providing such Term Loans or commitments.

           Any such amendment, supplement, modification or waiver shall apply
equally to each of the Lenders and shall be binding upon the parties to the
applicable Loan Document, the Lenders, the Administrative Agent and all future
holders of the Notes.  In the case of any waiver, the parties to the applicable
Loan Document, the Lenders and the Administrative Agent shall be restored to
their former position and rights hereunder and under the outstanding Notes and
other Loan Documents to the extent provided for in such waiver, and any Default
or Event of Default waived shall not extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon.  The Loan Documents
may not be amended orally or by any course of conduct.

    11.2.  Notices
           -------

           All notices, requests and demands to or upon the respective parties
to the Loan Documents to be effective shall be in writing and, unless otherwise
expressly provided therein, shall be deemed to have been duly given or made when
delivered by hand, or when deposited in the mail, first-class postage prepaid,
or, in the case of notice by fax, when sent, addressed as follows in the case of
the Borrower or the Administrative Agent, at the Domestic Lending Office, in the
case of each Lender, and to the address of a Credit Party set forth in a Loan
Document, or to such other addresses as to which the Administrative Agent may be
hereafter notified by the respective parties thereto or any future holders of
the Notes:

          The Borrower:


          Total Renal Care Holdings, Inc.
          21250 Hawthorne Blvd., Suite 800

                                      -83-
<PAGE>

          Torrance, CA 90503-5517
          Attention:  Richard Whitney,
                      Chief Financial Officer
          Telephone:  (310) 750-2135
          Fax:        (310) 792-9281

          The Administrative Agent:

          The Bank of New York
          One Wall Street
          Agency Function Administration
          18th Floor
          New York, New York 10286
          Attention:  Kalyani Bose
          Telephone:  (212) 635-4693
          Fax:        (212) 635-6365 or 6366 or 6367

          with a copy to:

          The Bank of New York
          10990 Wilshire Blvd., Suite 1125
          Los Angeles, California 90024
          Attention:  Rebecca K. Levine
                      Vice President
          Telephone:  (310) 996-8659
          Fax:        (310) 996-8667

except that any notice, request or demand by the Borrower to or upon the
Administrative Agent or the Lenders pursuant to Sections 2.4 or 2.5 shall not be
effective until received.  Any party to a Loan Document may rely on signatures
of the parties thereto that are transmitted by fax or other electronic means as
fully as if originally signed.

    11.3.  No Waiver; Cumulative Remedies
           ------------------------------

           No failure to exercise and no delay in exercising, on the part of the
Administrative Agent or any Lender, any right, remedy, power or privilege under
any Loan Document shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege under any Loan
Document preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege.  The rights, remedies, powers and
privileges under the Loan Documents are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.

                                      -84-
<PAGE>

    11.4.  Survival of Representations and Warranties
           ------------------------------------------

           All representations and warranties made under the Loan Documents and
in any document, certificate or statement delivered pursuant thereto or in
connection therewith shall survive the execution and delivery of the Loan
Documents.

    11.5.  Payment of Expenses and Taxes
           -----------------------------

           The Borrower agrees, promptly upon presentation of a statement or
invoice therefor, and whether any Loan is made (i) to pay or reimburse the
Administrative Agent, the Syndication Agent and the Co-Arrangers for all their
out-of-pocket costs and expenses reasonably incurred in connection with the
development, preparation and execution of the Loan Documents and any amendment,
supplement or modification thereto (whether or not executed), any documents
prepared in connection therewith and the consummation of the transactions
contemplated thereby, including, without limitation, the reasonable fees and
disbursements of Special Counsel, (ii) to pay or reimburse the Administrative
Agent, the Syndication Agent, the Co-Arrangers, and the Lenders for all of their
respective costs and expenses, including, without limitation, reasonable fees
and disbursements of counsel (including allocated costs of internal counsel),
incurred in connection with (A) any Default or Event of Default and any
enforcement or collection proceedings resulting therefrom or in connection with
the negotiation of any restructuring or "work-out" (whether consummated or not)
of the obligations of the Credit Parties under any of the Loan Documents and (B)
the enforcement of this Section, (iii) to pay, indemnify, and hold the
Administrative Agent, the Syndication Agent, the Co-Arrangers, and each Lender
harmless from and against, any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying, stamp,
excise and other similar taxes, if any, that may be payable or determined to be
payable in connection with the execution and delivery of, or consummation of any
of the transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, the Loan
Documents and any such other documents, and (iv) to pay, indemnify and hold the
Administrative Agent, the Syndication Agent, the Co-Arrangers, and each Lender,
and each of their respective officers, directors and employees, harmless from
and against any and all other liabilities, obligations, claims, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements of any
kind or nature whatsoever (including, without limitation, reasonable counsel
fees and disbursements) with respect to the enforcement and performance of the
Loan Documents, the use of the proceeds of the Loans and the enforcement and
performance of the provisions of any subordination agreement in favor of the
Administrative Agent and the Lenders (all the foregoing, collectively, the
"indemnified liabilities") and, if and to the extent that the foregoing
- ------------------------
indemnity may be unenforceable for any reason, the Borrower agrees to make the
maximum payment permitted or not prohibited under applicable law; provided,
however, that the Borrower shall have no obligation hereunder to pay indemnified
liabilities to the Administrative Agent, the Syndication Agent, the Co-
Arrangers, or any Lender to the extent arising from such indemnified party's
gross negligence or willful misconduct or claims between one indemnified

                                      -85-
<PAGE>

party and another indemnified party. The agreements in this Section shall
survive the payment of all amounts payable under the Loan Documents.

    11.6.  Lending Offices
           ---------------

           (a)  Each Lender shall have the right at any time and from time to
time to transfer its Loans to a different office, provided that it shall
promptly notify the Administrative Agent and the Borrower of any such change of
office. Such office shall thereupon become, with respect to its Loans, its
Lender's Domestic Lending Office or Eurodollar Lending Office, as the case may
be, provided, however, that it shall not be entitled to receive any greater
amount under Sections 2.8, 2.10, 2.11 or 2.14 as a result of any such transfer
to a different office than it would be entitled to immediately prior thereto
unless (i) such claim would have arisen even if such transfer had not occurred,
(ii) such transfer was made pursuant to subsection (b) below, or (iii) such
claims arose as a result of a change of law after such transfer.

           (b)  Each Lender agrees that, upon the occurrence of any event giving
rise to any increased cost or indemnity under Sections 2.8, 2.10, 2.11 or 2.14
with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to its overall policy considerations) to designate
another office for any part of its Loans affected by such event, provided that
such designation is made on such terms that such Lender and its office suffer no
economic, legal or regulatory disadvantage, with the object of avoiding the
consequence of the event giving rise to the operation of any such Section.

    11.7.  Assignments and Participations
           ------------------------------

           (a)  The Loan Documents shall be binding upon and inure to the
benefit of the Borrower, the Lenders, the Administrative Agent, all future
holders of the Notes and their respective successors and assigns, except that no
Credit Party may assign, delegate or transfer any of its rights or obligations
under the Loan Documents without the prior written consent of the Administrative
Agent and each Lender.

           (b)  Each Lender shall have the right at any time, upon written
notice to the Administrative Agent of its intent to do so and the payment of a
fee (the "Assignment Fee") of $1,500 to the Administrative Agent by the
          --------------
assigning or assignee Lender, to sell, assign, transfer or negotiate all or any
part of such Lender's rights and obligations under the Loan Documents (i) to one
or more of the other Lenders, (ii) to one or more of its affiliates or Approved
Funds or the affiliates or Approved Funds of one or more of the other Lenders,
or (iii) with the prior written consent of the Borrower and the Administrative
Agent (which consents shall not be unreasonably withheld or delayed, or with
respect to the Borrower, required during the continuance of an Event of
Default), to any other bank, insurance company, pension fund, mutual fund or
other financial institution or fund, which in the normal course of its business,
purchases loans such as the Loans, provided that each such sale, assignment,
transfer or negotiation pursuant to clause (iii) shall be in a minimum amount of
$1,000,000 (or, if less, a Lender's entire Credit Exposure). For each
assignment, the parties to such assignment shall execute and deliver

                                      -86-
<PAGE>

to the Administrative Agent for its acceptance an Assignment and Acceptance
Agreement which the Administrative Agent shall record in a register (the
"Register") maintained by the Administrative Agent on behalf of the Borrower,
 --------
for the recordation of the names and addresses of the Lenders and the principal
amount of the Loans owing to, each Lender from time to time and the registered
owners of the Obligation(s) evidenced by the Note(s). The entries in the
Register shall be presumptively correct absent manifest error. No assignment
shall be effective for purposes of this Agreement until it has been recorded in
the Register as provided above. Upon such execution, delivery, acceptance and
recording by the Administrative Agent, from and after the effective date
specified in such Assignment and Acceptance Agreement, the assignee thereunder,
if not already a Lender, shall be a party hereto and, to the extent provided in
such Assignment and Acceptance Agreement, the assignor Lender thereunder shall
be released from its obligations under the Loan Documents. The Borrower agrees
upon written request of the Administrative Agent and at the Borrower's expense
to execute and deliver (i) to such assignee a Note, dated the date of the
assignor's Note subject to such Assignment and Acceptance Agreement, in an
aggregate principal amount equal to the Loans assigned to such assignee and (ii)
to such assignor Lender, a Note, dated the date of the assignor's Note subject
to such Assignment and Acceptance Agreement, in an aggregate principal amount
equal to the balance of such assignor Lender's Loans, if any, and each assignor
Lender shall cancel and return to the Borrower its existing Note. Upon any such
sale, assignment or other transfer, the Pro Rata Shares set forth in Exhibit A
shall be adjusted accordingly by the Administrative Agent.

           (c)  Each Lender may grant participations in all or any part of its
Loans and its Note to one or more banks, insurance companies, financial
institutions, pension funds, mutual funds or funds which in the normal course of
business purchase loans such as the Loans, provided that (i) such Lender's
obligations under the Loan Documents shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties to the Loan Documents for
the performance of such obligations, (iii) the Borrower, the Administrative
Agent and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under the Loan
Documents and (iv) the voting rights of any holder of any participation shall be
limited to decisions that require the consent of all Lenders as set forth in
Section 11.1(a). The Borrower acknowledges and agrees that any such participant
shall for purposes of Sections 2.8, 2.10, 2.11 and 2.14 be deemed to be a
"Lender"; provided, however, the Borrower shall not, at any time, be obligated
to pay any participant in any interest of any Lender hereunder any sum in excess
of the sum that the Borrower would have been obligated to pay to such Lender in
respect of such interest had such Lender not sold such participation.

           (d)  If any (i) assignment is made pursuant to subsection (b) above
or (ii) participation is granted pursuant to subsection (c) above to any Person
that is not a U.S. Person, such Person shall furnish such certificates,
documents or other evidence to the Borrower and the Administrative Agent, in the
case of clause (i), and to the Borrower and the Lender that sold such
participation, in the case of clause (ii), as shall be required by Section
2.8(e).

                                      -87-
<PAGE>

           (e)  No Lender shall, as between and among the Borrower, the
Administrative Agent, the Syndication Agent and such Lender, be relieved of any
of its obligations under the Loan Documents as a result of any sale, assignment,
transfer or negotiation of, or granting of participations in, all or any part of
its Loans or its Notes, except that a Lender shall be relieved of its
obligations to the extent of any such sale, assignment, transfer, or negotiation
of all or any part of its Loans or its Notes pursuant to subsection (b) above.

           (f)  Notwithstanding anything to the contrary contained in this
Section, any Lender may at any time or from time to time assign or pledge all or
any portion of its rights under the Loan Documents to (i) a Federal Reserve Bank
or (ii) if such Lender is a fund which in the normal course of its business
purchases loans such as the Loans, to its lenders or a trustee under an
indenture for the benefit of its creditors, to secure such fund's obligations,
provided that any such assignment or pledge shall not release such assignor from
its obligations thereunder.

           (g)  In the event that the Borrower shall request that Lenders enter
into any amendment, modification, consent or waiver with respect to this
Agreement or any other Loan Document, which amendment, modification, consent or
waiver cannot become effective without the consent of each Lender, and any
Lender elects not to enter into such amendment, modification, consent or waiver
(each such Lender 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 its
Loans and Notes at par to any Lender or any other financial institution which
satisfies the requirements of Section 11.7(b) and has been consented to by the
Administrative Agent (which consent shall not be unreasonably withheld or
delayed), in each case that agrees, in its sole discretion, to assume such Loans
and Notes. Each such assignment shall be made pursuant to an Assignment and
Acceptance Agreement and shall comply with the other terms of this Section 11.7.
The Borrower shall pay to such Dissenting Lender, concurrently with the
effectiveness of such assignment, any amounts payable under Section 2.11 that
would have been payable if the Borrower had voluntarily prepaid such Loans. The
Dissenting Lender shall not be required to pay the Assignment Fee.

    11.8.  Counterparts; Effectiveness
           ---------------------------

           Each Loan Document (other than the Notes) may be executed by one or
more of the parties thereto on any number of separate counterparts and all of
said counterparts taken together shall be deemed to constitute one and the same
document.  It shall not be necessary in making proof of any Loan Document to
produce or account for more than one counterpart signed by the party to be
charged.  A counterpart of any Loan Document or of any amendment, modification,
consent or waiver to or of any Loan Document transmitted by fax shall be deemed
to be an originally executed counterpart.  A set of the copies of the Loan
Documents signed by all the parties thereto shall be deposited with each of the
Borrower and the Administrative Agent.  Any party to a Loan Document may rely
upon the signatures of any other party thereto that are transmitted by fax or
other electronic means to the same extent as if originally signed.  On the

                                      -88-
<PAGE>

Effective Date, at the time of the effectiveness of this Agreement, (i) this
Agreement shall amend and restate the Existing Term Loan Agreement, (ii) all
Term Loans (as defined in the Existing Term Loan Agreement) outstanding under
the Existing Term Loan Agreement shall continue as and constitute Loans for all
purposes under this Agreement, and (iii) all obligations of the Borrower under
the Existing Term Loan Agreement that have not been paid as of the Effective
Date shall become Obligations of the Borrower under this Agreement.

    11.9.  Adjustments; Set-off
           --------------------

           (a)  If any Lender shall at any time receive any payment of all or
any part of its Loans, or interest thereon, or receive any collateral in respect
thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or
proceedings of the nature referred to in Section 9.1 (h) or (i), or otherwise)
in a greater proportion than any such payment to and collateral received by any
other Lender in respect of such other Lender's Loans, or interest thereon (each
a "Benefited Lender"), such Benefited Lender shall purchase for cash from each
   ----------------
of the other Lenders such portion of each such other Lender's Loans, and shall
provide each of such other Lenders with the benefits of any such collateral, or
the proceeds thereof, as shall be necessary to cause such Benefited Lender to
share the excess payment or benefits of such collateral or proceeds ratably with
each of the Lenders, provided, however, that if all or any portion of such
excess payment or benefits is thereafter recovered from such Benefited Lender,
such purchase shall be rescinded, and the purchase price and benefits returned,
to the extent of such recovery, but without interest. The Borrower agrees that
each Lender so purchasing a portion of another Lender's Loans may exercise all
rights of payment (including, without limitation, rights of set-off, to the
extent not prohibited by law) with respect to such portion as fully as if such
Lender were the direct holder of such portion.

           (b)    In addition to any rights and remedies of the Lenders provided
by law, upon the occurrence of an Event of Default and the acceleration of the
obligations owing in connection with the Loan Documents, or at any time upon the
occurrence and during the continuance of an Event of Default, under Section
9.1(a) or (b), each Lender shall have the right, without prior notice to the
Borrower, any such notice being expressly waived by each Credit Party to the
extent not prohibited by applicable law, to set-off and apply against any
indebtedness, whether matured or unmatured, of such Credit Party to such Lender,
any amount owing from such Lender to such Credit Party, at, or at any time
after, the happening of any of the above-mentioned events. To the extent not
prohibited by applicable law, the aforesaid right of set-off may be exercised by
such Lender against such Credit Party or against any trustee in bankruptcy,
custodian, debtor in possession, assignee for the benefit of creditors,
receiver, or execution, judgment or attachment creditor of such Credit Party, or
against anyone else claiming through or against such Credit Party or such
trustee in bankruptcy, custodian, debtor in possession, assignee for the benefit
of creditors, receiver, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of set-off shall not have been
exercised by such Lender prior to the making, filing or issuance, or service
upon such Lender of, or of notice of, any such petition, assignment for the
benefit of creditors, appointment or application for the

                                      -89-
<PAGE>

appointment of a receiver, or issuance of execution, subpoena, order or warrant.
Each Lender agrees promptly to notify the applicable Credit Party and the
Administrative Agent after any such set-off and application made by such Lender,
provided that the failure to give such notice shall not affect the validity of
such set-off and application.

    11.10. Construction
           ------------

           Each Credit Party represents that it has been represented by counsel
in connection with the Loan Documents and the transactions contemplated thereby
and that the principle that agreements are to be construed against the draftsman
shall be inapplicable.

    11.11. Indemnity
           ---------

           The Borrower agrees to indemnify and hold harmless the Administrative
Agent, the Syndication Agent, the Co-Arrangers and each Lender and their
respective affiliates, directors, officers, employees, attorneys and agents
(each an "Indemnified Person") from and against any loss, cost, liability,
          ------------------
damage or expense (including the reasonable fees and disbursements of counsel of
such Indemnified Person, including all local counsel hired by any such counsel)
incurred by such Indemnified Person in investigating, preparing for, defending
against, or providing evidence, producing documents or taking any other action
in respect of, any commenced or threatened litigation, administrative proceeding
or investigation under any federal securities law or any other statute of any
jurisdiction, or any regulation, or at common law or otherwise, that is alleged
to arise out of or is based upon (i) any untrue statement or alleged untrue
statement of any material fact by any Credit Party in any document or schedule
executed or filed with any Governmental Authority by or on behalf of any Credit
Party; (ii) any omission or alleged omission to state any material fact required
to be stated in such document or schedule, or necessary to make the statements
made therein, in light of the circumstances under which made, not misleading;
(iii) any acts, practices or omissions or alleged acts, practices or omissions
of any Credit Party or its agents relating to the use of the proceeds of any or
all borrowings made by the Borrower alleged to be in violation of Section 2.13,
or in violation of any federal securities law or of any other statute,
regulation or other law of any jurisdiction applicable thereto; or (iv) any
acquisition or proposed acquisition by any Credit Party of all or a portion of
the Stock, or all or a portion of the assets, of any Person whether such
Indemnified Person is a party thereto, provided that the Borrower shall have no
obligation under this Section to an Indemnified Person with respect to any of
the foregoing to the extent any such loss, cost, liability, damage or expense
resulted from or arose out of the gross negligence or willful misconduct of such
Indemnified Person or arose from claims between one such Indemnified Person and
another such Indemnified Person.  The indemnity set forth herein shall be in
addition to any other obligations or liabilities of the Borrower to each
Indemnified Person under the Loan Documents or at common law or otherwise, and
shall survive any termination of the Loan Documents, the expiration of the
Commitments and the payment of all indebtedness of the Borrower under the Loan
Documents.

                                      -90-
<PAGE>

    11.12. GOVERNING LAW
           -------------

           THE LOAN DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
THEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.

    11.13. Headings Descriptive
           --------------------
           Section headings have been inserted in the Loan Documents for
convenience only and shall not be construed to be a part thereof.

    11.14. Severability
           ------------

           Every provision of the Loan Documents is intended to be severable,
and if any term or provision thereof shall be invalid, illegal or unenforceable
for any reason, the validity, legality and enforceability of the remaining
provisions thereof shall not be affected or impaired thereby, and any
invalidity, illegality or unenforceability in any jurisdiction shall not affect
the validity, legality or enforceability of any such term or provision in any
other jurisdiction.

    11.15. Integration
           -----------

           All exhibits to a Loan Document shall be deemed to be a part thereof.
Except for agreements between the Administrative Agent and the Borrower with
respect to certain fees, the Loan Documents embody the entire agreement and
understanding among the Credit Parties, the Administrative Agent and the Lenders
with respect to the subject matter thereof and supersede all prior agreements
and understandings among the Credit Parties, the Administrative Agent and the
Lenders with respect to the subject matter thereof.

    11.16. Consent to Jurisdiction
           -----------------------

           Each Credit Party hereby irrevocably submits to the jurisdiction of
any New York State or Federal court sitting in the City of New York over any
suit, action or proceeding arising out of or relating to the Loan Documents.
Each Credit Party hereby irrevocably waives, to the fullest extent permitted or
not prohibited by law, any objection that it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding brought in such a
court and any claim that any such suit, action or proceeding brought in such a
court has been brought in an inconvenient forum.  Each Credit Party hereby
agrees that a final judgment in any such suit, action or proceeding brought in
such a court, after all appropriate appeals, shall be conclusive and binding
upon it.

                                      -91-
<PAGE>

    11.17. Service of Process
           ------------------

           Each Credit Party hereby agrees that service of process in any such
suit, action or proceeding brought in the State of New York may be made upon CT
Corporation at its offices at 111 Eighth Avenue, New York, New York 10011 (or
any other location in New York City) (the "Process Administrative Agent") and
                                           ----------------------------
each Credit Party hereby irrevocably appoints the Process Administrative Agent
its authorized agent to accept such service of process, and agrees that the
failure of the Process Administrative Agent to give any notice of any such
service shall not impair or affect the validity of such service or of any
judgment rendered in any action or proceeding based thereon.  Each Credit Party
hereby further irrevocably consents to the service of process in any suit,
action or proceeding by sending the same by first class mail, return receipt
requested or by overnight courier service, to the address of such Credit Party
set forth in or referred to in Section 11.2 or in the applicable Loan Document
executed by such Credit Party.  Each Credit Party hereby agrees that any such
service (i) shall be deemed in every respect effective service of process upon
it in any such suit, action, or proceeding, and (ii) shall to the fullest extent
enforceable by law, be taken and held to be valid personal service upon and
personal delivery to it.

    11.18. No Limitation on Service or Suit
           --------------------------------

           Nothing in the Loan Documents or any modification, waiver, consent or
amendment thereto shall affect the right of the Administrative Agent or any
Lender to serve process in any manner permitted by law or limit the right of the
Administrative Agent or any Lender to bring proceedings against any Credit Party
in the courts of any jurisdiction or jurisdictions in which such Credit Party
may be served.

    11.19. [Intentionally Omitted]

    11.20. WAIVER OF TRIAL BY JURY
           -----------------------

           THE ADMINISTRATIVE AGENT, THE SYNDICATION AGENT, THE CO-ARRANGERS,
THE LENDERS AND EACH CREDIT PARTY EACH HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THE LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED THEREIN. FURTHER, EACH CREDIT PARTY HEREBY CERTIFIES
THAT NO REPRESENTATIVE OR AGENT OF THE ADMINISTRATIVE AGENT, THE SYNDICATION
AGENT, THE CO-ARRANGERS OR THE LENDERS, OR COUNSEL TO THE ADMINISTRATIVE AGENT,
THE SYNDICATION AGENT, THE CO-ARRANGERS OR THE LENDERS, HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT THE ADMINISTRATIVE AGENT, THE SYNDICATION AGENT,
THE CO-ARRANGERS OR THE LENDERS WOULD NOT, IN THE EVENT OF SUCH LITIGATION, SEEK
TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION. EACH CREDIT PARTY

                                      -92-
<PAGE>

ACKNOWLEDGES THAT THE ADMINISTRATIVE AGENT, THE SYNDICATION AGENT, THE CO-
ARRANGERS AND THE LENDERS HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
INTER ALIA, THE PROVISIONS OF THIS SECTION.
- ----- ----

    11.21. Treatment of Confidential Information
           -------------------------------------

           Each of the Administrative Agent, the Syndication Agent and each
Lender (each an "Agent/Lender") agrees to use reasonable precautions to keep
                 ------------
confidential, in accordance with its customary procedures for handling
confidential information of the same nature, all non-public information supplied
by the Borrower or any Subsidiary pursuant to this Agreement which (i) is
clearly identified by such Person as being confidential at the time the same is
delivered to such Agent/Lender or (ii) constitutes any financial statement,
financial projections or forecasts, budget, compliance certificate, audit
report, management letter or accountants' certification delivered hereunder
("Information"), provided that nothing herein shall limit the disclosure of any
- -------------
Information (a) on a confidential basis to its Affiliates, agents or other
advisors, (b) to the extent required by applicable laws or regulations or by any
subpoena or similar legal process, or requested by any regulatory authority, (c)
on a confidential basis, to prospective assignees or participants or their
Affiliates, agents or other advisors, (d) to auditors or accountants, and any
analogous counterpart thereof, (e) to any other Agent/Lender, (f) in connection
with any litigation to which any Agent/Lender is a party, (g) to the extent such
Information (A) becomes publicly available other than as a result of a breach of
this Agreement, (B) becomes available to any Agent/Lender on a non-confidential
basis from a source other than the Borrower or any Subsidiary or (C) was
available to any Agent/Lender on a non-confidential basis prior to its
disclosure to any of them by the Borrower or any Subsidiary; and (h) to the
extent the Borrower shall have consented to such disclosure in writing.

    11.22. Designation as Designated Senior Indebtedness
           ---------------------------------------------

           This Agreement, the Subsidiary Guaranty, and all Loans and all other
monetary obligations hereunder and thereunder, are hereby expressly designated
as "Designated Senior Indebtedness", as that term is defined in the RTC
Convertible Subordinated Indenture and in the RTC Convertible Subordinated
Guaranty.

    11.23. Waiver of Past Defaults and Events of Default
           ---------------------------------------------

          (a)  The Administrative Agent and the Required Lenders hereby waive
any Default or Event of Default (under and as defined in the Existing Revolving
Credit Agreement) that may exist immediately prior to the effectiveness of this
Agreement as a result of any of the following:

              (i)    the noncompliance with Sections 7.12, 7.13, 7.15, 8.5(d),
8.5(f) and 8.7(iv) of the Existing Revolving Credit Agreement;

                                      -93-
<PAGE>

              (ii)   the failure to have delivered an accountant's letter with
respect to the Borrower's audited consolidated financial statements for the
fiscal year ending December 31, 1999 that complied with the requirements of
Section 7.1(a)(ii) of the Existing Revolving Credit Agreement;

              (iii)  the late delivery of an officer's certificate with respect
to the Borrower's consolidated financial statements for the fiscal quarter
ending March 31, 2000 as required pursuant to Section 7.1(b) of the Existing
Revolving Credit Agreement;

              (iv)   the late delivery of the Compliance Certificates relating
to the fiscal year ending December 31, 1999 and the fiscal quarter ending March
31, 2000 as required pursuant to Section 7.1(c) of the Existing Revolving Credit
Agreement;

              (v)    the failure to deliver certain reports required pursuant
to Section 7.2(k) of the Existing Revolving Credit Agreement;

              (vi)   the late delivery of notices of the occurrence and
continuance of any Default or Event of Default (as defined in the Existing
Revolving Credit Agreement) as required by 7.2(a) of the Existing Revolving
Credit Agreement; and

              (vii)  the noncompliance with Section 8.7 of the Existing
Revolving Credit Agreement and Paragraph 1(g)(ii) of Amendment No. 5 and
Consent, dated as of February 18, 2000, to and under the Existing Revolving
Credit Agreement, in each case with respect to the Pharmacy Asset Sale (as
defined in such Amendment No. 5 and Consent).

           (b)  The Administrative Agent and the Required Lenders hereby waive
any Default or Event of Default (under and as defined in the Existing Revolving
Credit Agreement) that may exist immediately prior to the effectiveness of this
Agreement under Section 9.1(g)(iii) or 9.1(k)(ii) of the Existing Revolving
Credit Agreement as a result of any defaults that may have arisen under the
Existing Term Loan Agreement (as defined in the Term Loan Facility) that will be
waived pursuant to Section 11.23 of the Term Loan Facility.

           (c)  The foregoing waivers do not constitute a waiver of any other
provision of, or operate as a waiver of any right, power or remedy of the
Administrative Agent or any Lender under, any of the Loan Documents.

                                      -94-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
           SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.

                              TOTAL RENAL CARE HOLDINGS, INC.

                              By:
                                 ----------------------------
                              Name:
                                   --------------------------
                              Title:
                                    -------------------------

<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
                SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT

AGENTS:
                         THE BANK OF NEW YORK, Individually and as
                         Administrative Agent and Collateral Agent

                         By:
                            ---------------------------------
                         Name:
                              -------------------------------
                         Title:
                               ------------------------------


First Additional Term Loan Pro Rata Share:  [Intentionally Omitted]

<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
                SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT


                               DLJ CAPITAL FUNDING, INC., Individually and as
                               Syndication Agent



                               By:
                                  ---------------------------
                               Name:
                                    -------------------------
                               Title:
                                     ------------------------


First Additional Term Loan Pro Rata Share:  [Intentionally Omitted]

<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
                SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT

LENDERS:                       AERIES FINANCE LTD.



                               By:
                                  ---------------------------
                               Name:
                                    -------------------------
                               Title:
                                     ------------------------


First Additional Term Loan Pro Rata Share:  [Intentionally Omitted]

<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
                SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT

                               AMARA 2

                               By:
                                  ---------------------------
                               Name:
                                    -------------------------
                               Title:
                                     ------------------------


First Additional Term Loan Pro Rata Share:  [Intentionally Omitted]

<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
                SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT


                               ARCHIMEDES FUNDING, L.L.C.
                               By:  ING Capital Advisors, as Collateral Manager


                               By:
                                  ------------------------------
                               Name:
                                    ----------------------------
                               Title:
                                     ---------------------------


First Additional Term Loan Pro Rata Share:  [Intentionally Omitted]

<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
                SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT

                               ATHENA CDO, LIMITED

                               By:  Pacific Investment Management Company, as
                               its investment advisor

                               By:  PIMCO Management Inc., a general partner



                               By:
                                  --------------------------
                               Name:  Mohan V. Phansalkar
                               Title:  Senior Vice President




First Additional Term Loan Pro Rata Share:  [Intentionally Omitted]

<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
                SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT


                               CAPTIVA II FINANCE LTD.


                               By:
                                  -------------------------------------
                               Name:
                                    -----------------------------------
                               Title:
                                     ----------------------------------



First Additional Term Loan Pro Rata Share:  [Intentionally Omitted]

<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
                SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT


                               CAPTIVA III FINANCE, LTD., as advised by Pacific
                               Investment Management Company


                               By:
                                  ---------------------------------------
                               Name:
                                    -------------------------------------
                               Title:
                                     ------------------------------------



First Additional Term Loan Pro Rata Share:  [Intentionally Omitted]

<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
                SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT


                               CAPTIVA IV FINANCE, LTD., as advised by Pacific
                               Investment Management Company





                               By:
                                  ----------------------------------------
                               Name:
                                    --------------------------------------
                               Title:
                                     -------------------------------------



First Additional Term Loan Pro Rata Share:  [Intentionally Omitted]

<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
                SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT


                                    DEEP ROCK & COMPANY

                                    By: Eaton Vance Management, as Investment
                                    Advisor


                                    By:
                                       --------------------------------
                                    Name:
                                         ------------------------------
                                    Title:
                                          -----------------------------

First Additional Term Loan Pro Rata Share:  [Intentionally Omitted]

<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
                SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT


                               DELANO COMPANY

                               By:  Pacific Investment Management Company, as
                               its Investment Advisor

                               By:  PIMCO Management Inc., a general partner



                               By:
                                  -----------------------------------------
                               Name:
                               Title:



First Additional Term Loan Pro Rata Share:  [Intentionally Omitted]

<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
                SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT


                               FRANKLIN FLOATING RATE TRUST



                               By:
                                  ------------------------------------------
                               Name:
                                    ----------------------------------------
                               Title:
                                     ---------------------------------------

First Additional Term Loan Pro Rata Share:  [Intentionally Omitted]

<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
                SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT


                               JACKSON NATIONAL LIFE INSURANCE COMPANY

                               By:  PPM America, Inc., as attorney-in-fact, on
                               behalf of Jackson National Life Insurance Company



                               By:
                                  ----------------------------------------
                               Name:
                                    --------------------------------------
                               Title:
                                     -------------------------------------


First Additional Term Loan Pro Rata Share:  [Intentionally Omitted]

<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
                SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT


                               KZH  ING-2 LLC

                               By:
                                  -------------------------------------
                               Name:
                                    -----------------------------------
                               Title:
                                     ----------------------------------


First Additional Term Loan Pro Rata Share:  [Intentionally Omitted]

<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
                SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT


                               KZH  LANGDALE LLC

                               By:
                                  --------------------------------------
                               Name:
                                    ------------------------------------
                               Title:
                                     -----------------------------------


First Additional Term Loan Pro Rata Share:  [Intentionally Omitted]

<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
                SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT


                               KZH  SOLEIL LLC

                               By:
                                  ---------------------------------------
                               Name:
                                    -------------------------------------
                               Title:
                                     ------------------------------------


First Additional Term Loan Pro Rata Share:  [Intentionally Omitted]

<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
                SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT


                               KZH  SOLEIL-2 LLC

                               By:
                                  ------------------------------------
                               Name:
                                    ----------------------------------
                               Title:
                                     ---------------------------------


First Additional Term Loan Pro Rata Share:  [Intentionally Omitted]

<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
                SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT


                               MERILL LYNCH GLOBAL INVESTMENT SERIES:  INCOME
                               STRATEGIES PORTFOLIO

                               By:  Merrill Lynch Asset Management, L.P., As
                               Investment Advisor

                               By:
                                  ------------------------------------
                               Name:
                                    ----------------------------------
                               Title:
                                     ---------------------------------


First Additional Term Loan Pro Rata Share:  [Intentionally Omitted]

<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
                SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT


                               MERRILL LYNCH PRIME RATE PORTFOLIO

                               By:  Merrill Lynch Asset Management, L.P., As
                               Investment Advisor

                               By:
                                  ------------------------------------
                               Name:
                                    ----------------------------------
                               Title:
                                     ---------------------------------


First Additional Term Loan Pro Rata Share:  [Intentionally Omitted]

<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
                SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT


                               MERRILL LYNCH SENIOR FLOATING RATE FUND, INC.

                               By:
                                  ---------------------------------------
                               Name:
                                    -------------------------------------
                               Title:
                                     ------------------------------------


First Additional Term Loan Pro Rata Share:  [Intentionally Omitted]

<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
                SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT


                               ML CLO XIX STERLING (CAYMAN) LTD.
                               BY: STERLING ASSET MANAGER, L.L.C.,
                               as its Investment Advisor

                               By:
                                  -----------------------------------
                               Name:
                                    ---------------------------------
                               Title:
                                     --------------------------------


First Additional Term Loan Pro Rata Share:  [Intentionally Omitted]

<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
                SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT


                               NATIONAL WESTMINSTER BANK PLC

                               By:
                                  -------------------------------------
                               Name:
                                    -----------------------------------
                               Title:
                                     ----------------------------------


First Additional Term Loan Pro Rata Share:  [Intentionally Omitted]

<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
                SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT


                               THE BANK OF NEW YORK, as Trustee on behalf of
                               NATS Loan Trust 18 and not in its individual
                               capacity

                               By:
                                  ---------------------------------------
                               Name:
                                    -------------------------------------
                               Title:
                                     ------------------------------------


First Additional Term Loan Pro Rata Share:  [Intentionally Omitted]

<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
                SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT


                               OASIS COLLATERALIZED HIGH INCOME

                               By:
                                  ----------------------------------------
                               Name:
                                    --------------------------------------
                               Title:
                                     -------------------------------------


First Additional Term Loan Pro Rata Share:  [Intentionally Omitted]

<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
                SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT


                               OCTAGON LOAN TRUST

                               By:  Octagon Credit Investors, as Manager

                               By:
                                  ------------------------------------
                               Name:
                                    ----------------------------------
                               Title:
                                     ---------------------------------


First Additional Term Loan Pro Rata Share:  [Intentionally Omitted]

<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
                SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT


                               ORIX USA CORPORATION

                               By:
                                  ------------------------------------
                               Name:
                                    ----------------------------------
                               Title:
                                     ---------------------------------


First Additional Term Loan Pro Rata Share:  [Intentionally Omitted]

<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
                SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT


                               PACIFICA PARTNERS LLP

                               By:
                                  --------------------------------------
                               Name:
                                    ------------------------------------
                               Title:
                                     -----------------------------------


First Additional Term Loan Pro Rata Share:  [Intentionally Omitted]

<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
                SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT


                               PIMCO TOTAL RETURN FUND

                               By:  Pacific Investment Management Company, as
                               its Investment Advisor, acting through Investors
                               Fiduciary Trust Company in the Nominee Name of
                               IFTCO

                               By:  PIMCO Management Inc., a general partner


                               By:
                                  ---------------------------------------
                               Name:
                               Title:



First Additional Term Loan Pro Rata Share:  [Intentionally Omitted]

<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
                SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT


                               SENIOR DEBT PORTFOLIO

                               By:  Boston Management and Research, as
                               Investment Advisor


                               By:
                                  -------------------------------------
                               Name:
                                    -----------------------------------
                               Title:
                                     ----------------------------------


First Additional Term Loan Pro Rata Share:  [Intentionally Omitted]

<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
                SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT


                               STANFIELD CLO, LTD.

                               By:  Stanfield Capital Partners LLC as its
                               collateral manager


                               By:
                                  ------------------------------------
                               Name:
                                    ----------------------------------
                               Title:
                                     ---------------------------------


First Additional Term Loan Pro Rata Share:  [Intentionally Omitted]

<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
                SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT


                              SYNDICATED LOAN FUNDING TRUST

                               By:
                                  ---------------------------------------
                               Name:
                                    -------------------------------------
                               Title:
                                     ------------------------------------


First Additional Term Loan Pro Rata Share:  [Intentionally Omitted]

<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
                SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT


                               TRANSAMERICA LIFE INSURANCE AND ANNUITY COMPANY

                               By:
                                  ----------------------------------------
                               Name:
                                    --------------------------------------
                               Title:
                                     -------------------------------------


First Additional Term Loan Pro Rata Share:  [Intentionally Omitted]

<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
                SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT


                               VAN KAMPEN PRIME RATE INCOME TRUST

                               By:  Van Kampen Investment Advisory Corp.

                               By:
                                  ---------------------------------------
                               Name:
                                    -------------------------------------
                               Title:
                                     ------------------------------------


First Additional Term Loan Pro Rata Share:  [Intentionally Omitted]

<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
                SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT


                               VAN KAMPEN SENIOR INCOME TRUST

                               By:  Van Kampen Investment Advisory Corp.

                               By:
                                  ----------------------------------------
                               Name:
                                    --------------------------------------
                               Title:
                                     -------------------------------------



First Additional Term Loan Pro Rata Share:  [Intentionally Omitted]

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>4
<FILENAME>0004.txt
<DESCRIPTION>REVOLVING CREDIT AGREEMENT
<TEXT>

<PAGE>

                                                                    EXHIBIT 10.3

                          SECOND AMENDED AND RESTATED
                           REVOLVING CREDIT AGREEMENT

                                  by and among

                        TOTAL RENAL CARE HOLDINGS, INC.,
                           THE LENDERS PARTY HERETO,


                           DLJ CAPITAL FUNDING, INC.,
                             as Syndication Agent,

                           FIRST UNION NATIONAL BANK,
                            as Documentation Agent,

                                      and

                             THE BANK OF NEW YORK,
                            as Administrative Agent

                                      with

            BNY CAPITAL MARKETS, INC. and DLJ CAPITAL FUNDING, INC.
                             as Co-Lead Arrangers,

                           Dated as of July 14, 2000
<PAGE>

                              TABLE OF CONTENTS
                              -----------------

<TABLE>
<S> <C>                                                                                                  <C>
1.  DEFINITIONS AND PRINCIPLES OF CONSTRUCTION............................................................1

    1.1. Definitions......................................................................................1
    1.2. Principles of Construction......................................................................28

2.  AMOUNT AND TERMS OF REVOLVING CREDIT LOANS AND LETTERS OF CREDIT.....................................28

    2.1. Revolving Credit Commitments and Revolving Credit Loans.........................................28
    2.2. Revolving Credit Notes..........................................................................29
    2.3. Swing Line Loans................................................................................30
    2.4. Swing Line Note.................................................................................31
    2.5. Procedure for Borrowing.........................................................................32
    2.6. Termination or Reduction of Aggregate Revolving Credit Commitments and Swing Line Commitment....34
    2.7. Prepayments of the Revolving Credit Loans.......................................................37
    2.8. Participation in Swing Line Loans...............................................................40
    2.9. Conversions and Continuations...................................................................41
    2.10. Interest Rate and Payment Dates................................................................43
    2.11. Substituted Interest Rate......................................................................45
    2.12. Taxes..........................................................................................45
    2.13. Illegality.....................................................................................48
    2.14. Increased Costs................................................................................48
    2.15. Indemnification for Loss.......................................................................49
    2.16. Option to Fund.................................................................................51
    2.17. Use of Proceeds................................................................................51
    2.18. Capital Adequacy...............................................................................51
    2.19. Letter of Credit Sub-Facility..................................................................52
    2.20. Letter of Credit Participation and Funding Commitments.........................................53
    2.21. Absolute Obligation with respect to Letter of Credit Payments..................................55
    2.22. Increased Costs Based on Letters of Credit.....................................................55
    2.23. Administrative Agent's Records.................................................................56

3.  FEES; PAYMENTS.......................................................................................56

    3.1. Commitment Fee..................................................................................56
    3.2. Letter of Credit Fees...........................................................................58
    3.3. Pro Rata Treatment and Application of Principal Payments........................................58

4.  REPRESENTATIONS AND WARRANTIES.......................................................................59

    4.1. Subsidiaries; Capitalization....................................................................59
    4.2. Existence and Power.............................................................................59
    4.3. Authority.......................................................................................60
</TABLE>

                                      -i-
<PAGE>

<TABLE>
<S> <C>                                                                                                  <C>
    4.4. Binding Agreement...............................................................................60
    4.5. Litigation......................................................................................60
    4.6. Required Consents...............................................................................60
    4.7. No Conflicting Agreements.......................................................................61
    4.8. Compliance with Applicable Laws.................................................................61
    4.9. Taxes...........................................................................................61
    4.10. Governmental Regulations.......................................................................62
    4.11. Federal Reserve Regulations; Use of Proceeds...................................................62
    4.12. Plans..........................................................................................62
    4.13. Financial Statements...........................................................................63
    4.14. Property.......................................................................................63
    4.15. Franchises, Intellectual Property, Etc.........................................................63
    4.16. Environmental Matters..........................................................................64
    4.17. Labor Relations................................................................................65
    4.18. Burdensome Obligations.........................................................................65
    4.19. Medicare Participation/Accreditation...........................................................65
    4.20. Fraud and Abuse................................................................................66
    4.21. No Misrepresentation...........................................................................66
    4.22. Subordinated Indebtedness......................................................................66
    4.23. Survival of Rights Created under Existing Revolving Credit Agreement...........................67

5.  CONDITIONS TO EFFECTIVENESS OF AGREEMENT.............................................................67

    5.1. Evidence of Action..............................................................................67
    5.2. This Agreement..................................................................................68
    5.3. Notes...........................................................................................68
    5.4. Subsidiary Guaranty.............................................................................68
    5.5. Security Agreement..............................................................................68
    5.6. Intercreditor Agreement.........................................................................69
    5.7. Term Loan Facility..............................................................................69
    5.8. Litigation......................................................................................69
    5.9. Opinion of Counsel to the Credit Parties........................................................69
    5.10. Compliance Certificate.........................................................................70
    5.11. Aggregate Revolving Credit Commitment Reduction and Prepayment.................................70
    5.12. Fees...........................................................................................70
    5.13. Fees and Expenses of Steering Committee, Agents and Special Counsel............................71
    5.14. Documentation and Proceedings..................................................................71
    5.15. Required Acts and Conditions...................................................................71
    5.16. Approval of Special Counsel....................................................................71
    5.17. Other Documents................................................................................71
    5.18. Officers' Certificate Regarding Certain Conditions.............................................71

6.  CONDITIONS OF LENDING - ALL LOANS AND LETTERS OF CREDIT..............................................72

    6.1. Compliance......................................................................................72
    6.2. Loan Closings...................................................................................72
</TABLE>

                                      -ii-
<PAGE>

<TABLE>
<S> <C>                                                                                                  <C>
    6.3. Borrowing Request...............................................................................73
    6.4. Letter of Credit Request........................................................................73
    6.5. Documentation and Proceedings...................................................................73
    6.6. Required Acts and Conditions....................................................................73
    6.7. Approval of Special Counsel.....................................................................73
    6.8. Supplemental Opinions...........................................................................73
    6.9. Other Documents.................................................................................74

7.  AFFIRMATIVE COVENANTS................................................................................74

    7.1. Financial Statements............................................................................74
    7.2. Certificates; Other Information.................................................................75
    7.3. Legal Existence.................................................................................78
    7.4. Taxes...........................................................................................78
    7.5. Insurance.......................................................................................78
    7.6. Payment of Indebtedness and Performance of Obligations..........................................80
    7.7. Condition of Property...........................................................................80
    7.8. Observance of Legal Requirements................................................................80
    7.9. Inspection of Property; Books and Records; Discussions..........................................80
    7.10. Licenses, Intellectual Property................................................................81
    7.11. Additional Guarantors; Additional Collateral...................................................81
    7.12. Interest Coverage Ratio........................................................................81
    7.13. Minimum Net Worth..............................................................................82
    7.14. Minimum Consolidated EBITDA Ratio..............................................................82
    7.15. Leverage Ratio.................................................................................83
    7.16. Asset Swap Transactions........................................................................83
    7.17. Cash Management................................................................................84
    7.18. Further Assurances.............................................................................84

8.  NEGATIVE COVENANTS...................................................................................84

    8.1. Indebtedness....................................................................................85
    8.2. Liens...........................................................................................86
    8.3. Merger, Consolidation and  Certain Dispositions of Property.....................................87
    8.4. Restricted Payments.............................................................................87
    8.5. Investments, Loans, Etc.........................................................................88
    8.6. Business Change.................................................................................90
    8.7. Sale of Property................................................................................91
    8.8. Subsidiaries....................................................................................92
    8.9. Amendments, Etc. of Certain Documents...........................................................92
    8.10. ERISA..........................................................................................93
    8.11. Acquisition or Issuance of Additional Stock....................................................93
    8.12. Limitation on Upstream Dividends and Advances by Subsidiaries..................................94
    8.13. Fiscal Year....................................................................................94
    8.14. Transactions with Affiliates...................................................................94
    8.15. Limitation on Permitted Acquisitions and Development Capital Expenditures......................95
</TABLE>

                                     -iii-
<PAGE>

<TABLE>
<S> <C>                                                                                                  <C>
    8.16. Maintenance Capital Expenditures...............................................................96
    8.17. Non-Wholly-Owned Subsidiaries..................................................................96

9.  DEFAULT..............................................................................................96

    9.1. Events of Default...............................................................................96

10. THE ADMINISTRATIVE AGENT............................................................................100

    10.1. Appointment...................................................................................100
    10.2. Delegation of Duties..........................................................................101
    10.3. Exculpatory Provisions........................................................................101
    10.4. Reliance by Administrative Agent..............................................................101
    10.5. Notice of Default.............................................................................102
    10.6. Non-Reliance on Administrative Agent and Other Lenders........................................102
    10.7. Indemnification...............................................................................103
    10.8. Administrative Agent in Its Individual Capacity...............................................103
    10.9. Successor Administrative Agent................................................................103
    10.10. Appointment of Collateral Agent..............................................................104
    10.11. The Co-Arrangers.............................................................................104
    10.12. The Syndication Agent........................................................................104
    10.13. The Documentation Agent......................................................................105

11. OTHER PROVISIONS....................................................................................105

    11.1. Amendments and Waivers........................................................................105
    11.2. Notices.......................................................................................106
    11.3. No Waiver; Cumulative Remedies................................................................107
    11.4. Survival of Representations and Warranties....................................................108
    11.5. Payment of Expenses and Taxes.................................................................108
    11.6. Lending Offices...............................................................................109
    11.7. Assignments and Participations................................................................109
    11.8. Counterparts; Effectiveness...................................................................112
    11.9. Adjustments; Set-off..........................................................................112
    11.10. Construction.................................................................................113
    11.11. Indemnity....................................................................................113
    11.12. GOVERNING LAW................................................................................114
    11.13. Headings Descriptive.........................................................................114
    11.14. Severability.................................................................................114
    11.15. Integration..................................................................................115
    11.16. Consent to Jurisdiction......................................................................115
    11.17. Service of Process...........................................................................115
    11.18. No Limitation on Service or Suit.............................................................115
    11.19. [Intentionally Omitted]......................................................................116
    11.20. WAIVER OF TRIAL BY JURY......................................................................116
    11.21. Treatment of Confidential Information........................................................116
    11.22. Designation as Designated Senior Indebtedness................................................117
</TABLE>

                                      -iv-
<PAGE>

<TABLE>
<S> <C>                                                                                                  <C>
    11.23. Waiver of Past Defaults and Events of Default................................................117
</TABLE>

<TABLE>
<CAPTION>
EXHIBITS
- --------
<S>                     <C>
Exhibit A               List of Commitments
Exhibit B-1             Form of Revolving Tranche Note
Exhibit B-2             Form of Term Tranche Note
Exhibit B-3             Form of Swing Line Note
Exhibit C               Form of Borrowing Request
Exhibit D               Form of Compliance Certificate
Exhibit E               Form of Assignment and Acceptance Agreement
Exhibit F-1             Form of Opinion of general counsel to Credit Parties
Exhibit F-2             Form of Opinion of special counsel to Credit Parties
Exhibit G               Form of Notice of Conversion/Continuation
Exhibit H               Form of Letter of Credit Request
Exhibit I               List of Agent Payment Offices
Exhibit J               Form of Intercreditor Agreement
Exhibit K               Form of Security Agreement
Exhibit L               Form of Subsidiary Guaranty

<CAPTION>
SCHEDULES
- ---------
<S>                     <C>
Schedule 1.1            List of Lending Offices
Schedule 1.1(P)         List of Excluded Pension Plans
Schedule 1.1(S)         List of Scheduled Existing Deferred Payment Obligations
Schedule 4.1            List of Subsidiaries; Capitalization
Schedule 4.5            List of Litigation
Schedule 4.9            List of Taxes
Schedule 4.12           List of Existing Pension Plans
Schedule 4.19           List of Exceptions to Medicare/Medicaid Participation
Schedule 7.17           Cash Management and Collateral Program
Schedule 8.1            List of Existing Indebtedness
Schedule 8.2            List of Existing Liens
Schedule 8.5            List of Existing Investments
</TABLE>



                                      -v-
<PAGE>

          SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT, dated as of
July 14, 2000, by and among TOTAL RENAL CARE HOLDINGS, INC., a Delaware
corporation (the "Borrower"), the lenders party hereto (together with the Swing
                  --------
Line Lender and their respective successors and assigns, the "Lenders", each a
                                                              -------
"Lender"), DLJ CAPITAL FUNDING, INC., as syndication agent (the "Syndication
- -------                                                          -----------
Agent"), FIRST UNION NATIONAL BANK, as documentation agent (the "Documentation
- -----                                                           --------------
Agent"), and THE BANK OF NEW YORK, as administrative agent for the Lenders (in
- -----
such capacity, the "Administrative Agent") (the "Agreement").
                    --------------------         ---------

                            PRELIMINARY STATEMENTS
                            ----------------------

           A.  The Borrower, the Lenders (or their predecessors), the
Syndication Agent, the Documentation Agent, the Letter of Credit Issuer, the
Swing Line Lender and the Administrative Agent have heretofore entered into that
certain Amended and Restated Revolving Credit Agreement, dated as of April 30,
1998, as amended by Amendment No. 1 and Consent No. 1, dated as of August 5,
1998, Amendment No. 2, dated as of November 12, 1998, Amendment No. 3 and
Waiver, dated as of August 9, 1999, Amendment No. 4 and Waiver, dated as of
November 8, 1999, and Amendment No. 5 and Consent, dated as of February 18, 2000
(as so amended, the "Existing Revolving Credit Agreement").
                     -----------------------------------

           B.  The Borrower, the Lenders, the Syndication Agent, the
Documentation Agent, the Letter of Credit Issuer, the Swing Line Lender and the
Administrative Agent desire to amend and restate the Existing Revolving Credit
Agreement in its entirety.

     NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the Borrower, the Lenders, the
Syndication Agent, the Documentation Agent, the Letter of Credit Issuer, the
Swing Line Lender and the Administrative Agent agree that the Existing Revolving
Credit Agreement shall be amended and restated, without novation, as follows:

1.  DEFINITIONS AND PRINCIPLES OF CONSTRUCTION
    ------------------------------------------

    1.1.  Definitions
          -----------

          As used in this Agreement, terms defined in the preamble have the
meanings therein indicated, and the following terms have the following meanings:

          "ABR Advances": the Revolving Credit Loans (or any portions thereof)
           ------------
at such time as they (or such portions) are made and/or being maintained in
Dollars at a rate of interest based upon the Alternate Base Rate.

          "Accountants": PriceWaterhouseCoopers LLP (or any successor thereto),
           -----------
or such other firm of certified public accountants of recognized national
standing selected by the Borrower.
<PAGE>

          "Accumulated Funding Deficiency": as defined in Section 302 of ERISA.
           ------------------------------

          "Acquisition": the acquisition by the Borrower or any Subsidiary of
           -----------
the Borrower of 50% or more of the capital Stock of or other equity interests in
another Person, whether by purchase, merger, consolidation or otherwise (such
that, after giving effect thereto, such Person shall qualify as a Subsidiary of
the Borrower), or substantially all of the assets of another Person, or the
assets comprising a division or line of business of another Person, or one or
more facilities of an ESRD-Related Business.

          "Additional Guarantor Event": any time when any Person that is not a
           --------------------------
Guarantor becomes a wholly-owned Domestic Subsidiary of the Borrower after the
Effective Date.

          "Adjusted Net Cash Proceeds": with respect to any Asset Sale as of any
           --------------------------
date of determination, the amount equal to the difference between (i) the Net
Cash Proceeds from such Asset Sale that have not been previously applied to the
prepayment of the Revolving Credit Loans and the Term Loans pursuant to Section
2.7(f)(i) hereof and Section 2.4(f)(i) of the Term Loan Facility, and (ii) the
Reinvested Proceeds in connection with such Asset Sale that have been used prior
to the date prepayment is required to be made under Section 2.7(f)(ii).

          "Advance": an ABR Advance or a Eurodollar Advance, as the case may be.
           -------

          "Affected Advance": as defined in Section 2.11.
           ----------------

          "Affected Principal Amount": in the event that (i) the Borrower shall
           -------------------------
fail for any reason to borrow, convert or continue after it shall have notified
the Administrative Agent of its intent to do so in any instance in which it
shall have requested a Eurodollar Advance, an amount equal to the principal
amount of such Eurodollar Advance; (ii) the Borrower shall fail for any reason
to borrow a Swing Line Loan after it shall have agreed to a Negotiated Rate with
respect thereto in accordance with Section 2.3, an amount equal to the principal
amount of such Swing Line Loan; (iii) a Eurodollar Advance or Swing Line Loan
bearing interest at a Negotiated Rate shall terminate for any reason prior to
the last day of the Interest Period applicable thereto, an amount equal to the
principal amount of such Eurodollar Advance or Swing Line Loan, as the case may
be; and (iv) the Borrower shall prepay or repay all or any part of the principal
amount of a Eurodollar Advance or Swing Line Loan bearing interest at a
Negotiated Rate prior to the last day of the Interest Period applicable thereto,
an amount equal to the principal amount of such Eurodollar Advance or Swing Line
Loan, as the case may be, so prepaid or repaid.

          "Affiliate": as to any Person, any other Person that, directly or
           ---------
indirectly, is in control of, is controlled by, or is under common control with,
such Person.  For purposes of this definition, control of a Person shall mean
the power, direct or indirect, (i) to vote 20% or more of the securities or
other interests having ordinary voting power for the election of directors or
other managing Persons thereof or (ii) to direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.

                                      -2-
<PAGE>

          "Affiliate Transaction":  as defined in Section 8.14.
           ---------------------

          "Agent Payment Office": with respect to all amounts owing under the
           --------------------
Loan Documents, initially, the office, branch, affiliate, or correspondent bank
of the Administrative Agent designated as its "Domestic Payment Office" in
Exhibit I and, thereafter, such other office, branch, affiliate, or
correspondent bank thereof as it may from time to time designate in writing as
such to the Borrower, the Issuing Bank, the Swing Line Lender and each Lender.

          "Aggregate Alternate Currency Exposure": [Intentionally Omitted]
           -------------------------------------

          "Aggregate Credit Exposure":  at any time, the sum at such time of the
           -------------------------
Credit Exposures of all Lenders.

          "Aggregate Revolving Credit Commitments": on any date, the sum of the
           --------------------------------------
Revolving Credit Commitments of all Lenders on such date.

          "Aggregate Revolving Tranche Commitments": on any date, the sum of the
           ---------------------------------------
Revolving Tranche Commitments of all Lenders on such date.

          "Aggregate Revolving Tranche Exposure":  at any time, the sum at such
           ------------------------------------
time of the Revolving Tranche Exposures of all Lenders.

          "Aggregate Term Tranche Commitments":  on any date, the sum of the
           ----------------------------------
Term Tranche Commitments of all Lenders on such date.

          "Alternate Currency Advances":  [Intentionally Omitted]
           ---------------------------

          "Agreement": this Second Amended and Restated Revolving Credit
           ---------
Agreement, as the same may be amended, supplemented or otherwise modified from
time to time.

          "Alternate Base Rate": on any date, a rate of interest per annum equal
           -------------------
to the higher of (i) the Federal Funds Rate in effect on such date plus 1/2 of
1% or (ii) the BNY Rate in effect on such date.

          "Ancillary Services":  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 densimetry 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": in respect of any Lender, (i) in the case
           -------------------------
of such Lender's ABR Advances, its Domestic Lending Office, (ii) in the case of
such Lender's

                                      -3-
<PAGE>

Eurodollar Advances, its Eurodollar Lending Office, and (iii) in the case of the
Swing Line Lender with respect to its Swing Line Loans, its Domestic Lending
Office.

          "Applicable Margin":  (a) at all times during the applicable periods
           -----------------
set forth below and based on the most recently delivered Compliance Certificate
of the Borrower: (i) with respect to the unpaid principal amount of Eurodollar
Advances, the percentage set forth below under the heading "Eurodollar Margins"
and adjacent to such period, and (ii) with respect to the unpaid principal
amount of ABR Advances, the percentage set forth below under the heading "ABR
Margin" and adjacent to such period:

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
          Period                               Eurodollar Margin                   ABR Margin
          ------                               -----------------                   ----------
- -----------------------------------------------------------------------------------------------------
<S>                                         <C>                                   <C>
  When the Leverage Ratio is equal
  to or greater than 4.40:1.00
                                                     3.50%                            2.25%

- ----------------------------------------------------------------------------------------------------
  When the Leverage Ratio is less
  than 4.40:1.00 but equal to or
  greater than 4.00:1.00
                                                     3.25%                            2.00%

 ----------------------------------------------------------------------------------------------------
  When the Leverage Ratio is less
  than 4.00:1.00
                                                      3.00%                           1.75%

- ----------------------------------------------------------------------------------------------------
</TABLE>

          (b) Changes in the Applicable Margin resulting from a change in the
Leverage Ratio, as evidenced by a Compliance Certificate delivered to the
Administrative Agent pursuant to Section 7.1(c) evidencing such a change, shall
become effective upon delivery of such Compliance Certificate. If the Borrower
shall fail to deliver a Compliance Certificate in accordance with Section 7.1(c)
(each a "certificate delivery date"), for purposes of calculating the Applicable
         -------------------------
Margin, the Leverage Ratio from and including such certificate delivery date to
the date of delivery by the Borrower to the Administrative Agent of such
Compliance Certificate shall be conclusively presumed to be greater than
4.40:1.0.

          "Approved Fund": with respect to any Lender that is a fund that
           -------------
invests in commercial loans, any other fund that invests in commercial loans and
is advised or managed by the same investment advisor as such Lender or by an
Affiliate of such investment advisor.

          "Asset Sale": any direct or indirect sale, issuance, conveyance,
           ----------
transfer, lease (other than operating leases entered into in the ordinary course
of business), assignment or other transfer for value by the Borrower or any of
its Subsidiaries (including any sale and leaseback transaction) to any Person of
(a) any capital Stock of any Subsidiary of the Borrower, or (b) any other
Property or assets of the Borrower or any Subsidiary of the Borrower other than
in the

                                      -4-
<PAGE>

ordinary course of business; provided that Asset Sales shall not include
                             --------
(i) any transfer of Property or assets in connection with a dividend to holders
of capital Stock if such payment is permitted by Section 8.4, (ii) the granting
of Permitted Liens, (iii) a merger permitted under Section 8.3, (iv) the sale or
other disposition of Cash Equivalents or inventory in the ordinary course of
business or obsolete equipment in the ordinary course of business consistent
with past practices of the Borrower or (v) the lease or sublease of any real or
personal property in the ordinary course of business (provided that, for
purposes of this definition, "ordinary course of business" shall not include the
sale or disposition of any Subsidiary of the Borrower, any ESRD-Related Business
or any interest therein).

          "Asset Sales Application Method": With respect to the reduction of the
           ------------------------------
Aggregate Revolving Credit Commitments required pursuant to Section 2.6(d) (with
respect to prepayments pursuant to Section 2.7(f)) (each, a "Required Asset Sale
                                                             -------------------
Reduction"), with respect to any Asset Sale (other than the Puerto Rico Asset
- ---------
Sale), such Required Asset Sale Reduction shall be applied to the remaining
Mandatory Scheduled Commitment Reductions as follows: first, pro rata among each
                                                      -----  --- ----
of the remaining Mandatory Scheduled Commitment Reductions (excluding the
Mandatory Scheduled Commitment Reduction on the Maturity Date) (each a

"Remaining Pre-Maturity Mandatory Scheduled Commitment Reduction") in an amount
- ----------------------------------------------------------------
equal to such Required Asset Sale Reduction multiplied by a fraction, the
numerator of which is the amount of such Remaining Pre-Maturity Mandatory
Scheduled Commitment Reduction (as in effect on the Effective Date) and the
denominator of which is the aggregate of all Mandatory Scheduled Commitment
Reductions (as in effect on the Effective Date) for the period from the
Effective Date to but excluding the Maturity Date, and, second, the balance to
                                                        ------
the Mandatory Scheduled Commitment Reduction on the Maturity Date.

          "Asset Sale Prepayment Percentage": with respect to any Asset Sale,
           --------------------------------
(i) 50% or (ii) 25% if the Leverage Ratio is less than 3.75:1.00 immediately
before and after giving effect to such Asset Sale and at all times during the
immediately preceding two fiscal quarters in respect of which financial
statements and a Compliance Certificate have been delivered to the
Administrative Agent and the Lenders; provided that if a Default or Event of
Default shall exist such percentage shall be 100%.

          "Asset Swap Transaction": any (i) Asset Sale (excluding the issuance
           ----------------------
of Stock) occurring after the Effective Date (excluding the Puerto Rico Asset
Sale) followed by a Permitted Acquisition or (ii) Permitted Acquisition
occurring after the Effective Date followed by an Asset Sale (excluding the
Puerto Rico Asset Asset Sale), in either case with the same counterparty, that
closes within 365 days following the closing of the first transaction.

          "Assignment and Acceptance Agreement": an assignment and acceptance
           -----------------------------------
agreement executed by an assignor and an assignee pursuant to which the assignor
assigns to the assignee all or any portion of such assignor's Notes and
Commitment, substantially in the form of Exhibit E.

                                      -5-
<PAGE>

          "Assignment Fee": as defined in Section 11.7(b).
           --------------

          "Authorized Signatory": as to (i) any Person that is a corporation,
           --------------------
the chairman of the board, the president, any vice president, the chief
financial officer or any other duly authorized officer (acceptable to the
Administrative Agent) of such Person and (ii) any Person that is not a
corporation, the general partner or other managing Person thereof.

          "Benefited Lender": as defined in Section 11.9.
           ----------------

          "BNY": The Bank of New York.
           ---

          "BNY Rate": a rate of interest per annum equal to the rate of interest
           --------
publicly announced in New York City by BNY from time to time as its prime
commercial lending rate, such rate to be adjusted automatically (without notice)
on the effective date of any change in such publicly announced rate.

          "Borrowing Date": any Business Day specified in (i) a Borrowing
           --------------
Request as a date on which the Borrower requests the Lenders to make Revolving
Tranche Loans, (ii) a Borrowing Request as a date on which the Borrower requests
the Swing Line Lender to make a Swing Line Loan, or (iii) a Letter of Credit
Request as a date on which the Borrower requests the Letter of Credit Issuer to
issue a Letter of Credit.

          "Borrowing Request": a request for Revolving Tranche Loans or a Swing
           -----------------
Line Loan in the form of Exhibit C.

          "Business Day":
           ------------

          (i)  for all purposes (other than as covered by clause (ii) below),
any day except Saturday, Sunday or a day which in New York City is a legal
holiday or a day on which banking institutions are authorized or required by law
or other government action to close, and

          (ii) with respect to all notices and determinations in connection
with, and payments of principal and interest on, a Eurodollar Advance, any day
which is a Business Day described in clause (i) above and which is also a day
for trading by and between banks in the London interbank market.

          "Capital Expenditures": of any Person means expenditures (whether paid
           --------------------
in cash or other consideration or accrued as a liability) for fixed or capital
assets (excluding any replacement assets acquired with the proceeds of
insurance) made by such Person, excluding any Permitted Acquisition.

          "Capital Lease Obligations": with respect to any Person, obligations
           -------------------------
of such Person with respect to leases that, in accordance with GAAP, are
required to be capitalized on the financial statements of such Person.

                                      -6-
<PAGE>

          "Cash Collateral Account": as defined in Section 2.7(b).
           -----------------------

          "Cash Equivalents":  (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 Standard & Poor's Ratings Services or Aa3 by Moody's Investors Service,
Inc., 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 Standard & Poor's Ratings
Services or P-2 by Moody's Investors Service, Inc., 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 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 Standard & Poor's
Ratings Services or Moody's Investors Service, Inc., or carrying an equivalent
rating by a nationally recognized rating agency if both of the two named rating
agencies cease publishing ratings of investments.

          "Change of Control":  any of the following:
           -----------------

          (i) the acquisition, directly or indirectly, by any Person or group
     (as such term is used in Section 13(d)(3) of the Exchange Act) of more than
     50% of the voting power of the Stock of the Borrower by way of merger,
     consolidation or otherwise; or

          (ii) the Continuing Directors cease for any reason to constitute a
     majority of the directors of the Borrower then in office.

          "Co-Arrangers": BNY Capital Markets, Inc. and DLJ Capital Funding,
           ------------
Inc.

          "Code": the Internal Revenue Code of 1986, as the same may be amended
           ----
from time to time, or any successor thereto, and the rules and regulations
issued thereunder, as from time to time in effect.

          "Collateral": collectively, the Collateral under and as defined in the
           ----------
Collateral Documents.

          "Collateral Agent": BNY acting in its capacity as Collateral Agent
           ----------------
under the Intercreditor Agreement, the Collateral Documents and the Subsidiary
Guaranty, and its successors in such capacity.

                                      -7-
<PAGE>

          "Collateral Documents": collectively, the Security Agreement, and all
           --------------------
other instruments or documents delivered by any Credit Party in order to grant
to the Collateral Agent Liens on any Collateral.

          "Commitment":  a Revolving Credit Commitment, a Revolving Tranche
           ----------
Commitment, a Term Tranche Commitment or the Swing Line Commitment, as the case
may be.

          "Commitments":  the Revolving Credit Commitments, the Revolving
           -----------
Tranche Commitments, the Term Tranche Commitments or the Swing Line Commitment,
as the case may be.

          "Commitment Fee": as defined in Section 3.1.
           --------------

          "Commitment Percentage":  as to any Lender, the percentage equal to
           ---------------------
such Lender's: Revolving Credit Commitment divided by the Aggregate Revolving
Credit Commitments, Revolving Tranche Commitment divided by the Aggregate
Revolving Tranche Commitments, or Term Tranche Commitment divided by the
Aggregate Term Tranche Commitments, as the case may be.

          "Compensatory Interest Payment": as defined in Section 2.10(c).
           -----------------------------

          "Compliance Certificate": a certificate substantially in the form of
           ----------------------
Exhibit D.

          "Consolidated": when applied to an accounting term used with respect
           ------------
to more than one Person, such accounting term determined on a consolidated basis
for such Persons in accordance with GAAP, including principles of consolidation
under GAAP.

          "Consolidated EBITDA": EBITDA of the Borrower and its Subsidiaries on
           -------------------
a Consolidated basis determined in accordance with GAAP.

          "Consolidated Pre-Minority EBITDA": 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.

          "Contingent Obligation": as to any Person (the "secondary obligor"),
           ---------------------                          -----------------
any obligation of such secondary obligor (i) guaranteeing or in effect
guaranteeing any return on any Investment made in another Person, or (ii)
guaranteeing or in effect guaranteeing any Indebtedness, lease, dividend or
other obligation ("primary obligation") of any other Person (the "primary
                   ------------------                             -------
obligor") in any manner, whether directly or indirectly, including, without
- -------
limitation, any obligation of such secondary obligor, whether contingent, (A) to
purchase any such primary obligation or any Property constituting direct or
indirect security therefor, (B) to advance or supply funds (x) for the purchase
or payment of any such primary obligation or (y) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or

                                      -8-
<PAGE>

solvency of the primary obligor, (C) to purchase Property, securities or
services primarily for the purpose of assuring the beneficiary of any such
primary obligation of the ability of the primary obligor to make payment of such
primary obligation, (D) otherwise to assure or hold harmless the beneficiary of
such primary obligation against loss in respect thereof, and (E) in respect of
the liabilities of any partnership in which such secondary obligor is a general
partner, except to the extent that such liabilities of such partnership are
nonrecourse to such secondary obligor and its separate Property, provided,
however, that the term "Contingent Obligation" shall not include the indorsement
of instruments for deposit or collection in the ordinary course of business.
The amount of any Contingent Obligation of a Person 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 not stated or
determinable, the maximum reasonably anticipated liability in respect thereof as
determined by such Person in good faith.

          "Continuing Director": means any member of the Board of Directors of
           -------------------
the Borrower who (i) is a member of that Board of Directors on the Effective
Date or (ii) has been nominated for election by the Board of Directors a
majority of whom were directors at the Effective Date or whose election or
nomination for election has been previously approved by a majority of such
directors.

          "Conversion/Continuation Date": the date on which (i) a Eurodollar
           ----------------------------
Advance is converted to an ABR Advance, (ii) an ABR Advance is converted to a
Eurodollar Advance, or (iii) a Eurodollar Advance is continued as a new
Eurodollar Advance.

          "Credit Exposure": with respect to any Lender as at any time, the sum
           ---------------
at such time of (i) the outstanding principal balance of such Lender's Revolving
Credit Loans, (ii) the Swing Line Exposure of such Lender and (iii) the Letter
of Credit Exposure of such Lender.

          "Credit Party": the Borrower and each Guarantor.
           ------------

          "Currency": Dollars.
           --------

          "Default": any event or condition that constitutes an Event of Default
           -------
or that, with the giving of notice, the lapse of time, or any other condition,
would, unless cured or waived, become an Event of Default.

          "Designated Amount": as defined in Section 8.15.
           -----------------

          "Development Capital Expenditures":  Capital Expenditures attributable
           --------------------------------
to the creation of new renal treatment centers or the relocation or expansion of
existing renal treatment centers.

          "Dialysis Services":  hemodialysis services and peritoneal dialysis
           -----------------
services, hemoperfusion, plasmapheresis, continuous arteriovenous hemofiltration
and bio-medical services related to the foregoing.

                                      -9-
<PAGE>

          "Dollars" and "$": lawful currency of the United States of America.
           -------       -

          "Domestic Acquisition": any Acquisition that is not a Foreign
           --------------------
Acquisition.

          "Domestic Lending Office": in respect of any Lender, initially, the
           -----------------------
office or offices of such Lender designated as such on Schedule 1.1; thereafter,
such other office of such Lender through which it shall be making or maintaining
ABR Advances or Swing Line Loans, as reported by such Lender to the
Administrative Agent and the Borrower.

          "Domestic Subsidiary": any Subsidiary of the Borrower that is not a
           -------------------
Foreign Subsidiary.

          "EBITDA":  for any period, for any Person, net income of such Person
           ------
for such period, determined in accordance with GAAP, plus the sum of, without
duplication, (i) Interest Expense of such Person, (ii) provision for income
taxes of such Person and (iii) depreciation, amortization and all other non-cash
charges (except minority interests in income of consolidated Subsidiaries) of
such Person, each to the extent deducted in determining net income of such
Person for such period.  EBITDA shall exclude (to the extent otherwise included
therein) (x) extraordinary gains and  losses and (y) gains and losses on the
sale, transfer or other disposition of assets (other than inventory and cash
management investments sold in the ordinary course of business) ((x) and (y),
collectively, the "Gains and Losses"), provided that this sentence shall not be
                   ----------------
applicable with respect to any fiscal quarter if the net aggregate amount of
Gains and Losses for such fiscal quarter is between ($100,000) and $100,000.
Other than for purposes of calculating the Applicable Margin, the Commitment
Fee, the Asset Sale Prepayment Percentage and the release and regranting of
Collateral pursuant to Section 22 of the Security Agreement and any
corresponding section of any other Collateral Document, EBITDA for any period
shall further exclude the following non-recurring charges incurred during such
period: (i) charges not exceeding in the aggregate during the period from April
1, 2000 and continuing through the term of this Agreement $12,000,000 resulting
from the settlement of shareholder class action lawsuits existing on the
Effective Date, (ii) charges 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 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, and
(iii) other cash charges not exceeding in the aggregate during the period from
April 1, 2000 and continuing through the term of this Agreement $5,000,000 (the
"Non-Recurring Charges").
 ---------------------

          "Effective Date": the date upon which the conditions as set forth in
           --------------
Section 5 have been or simultaneously will be satisfied.

          "Employee Benefit Plan": an employee benefit plan within the meaning
           ---------------------
of Section 3(3) of ERISA maintained, sponsored or contributed to by the
Borrower, any of its Subsidiaries or any ERISA Affiliate.

                                      -10-
<PAGE>

          "Environmental Laws": any and all federal, state and local laws
           ------------------
relating to the environment, the use, storage, transporting, manufacturing,
handling, discharge, release, disposal or recycling of hazardous substances,
materials or pollutants or industrial hygiene, and including, without
limitation, (i) the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, 42 USCA (S)9601 et seq.; (ii) the Resource
                                           -- ---
Conservation and Recovery Act of 1976, as amended, 42 USCA (S)6901 et seq.;
                                                                   -- ---
(iii) the Toxic Substance Control Act, as amended, 15 USCA (S)2601 et seq.; (iv)
                                                                   -- ---
the Water Pollution Control Act, as amended, 33 USCA (S)1251 et seq.; (v) the
                                                             -- ---
Clean Air Act, as amended, 42 USCA (S)7401 et seq.; (vi) the Hazardous Materials
Transportation Authorization Act of 1994, 49 U.S.C. 5101 et seq. and (vii) all
                                                         -- ---
rules, regulations, judgments, decrees, injunctions and restrictions thereunder
and any analogous state law.

          "Equity Interests": capital Stock and all warrants, options or other
           ----------------
rights to acquire capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, capital Stock).

          "ERISA": the Employee Retirement Income Security Act of 1974, as
           -----
amended from time to time, and the rules and regulations issued thereunder, as
from time to time in effect.

          "ERISA Affiliate": when used with respect to an Employee Benefit Plan,
           ---------------
ERISA, the PBGC or a provision of the Code pertaining to employee benefit plans,
any Person that is a member of any group of organizations within the meaning of
Sections 414(b), (c), (m) or (o) of the Code of which the Borrower or any of its
Subsidiaries is a member.

          "ESRD-Related Business": the business of providing Dialysis Services
           ---------------------
and/or Ancillary Services.

          "Eurodollar Advances": collectively, the Revolving Credit Loans (or
           -------------------
any portions thereof) at such time as they (or such portions) are made and/or
being maintained in Dollars at a rate of interest based upon the Eurodollar
Rate.

          "Eurodollar Lending Office": in respect of any Lender, initially, the
           -------------------------
office, branch or affiliate  of such Lender designated as such on Schedule 1.1
(or, if no such office branch or affiliate is specified, its Domestic Lending
Office); thereafter, such other office, branch or affiliate of such Lender
through which it shall be making or maintaining Eurodollar Advances, as reported
by such Lender to the Administrative Agent and the Borrower.

          "Eurodollar Rate": with respect to the Interest Period applicable to
           ---------------
any Eurodollar Advance, a rate of interest per annum, as determined by the
Administrative Agent, obtained by dividing (and then rounding to the nearest
1/16 of 1% or, if there is no nearest 1/16 of 1%, then to the next higher 1/16
of 1%):

          (a) the rate quoted by the Administrative Agent, in its capacity as a
     Lender, to leading banks in the interbank eurodollar market as the rate at
     which it is offering Dollar deposits in an amount equal approximately to
     its Eurodollar Advance to which such

                                      -11-
<PAGE>

     Interest Period shall apply for a period equal to such Interest Period, as
     quoted at approximately 11:00 A.M. two Business Days prior to the first day
     of such Interest Period, by

          (b) a number equal to 1.00 minus the aggregate of the then stated
     maximum rates during such Interest Period of all reserve requirements
     (including, without limitation, marginal, emergency, supplemental and
     special reserves), expressed as a decimal, established by the Board of
     Governors of the Federal Reserve System and any other banking authority to
     which BNY and other major United States money center banks are subject, in
     respect of eurocurrency funding (currently referred to as "Eurocurrency
     liabilities" in Regulation D of the Board of Governors of the Federal
     Reserve System) or in respect of any other category of liabilities
     including deposits by reference to which the interest rate on Eurodollar
     Advances is determined or any category of extensions of credit or other
     assets that includes loans by non-domestic offices of any Lender to United
     States residents.  Such reserve requirements shall include, without
     limitation, those imposed under such Regulation D.  Eurodollar Advances
     shall be deemed to constitute Eurocurrency liabilities and as such shall be
     deemed to be subject to such reserve requirements without benefit of
     credits for proration, exceptions or offsets that may be available from
     time to time to any Lender under such Regulation D. The Eurodollar Rate
     shall be adjusted automatically on and as of the effective date of any
     change in any such reserve requirement.

          "Event of Default": any of the events specified in Section 9.1,
           ----------------
provided that any requirement for the giving of notice, the lapse of time, or
any other condition has been satisfied.

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

          "Excluded Contingent Obligations":  all Contingent Obligations of the
           -------------------------------
Borrower and its Subsidiaries on a Consolidated basis in accordance with GAAP
that are not in respect of Indebtedness described in items (i), (ii), (iii),
(iv)(B), (v) or (vi) of the definition of Indebtedness.

          "Existing Pension Plans": as defined in Section 4.12.
           ----------------------

          "Existing Revolving Credit Agreement": as defined in paragraph A of
           -----------------------------------
the Preliminary Statements to this Agreement.

          "Federal Funds Rate": for any day, a rate per annum (expressed as a
           ------------------
decimal, rounded upwards, if necessary, to the next higher 1/100 of 1%), equal
to the weighted average of the rates on overnight federal funds transactions
with members of the Federal Reserve System arranged by federal funds brokers on
such day, as published by the Federal Reserve Bank of New York on the Business
Day next succeeding such day, provided that (i) if the day for which such rate
is to be determined is not a Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Business Day as so
published on the next

                                      -12-
<PAGE>

succeeding Business Day, and (ii) if such rate is not so published for any day,
the Federal Funds Rate for such day shall be the average of the quotations for
such day on such transactions received by the Administrative Agent.

          "Financial Statements": as defined in Section 4.13.
           --------------------

          "Foreign Acquisition":  the Acquisition of Stock or Property of a
           -------------------
Person that is not organized under the laws of, or whose property is not located
in, a jurisdiction within the United States.

          "Foreign Subsidiary": any Subsidiary of the Borrower which is a
           ------------------
"controlled foreign corporation" within the meaning of Section 957 of the Code.

          "Funded Current Liability Percentage": as defined in Section
           -----------------------------------
401(a)(29) of the Code.

          "GAAP": generally accepted accounting principles set forth in the
           ----
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or such other principles as may be
approved by a significant segment of the accounting profession, that are
applicable to the circumstances as of the date of determination, consistently
applied.  If at any time any change in GAAP would affect the computation of any
financial ratio or requirement set forth in this Agreement, and either the
Borrower or the Required Lenders shall so request, the Administrative Agent, the
Lenders and the Borrower shall negotiate in good faith to amend such ratio or
requirement to reflect such change in GAAP (subject to the approval of the
Required Lenders), provided that, until so amended, (i) such ratio or
requirement shall continue to be computed in accordance with GAAP prior to such
change therein and (ii) the Borrower shall provide to the Administrative Agent
and the Lenders financial statements and other documents required under this
Agreement or as reasonably requested hereunder setting forth a reconciliation
between calculations of such ratio or requirement made before and after giving
effect to such change in GAAP.

          "Governmental Authority": any nation or government, any state or other
           ----------------------
political subdivision thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
and any court or arbitrator.

          "Guarantors": collectively, (i) each wholly-owned Subsidiary of the
           ----------
Borrower on the Effective Date and (ii) each other Domestic Subsidiary of the
Borrower that becomes a party to the Subsidiary Guaranty pursuant to Section
7.11; each a "Guarantor".
              ---------

          "Hazardous Substance": any hazardous or toxic substance, material or
           -------------------
waste, including, but not limited to, (i) those substances, materials, and
wastes listed in the United States Department of Transportation Hazardous
Materials Table (49 CFR 172.101) or by the Environmental Protection Agency as
hazardous substances (40 CFR Part 302) and amendments

                                      -13-
<PAGE>

thereto and replacements therefor and (ii) any substance, pollutant or material
defined as, or designated in, any Environmental Law as a "hazardous substance,"
"toxic substance," "hazardous material," "hazardous waste," "restricted
hazardous waste," "pollutant," "toxic pollutant" or words of similar import.

          "Hedging Obligations": with respect to any Person, the obligations of
           -------------------
such Person under Interest Rate Agreements designed to protect such Person
against fluctuations in interest rates.

          "Highest Lawful Rate": with respect to any Lender, the maximum rate of
           -------------------
interest, if any, that at any time or from time to time may be contracted for,
taken, charged or received by such Lender on its Loans or that may be owing to
such Lender pursuant to this Agreement under the laws applicable to such Lender
and this Agreement.

          "Indebtedness": as to any Person, at a particular time, all items that
           ------------
constitute, without duplication, (i)  indebtedness for borrowed money or the
deferred purchase price of Property (other than trade payables incurred in the
ordinary course of business), (ii) indebtedness evidenced by notes, bonds,
debentures or similar instruments, (iii) obligations with respect to any
conditional sale or title retention agreement, (iv) indebtedness arising under
(A) acceptance facilities and the amount available to be drawn under all letters
of credit issued for the account of such Person, and (B) without duplication,
all drafts drawn thereunder to the extent such Person shall not have reimbursed
the issuer in respect of the issuer's payment of such drafts, (v) all
liabilities secured by any Lien on any Property owned by such Person even though
such Person has not assumed or otherwise become liable for the payment thereof
(other than carriers', warehousemen's, mechanics', repairmen's or other like
non-consensual statutory Liens arising in the ordinary course of business), (vi)
the principal portion of obligations under Capital Lease Obligations and (vii)
Contingent Obligations.

          "Indemnified Person": as defined in Section 11.11.
           ------------------

          "Indemnified Tax": as to any Person, any Tax, except (i) a Tax on the
           ---------------
Income imposed on such Person and (ii) any interest, fees or penalties for late
payment imposed on such Person, in each case to the extent not attributable to
the failure of the Borrower or any of its Subsidiaries to obtain any necessary
approvals or consents of, or file or cause to be filed any reports,
applications, documents, instruments or information required to be filed
pursuant to any applicable law, rule, regulation or request of, any Governmental
Authority.

          "Indemnified Tax Person": the Administrative Agent, the Collateral
           ----------------------
Agent, the Syndication Agent, the Documentation Agent, a Co-Arranger, the
Issuing Bank, the Swing Line Lender, or any Lender, as the case may be.

          "Intellectual Property": all copyrights, trademarks, servicemarks,
           ---------------------
patents, trade names and service names.

                                      -14-
<PAGE>

          "Intercreditor Agreement": the Amended and Restated Intercreditor and
           -----------------------
Collateral Agency Agreement, substantially in the form of Exhibit J as amended,
supplemented or otherwise modified from time to time.

          "Interest Coverage Ratio": at any date of determination, the ratio of
           -----------------------
(i)  Consolidated Pre-Minority EBITDA to (ii) Interest Expense of the Borrower
and its Subsidiaries on a Consolidated basis, in each case for (a) the two
fiscal quarter period ending June 30, 2000, if the date of determination is at
any time during the period from the Effective Date through September 29, 2000,
(b) the three fiscal quarter period ended September 30, 2000, if the date of
determination is at any time during the period from September 30, 2000 through
December 30, 2000, and (c) the immediately preceding four fiscal quarters of the
Borrower (or in the event that the date of determination is a fiscal quarter
ending date, the four fiscal quarter period then ended), if the date of
determination is at any time on or after December 31, 2000.

          "Interest Expense": for any Person, with respect to any period,
           ----------------
without duplication, the sum of all interest, including (whether in the form of
cash or Property) whether paid or required to be accrued (including, without
limitation, paid-in-kind or PIK interest) in respect of all Indebtedness of such
Person for such period determined in accordance with GAAP less capitalized
financing costs, each to the extent included in Interest Expense of such Person
for such period.

          "Interest Payment Date": (i) as to any ABR Advance, the last day of
           ---------------------
each March, June, September and December commencing on the first of such days to
occur after such ABR Advance is made or any Eurodollar Advance is converted to
an ABR Advance, (ii) as to any Swing Line Loan, the date on which the
outstanding principal balance of such Swing Line Loan shall become due and
payable in accordance with Section 2.3, (iii) as to any Eurodollar Advance in
respect of which the Borrower has selected an Interest Period of one, two or
three months, the last day of such Interest Period, and (iv) as to any
Eurodollar Advance in respect of which the Borrower has selected an Interest
Period of six months, the day that is three months after the first day of such
Interest Period and the last day of such Interest Period.

          "Interest Period": (a) with respect to any Eurodollar Advance
           ---------------
requested by the Borrower, the period commencing on, as the case may be, the
Borrowing Date or Conversion/Continuation Date with respect to such Advance and
ending one, two, three or six months thereafter, as selected by the Borrower in
its irrevocable Borrowing Request or its irrevocable Notice of
Conversion/Continuation, provided, however, that (i) if any Interest Period
would otherwise end on a day that is not a Business Day, such Interest Period
shall be extended to the next succeeding Business Day unless the result of such
extension would be to carry such Interest Period into another calendar month, in
which event such Interest Period shall end on the immediately preceding Business
Day, (ii) any Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last
Business Day of a

                                      -15-
<PAGE>

calendar month, and (iii) the Borrower shall select Interest Periods so as not
to have more than 15 different Interest Periods outstanding at any one time for
all Revolving Credit Loans; and

          (b) with respect to any Swing Line Loan requested by the Borrower, the
period commencing on the Borrowing Date with respect to such Swing Line Loan and
ending on or between one and seven days thereafter, as selected by the Borrower
in its irrevocable Borrowing Request, provided, however, that (i) if any
Interest Period would otherwise end on a day that is not a Business Day, such
Interest Period shall be extended to the next succeeding Business Day, and (ii)
the Borrower shall select Interest Periods so as not to have more than three
different Interest Periods outstanding at any one time for all Swing Line Loans.

          "Interest Rate Agreement": any interest rate swap agreement, interest
           -----------------------
rate cap agreement, interest rate collar agreement or other similar agreement or
arrangement to which the Borrower or any of its Subsidiaries is a party.

          "Investments": with respect to any Person, all investments by such
           -----------
Person in other Persons (including Affiliates of such Person) in the form of
loans, Contingent Obligations, advances or capital contributions (excluding
commission, travel and similar advances to officers and employees made in the
ordinary course of business), purchases or other acquisitions for consideration
of Indebtedness, Equity Interests or other securities and all other items that
are or would be classified as investments on a balance sheet prepared in
accordance with GAAP.  The amount of any Investment shall be the original cost
of such Investment plus the cost of all additions thereto, without any
                   ----
adjustments for increases or decreases in value, or write-ups, write-downs or
write-offs with respect to such Investment.

          "LC Rate":  a rate per annum equal to the Applicable Margin with
           -------
respect to Eurodollar Advances plus, after the occurrence and during the
continuance of a Default or Event of Default under Section 9.1(a), (b) (with
respect to interest, the Commitment Fee, the LC Fronting Fee or the Letter of
Credit Fee), (h) or (i), 2%.

          "LC Fronting Fee": as defined in Section 3.2.
           ---------------

          "Letter of Credit": as defined in Section 2.19, provided that the
           ----------------
following shall constitute a Letter of Credit for the purposes of this
Agreement: Letter of Credit S00040412 in the amount of $1,580,000 (the "Existing
                                                                        --------
Letter of Credit").
- ----------------

          "Letter of Credit Fee": as defined in Section 3.2.
           --------------------

          "Letter of Credit Exposure": at any time, (i) in respect of all
           -------------------------
Lenders having a Revolving Tranche Commitment, the sum, without duplication, of
(x) the aggregate undrawn face amount of the outstanding Letters of Credit at
such time, (y) the aggregate amount of unpaid drafts drawn on all Letters of
Credit at such time, and (z) the aggregate unpaid reimbursement obligations in
respect of the Letters of Credit at such time (after giving effect to any Loans
made at such time to pay any such reimbursement obligations), and (ii) in
respect of any Lender, an

                                      -16-
<PAGE>

amount equal to such Lender's Commitment Percentage with respect to its
Revolving Tranche Commitment at such time multiplied by the amount determined
under clause (i) of this definition at such time.

          "Letter of Credit Issuer": BNY (or any successor thereto).
           -----------------------

          "Letter of Credit Request": a request in the form of Exhibit H.
           ------------------------

          "Leverage Ratio":  at any date of determination, the ratio of:
           --------------

          (a) for purposes of determining the Applicable Margin and the
Commitment Fee, (i) Total Debt to (ii) Consolidated Pre-Minority EBITDA for (a)
the two fiscal quarter period ending June 30, 2000 multiplied by two, if the
date of determination is at any time during the period from the Effective Date
through September 29, 2000, (b) the three fiscal quarter period ended September
30, 2000 multiplied by four-thirds, if the date of determination is at any time
during the period from September 30, 2000 through December 30, 2000, and (c) the
immediately preceding four fiscal quarters (or, in the event that the date of
determination is a fiscal quarter ending date, the four fiscal quarter period
then ended), if the date of determination is at any time on or after December
31, 2000; and

          (b) for all other purposes, (i) Total Debt to (ii) the sum of (A)
Consolidated Pre-Minority EBITDA for (a) the two fiscal quarter period ending
June 30, 2000 multiplied by two, if the date of determination is at any time
during the period from the Effective Date through September 29, 2000, (b) the
three fiscal quarter period ended September 30, 2000 multiplied by four-thirds,
if the date of determination is at any time during the period from September 30,
2000 through December 30, 2000, and (c) the immediately preceding four fiscal
quarters (or, in the event that the date of determination is a fiscal quarter
ending date, the four fiscal quarter period then ended), if the date of
determination is at any time during the period from and after December 31, 2000,

less any Consolidated EBITDA during such period (multiplied by the same
- ----
multiplication factors, if applicable, and adjusted appropriately if such
Permitted Acquisition occurred at any time after the first day of such period)
attributable to any Permitted Acquisition which occurred during such period,

plus (B) EBITDA attributable to any Permitted Acquisition which occurred during
- ----
such period, calculated in the manner set forth in the next sentence. For
purposes of calculating the Leverage Ratio under this clause (b), (i)
Consolidated EBITDA and Consolidated Pre-Minority EBITDA shall be adjusted to
reflect any Asset Sale which occurred during such period as if it occurred on
the first day of such period and (ii) EBITDA attributable to any Permitted
Acquisition which occurred during such period as referred to in clause (ii)(B)
above shall be calculated as the EBITDA attributable to such Permitted
Acquisition for the immediately preceding four fiscal quarters (or in the event
that the date of determination is a fiscal quarter ending date, the four fiscal
quarter period then ended), which for the pre-acquisition period from the first
date of such four fiscal quarter period to the date such Permitted Acquisition
occurred shall equal the EBITDA attributable to the assets or Stock constituting
such Permitted Acquisition for such pre-acquisition period, as demonstrated to
the reasonable

                                      -17-
<PAGE>

satisfaction of the Administrative Agent and as adjusted in a manner reasonably
satisfactory to the Administrative Agent to eliminate non-continuing expenses
included in such EBITDA.

          "Lien": any mortgage, pledge, hypothecation, assignment, deposit or
           ----
preferential arrangement, encumbrance, lien (statutory or other), or other
security agreement or security interest of any kind or nature whatsoever,
including, without limitation, any conditional sale or other title retention
agreement and any capital or financing lease having substantially the same
economic effect as any of the foregoing.

          "Loan Documents": collectively, this Agreement, the Notes, the
           --------------
Reimbursement Agreements, the Collateral Documents, the Subsidiary Guaranty, and
the Intercreditor Agreement.

          "Loan":  a Revolving Tranche Loan, a Term Tranche Loan or a Swing Line
           ----
Loan, as the case may be.

          "Loans":  the Revolving Tranche Loans, the Term Tranche Loans and/or
           -----
the Swing Line Loans, as the case may be.

          "Maintenance Capital Expenditures": all Capital Expenditures other
           --------------------------------
than Development Capital Expenditures.

          "Mandatory Borrowing":  as defined in Section 2.3(c).
           -------------------

          "Mandatory Scheduled Commitment Reductions":  the mandatory scheduled
           -----------------------------------------
reductions of the Aggregate Revolving Credit Commitments required pursuant to
Section 2.6(b).

          "Mandatory Scheduled Payment":  as defined in the Term Loan Facility.
           ---------------------------

          "Margin Stock": any "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": a material adverse change in (i) the
           -----------------------
financial condition, operations, business, prospects or Property of the Borrower
and its Subsidiaries taken as a whole, (ii) the ability of any Credit Party to
perform its obligations under the Loan Documents to which it is a party or (iii)
the ability of the Administrative Agent, the Collateral Agent or the Lenders to
enforce the Loan Documents.

          "Material Adverse Effect": a material adverse effect on (i) the
           -----------------------
financial condition, operations, business, prospects or Property of the Borrower
and its Subsidiaries taken as a whole, (ii) the ability of any Credit Party to
perform its obligations under the Loan Documents to which it is a party or (iii)
the ability of the Administrative Agent, the Collateral Agent or the Lenders to
enforce the Loan Documents.

                                      -18-
<PAGE>

          "Maturity Date": March 31, 2003, or such earlier date on which the
           -------------
Notes shall become due and payable, whether by acceleration or otherwise.

          "Minority Investment":  as defined in Section 8.5(g).
           -------------------

          "Multiemployer Plan": a Pension Plan that is a multiemployer plan as
           ------------------
defined in Section 4001(a)(3) of ERISA.

          "Negotiated Rate":  with respect to each Swing Line Loan, the rate per
           ---------------
annum agreed to in writing by the Borrower and the Swing Line Lender as the
interest rate that such Swing Line Loan shall bear.

          "Net Cash Proceeds": with respect to any Asset Sale by any Person, the
           -----------------
excess, if any, of (i) the cash received by such Person and/or its Affiliates
(including any cash payments received by way of deferred payment pursuant to, or
monetization of, a note or installment receivable or otherwise, or release of
any sum from escrow or the deposit arrangement, but only as and when received)
in connection with such Asset Sale (provided that with respect to any Asset Sale
constituting the first transaction of an Asset Swap Transaction, the cash
proceeds received by such Person and/or any of its Affiliates shall not be
deemed received until the earliest to occur of (A) the closing date of the
Permitted Acquisition constituting the second transaction of such Asset Swap
Transaction, (B) the date on which the Borrower shall have determined that such
Permitted Acquisition will not occur, (C) the 366th day following the closing of
such Asset Sale and (D) the occurrence of an Event of Default), over (ii) the
sum of (A) the amount of any Indebtedness (other than Indebtedness under this
Agreement and the Term Loan Facility) that is secured by such asset and which is
required to be repaid by such Person in connection with such Asset Sale, plus
                                                                         ----
(B) the out-of-pocket expenses (1) incurred by such Person in connection with
such Asset Sale and (2) if such Person is a Subsidiary, incurred in connection
with the transfer of such amount to the parent company or entity of such Person,

plus (C) provision for taxes, including income taxes, attributable to the Asset
- ----
Sale or attributable to required prepayments or repayments of Indebtedness with
the proceeds of such Asset Sale, plus (D) a reasonable reserve for any
                                 ----
indemnification payments (fixed or contingent) attributable to seller's
indemnities and representations and warranties to purchaser in respect of such
Asset Sale undertaken by the Borrower or any of its Subsidiaries in connection
with such Asset Sale (which reserve amount shall be reduced to the extent that
it is reasonably determined that such reserve is in excess of the amount
reasonably required), plus (E) if such Person is a Subsidiary, any dividends or
                      ----
distributions payable to holders of minority interests in such Subsidiary from
the proceeds of such Asset Sale, less (F) if such Asset Sale is part of an Asset
                                 ----
Swap Transaction, the sum of the aggregate purchase price (to the extent paid in
cash) of the Permitted Acquisition constituting a part of such Asset Swap
Transaction and the out-of-pocket expenses incurred by such Person in connection
with such Permitted Acquisition, provided that Net Cash Proceeds shall not be
less than $0.

          "New Subsidiary": as defined in Section 8.11.
           --------------

                                      -19-
<PAGE>

          "Note": a Revolving Tranche Note, a Term Tranche Note or the Swing
           ----
Line Note, as the case may be.

          "Notes": the Revolving Tranche Notes, the Term Tranche Notes and/or
           -----
the Swing Line Note, as the case may be.

          "Notice of Conversion/Continuation": a notice substantially in the
           ---------------------------------
form of Exhibit G.

          "Obligations":  all obligations of every nature of the Credit Parties
           -----------
from time to time owed to the Administrative Agent, the Collateral Agent, the
Lenders or any of them under the Loan Documents, whether for principal,
interest, fees, expenses, indemnification or otherwise.

          "PBGC": the Pension Benefit Guaranty Corporation established pursuant
           ----
to Subtitle A of Title IV of ERISA, or any Governmental Authority succeeding to
the functions thereof.

          "Pension Plan": at any date of determination, any employee pension
           ------------
benefit plan (including a Multiemployer Plan) that is covered by Title IV of
ERISA or subject to the minimum funding standards under Section 412 of the Code,
the funding requirements of which (under Section 302 of ERISA or Section 412 of
the Code) are, or at any time within the five years immediately preceding such
date, were in whole or in part, the responsibility of the Borrower, any of its
Subsidiaries or any ERISA Affiliate, provided that the term Pension Plan shall
not include the employee benefit pension plans listed on Schedule 1.1(P).

          "Permitted Acquisition": any Acquisition permitted by Section 8.5(f).
           ---------------------

          "Permitted Lien": any Lien permitted under Section 8.2.
           --------------

          "Permitted Preferred Stock": preferred Stock of the Borrower that (i)
           -------------------------
is not redeemable or otherwise subject to any mandatory prepayment, repurchase,
sinking fund or other similar obligation, in whole or in part, for any reason
prior to March 31, 2007, except in the case of a change of control of the
Borrower (such definition of change of control to be not more restrictive than
the definition of "Change of Control" herein), such redemption or mandatory
prepayment, repurchase, sinking fund or other similar obligation in the event of
change of control to be fully and absolutely subordinated to the indefeasible
prior payment in full of all principal, interest and other obligations of the
Credit Parties under the Loan Documents pursuant to subordination terms
satisfactory to the Administrative Agent and the Syndication Agent, (ii) permits
dividends to be payable in additional shares of Permitted Preferred Stock or
common Stock of the Borrower and does not require dividends to be payable in
cash or other Property, (iii) contains restrictions and covenants reasonably
satisfactory to the Administrative Agent and the Syndication Agent, and (iv) is
not convertible into or exchangeable for any security other than Permitted
Preferred Stock or common Stock of the Borrower.

                                      -20-
<PAGE>

          "Person": any individual, firm, partnership, joint venture,
           ------
corporation, association, business enterprise, joint stock company,
unincorporated association, trust, Governmental Authority or any other entity,
whether acting in an individual, fiduciary, or other capacity, and for the
purpose of the definition of "ERISA Affiliate", a trade or business.

          "Process Administrative Agent": as defined in Section 11.17.
           ----------------------------

          "Prohibited Transaction": a transaction that is prohibited under
           ----------------------
Section 4975 of the Code or Section 406 of ERISA and not exempt under Section
4975 of the Code or Section 408 of ERISA.

          "Property": all types of real, personal, tangible, intangible or mixed
           --------
property.

          "Public Debt": as defined in Section 8.1.
           -----------

          "Puerto Rico Asset Sale": the sale of certain assets of Total Renal
           ----------------------
Care Puerto Rico, Inc. pursuant to the Asset Purchase Agreement, dated January
18, 2000, by and between Fresenius Medical Care Holdings, Inc. and TRC, as
amended.

          "Qualified Issuer":  (A) any Lender hereunder, (B) any lender that is
           ----------------
a party to the Term Loan Facility and (C) any commercial bank that has capital
and surplus in excess of $100,000,000.

          "Real Property": all real property owned or leased by the Borrower or
           -------------
any of its Subsidiaries.

          "Register":  as defined in Section 11.7(b).
           --------

          "Reimbursement Agreement":  as defined in Section 2.19(b).
           -----------------------

          "Reinvested Proceeds": with respect to any Asset Sale as of any date
           -------------------
of determination, the amount of Net Cash Proceeds from such Asset Sale that is
not required to be immediately applied to the prepayment of the Revolving Credit
Loans or the Term Loans pursuant to Section 2.7(f)(i) hereof and Section
2.4(f)(i) of the Term Loan Facility and that has been used by the Borrower or
any of its Subsidiaries to acquire, during the Reinvestment Period, Property
that is to be used in the same or a related line of business of the Borrower.

          "Reinvestment Period": the period beginning on, and ending 730 days
           -------------------
after, the date that proceeds from an Asset Sale are received by the Borrower or
any of its Subsidiaries, as the case may be.

          "Relevant Date":  (i) in the case of each Lender listed on the
           -------------
signature pages hereof, the Effective Date, and (ii) in the case of each other
Lender, the effective date of the Assignment and Acceptance Agreement or other
document pursuant to which it became a Lender.

                                      -21-
<PAGE>

          "Remaining Interest Period": (i) in the event that the Borrower shall
           -------------------------
fail for any reason to borrow a Revolving Credit Loan in respect of which it
shall have requested a Eurodollar Advance or convert an Advance to, or continue
an Advance as, a Eurodollar Advance after it shall have notified the
Administrative Agent of its intent to do so, a period equal to the Interest
Period that the Borrower elected in respect of such Eurodollar Advance; or (ii)
in the event that the Borrower shall fail for any reason to borrow a Swing Line
Loan after it shall have agreed to a Negotiated Rate with respect thereto in
accordance with Section 2.3, a period equal to the Interest Period that the
Borrower elected in respect of such Swing Line Loan; or (iii) in the event that
a Eurodollar Advance or a Swing Line Loan bearing interest at a Negotiated Rate
shall terminate for any reason prior to the last day of the Interest Period
applicable thereto, a period equal to the remaining portion of such Interest
Period if such Interest Period had not been so terminated; or (iv) in the event
that the Borrower shall prepay or repay all or any part of the principal amount
of a Eurodollar Advance or a Swing Line Loan bearing interest at a Negotiated
Rate prior to the last day of the Interest Period applicable thereto, a period
equal to the period from and including the date of such prepayment or repayment
to but excluding the last day of such Interest Period.

          "Reportable Event": with respect to any Pension Plan, (i) any event
           ----------------
set forth in Sections 4043(b) (other than a Reportable Event as to which the 30
day notice requirement is waived by the PBGC under applicable regulations),
4062(c) or 4063(a) of ERISA or the regulations thereunder or (ii) an event
requiring the Borrower, any of its Subsidiaries or any ERISA Affiliate to
provide security to a Pension Plan under Section 401(a)(29) of the Code.

          "Required Lenders": Lenders having Revolving Credit Commitments equal
           ----------------
to at least 51% of the Aggregate Revolving Credit Commitments, provided that if
the Revolving Credit Commitments have expired or otherwise been terminated,
Lenders with Credit Exposure equal to at least 51% of the Aggregate Credit
Exposure.

          "Required Payment": as defined in Section 2.12(a).
           ----------------

          "Restricted Payment": as to any Person (i) any dividend or other
           ------------------
distribution, direct or indirect, on account of any shares of any class of Stock
or other equity interest in such Person now or hereafter outstanding (other than
a dividend payable solely in shares of such Stock to the holders of such
shares), (ii) any redemption, retirement, sinking fund or similar payment,
purchase or other acquisition, direct or indirect, of any shares of any class of
Stock or other equity interest in such Person now or hereafter outstanding and
(iii) any tax sharing or similar payment payable by such Person to another
Person.

          "Revolver Prepayment Fraction": on any date of calculation, a fraction
           ----------------------------
determined by dividing (a) the Aggregate Revolving Credit Commitments as of such
date by (b) the sum of (i) the Aggregate Revolving Credit Commitments as of such
date plus (ii) the aggregate outstanding principal amount of the Term Loans as
of such date.

                                      -22-
<PAGE>

          "Revolving Credit Commitment":  as to any Lender, at any time, the sum
           ---------------------------
of such Lender's Revolving Tranche Commitment and Term Tranche Commitment at
such time.

          "Revolving Credit Commitment Period":  the period from the Effective
           ----------------------------------
Date until the earlier of (i) the day preceding the Maturity Date, or (ii) such
other date upon which the Revolving Tranche Commitments shall have been
terminated in accordance with Sections 2.6 or 9.1.

          "Revolving Credit Loan": any Term Tranche Loan or Revolving Tranche
           ---------------------
Loan.

          "Revolving Credit Loans": collectively, the Term Tranche Loans and
           ----------------------
Revolving Tranche Loans.

          "Revolving Credit Note": a Revolving Tranche Note or a Term Tranche
           ---------------------
Note, as the case may be.

          "Revolving Credit Notes": the Revolving Tranche Notes and/or the Term
           ----------------------
Tranche Notes, as the case may be.

          "Revolving Tranche Commitment":  as to any Lender, such Lender's
           ----------------------------
undertaking during the Revolving Credit Commitment Period to make Revolving
Tranche Loans, subject to the terms and conditions hereof, in an aggregate
outstanding principal amount not exceeding the amount set forth next to the name
of such Lender in Exhibit A under the heading "Revolving Tranche Commitment", as
the same may be reduced pursuant to Section 2.6.

          "Revolving Tranche Exposure": with respect to any Lender as at any
           --------------------------
time, the sum at such time of (i) the outstanding principal balance of such
Lender's Revolving Tranche Loans, (ii) the Swing Line Exposure of such Lender
and (iii) the Letter of Credit Exposure of such Lender.

          "Revolving Tranche Loan" and "Revolving Tranche Loans": as defined in
           ----------------------       -----------------------
Section 2.1.

          "Revolving Tranche Note" and "Revolving Tranche Notes": as defined in
           ----------------------       -----------------------
Section 2.2.

          "RTC": Renal Treatment Centers, Inc., a Delaware corporation and a
           ---
wholly-owned Subsidiary of the Borrower.

          "RTC Convertible Subordinated Guaranty": The Guaranty, dated as of
           -------------------------------------
March 31, 1998, made by the Borrower in favor of Chase Manhattan Trust Company,
N. A., as trustee, pursuant to which the Borrower guaranteed, on a subordinated
basis, the RTC Convertible Subordinated Notes, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with Section
8.9.

                                      -23-
<PAGE>

          "RTC Convertible Subordinated Indenture":  the Indenture, dated as of
           --------------------------------------
June 12, 1996, between RTC and Chase Manhattan Trust Company, N. A., as trustee,
pursuant to which RTC issued the RTC Convertible Subordinated Notes, as amended
by that certain First Supplemental Indenture dated as of February 27, 1998 and
that certain Second Supplemental Indenture dated as of March 31, 1998, and as
the same may be further amended, supplemented or otherwise modified from time to
time in accordance with Section 8.9.

          "RTC Convertible Subordinated Notes": the 5-5/8% Convertible
           ----------------------------------
Subordinated Notes, due 2006, issued by RTC pursuant to the RTC Convertible
Subordinated Indenture, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with Section 8.9.

          "Scheduled Existing Deferred Payment Obligations":  the joint venture
           -----------------------------------------------
put obligations and deferred acquisition/earnout payment obligations of the
Borrower and its Subsidiaries, in each case payable under contracts existing on
the Effective Date as set forth on Schedule 1.1(S).

          "SEC": the Securities and Exchange Commission or any Governmental
           ---
Authority succeeding to the functions thereof.

          "Security Agreement":  the Security Agreement, substantially in the
           ------------------
form of Exhibit K as amended, supplemented or otherwise modified from time to
time.

          "Special Counsel": such counsel as the Administrative Agent may from
           ---------------
time to time consult with in connection with the Loan Documents and the
transactions contemplated hereby.

          "Stock": any and all shares, rights, interests, participations,
           -----
warrants or other equivalents (however designated) of corporate stock.

          "Subordinated Indebtedness":  any unsecured Indebtedness of the
           -------------------------
Borrower subordinated in right of payment to the payment in full of the
Obligations of the Borrower and other senior obligations of the Borrower;
provided that (i) the negative covenants in such subordinated Indebtedness are
less restrictive than the negative covenants in this Agreement as in effect at
the time such subordinated Indebtedness is incurred, (ii) the affirmative
covenants in such subordinated Indebtedness are no more restrictive that the
affirmative covenants in this Agreement as in effect at the time such
subordinated Indebtedness is incurred, (iii) the events of default in such
subordinated Indebtedness 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 Indebtedness is

                                      -24-
<PAGE>

incurred, (iv) such subordinated Indebtedness does not cross-default to other
Indebtedness (but may cross-accelerate to other Indebtedness of Borrower or any
Guarantor that has guarantied such subordinated Indebtedness), (v) the
subordination provisions in such subordinated Indebtedness are on market terms
for subordinated debt instruments prevailing at or around the time such
subordinated Indebtedness is incurred and (vi) such subordinated Indebtedness
provides for no scheduled payment or mandatory prepayments of principal before
March 31, 2007 other than (x) redemptions made at the option of the holders of
such subordinated Indebtedness upon a change in control of the Borrower in
circumstances where the Lenders under this Agreement would have rights to
prepayment under Section 2.7(c), provided that any such redemptions are made not
fewer than 30 days after such change in control and provided that such
redemptions are 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 Indebtedness 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.

          "Subsidiary": as to any Person, any corporation, association,
           ----------
partnership, joint venture or other business entity of which such Person or any
Subsidiary of such Person, directly or indirectly, either (i) in respect of a
corporation, owns or controls more than 50% of the outstanding Stock having
ordinary voting power to elect a majority of the board of directors or similar
managing body, irrespective of whether a class or classes shall or might have
voting power by reason of the happening of any contingency, or (ii) in respect
of an association, partnership, joint venture or other business entity, is
entitled to share in more than 50% of the profits and losses, however
determined.

          "Subsidiary Guaranty": the Amended and Restated Subsidiary Guaranty,
           -------------------
substantially in the form of Exhibit L as amended, supplemented or otherwise
modified from time to time.

          "Swing Line Commitment": the undertaking of the Swing Line Lender
           ---------------------
during the Swing Line Commitment Period to make Swing Line Loans, subject to the
terms and conditions hereof, in an aggregate outstanding principal amount not in
excess of $15,000,000, and the commitment of the Lenders having Revolving
Tranche Commitments to participate therein as set forth in Section 2.8, as the
same may be reduced pursuant to Section 2.6.

          "Swing Line Commitment Period": the period from the Effective Date to,
           ----------------------------
but excluding, the Swing Line Termination Date.

          "Swing Line Exposure": at any time, in respect of any Lender or having
           -------------------
a Revolving Tranche Commitment, an amount equal to the aggregate outstanding
principal amount of the Swing Line Loans at such time multiplied by such
Lender's Commitment Percentage with respect to its Revolving Tranche Commitment
at such time.

          "Swing Line Lender": BNY (or any successor thereto).
           -----------------

          "Swing Line Loan" and "Swing Line Loans": as defined in Section 2.3.
           ---------------       ----------------

          "Swing Line Note": as defined in Section 2.4.
           ---------------

                                      -25-
<PAGE>

          "Swing Line Participation Amount": as defined in Section 2.8.
           -------------------------------

          "Swing Line Termination Date": the date which is five Business Days
           ---------------------------
prior to the Maturity Date.

          "Tax": any present or future tax, levy, impost, duty, charge, fee,
           ---
deduction or withholding of any nature and whatever called, by a Governmental
Authority, imposed, levied, collected, withheld or assessed with respect to any
payment by the Borrower pursuant to this Agreement or any other Loan Document,
and all liabilities with respect thereto.

          "Tax on the Income": as to any Person, a Tax imposed by one of the
           -----------------
following jurisdictions or by any political subdivision or taxing authority
thereof: (i) the United States, (ii) the jurisdiction in which such Person is
organized, (iii) the jurisdiction in which such Person's principal office is
located, or (iv) in the case of each Lender, any jurisdiction in which such
Person is deemed to be doing business; which Tax is an income tax (or any tax
in lieu thereof or equivalent thereto) or franchise tax imposed on all or part
of the net income or net profits of such Person or with respect to the net
increase in the shareholders' or owners' equity or capital in such Person or
which Tax represents interest, fees or penalties for payment of any such income
tax or franchise tax.

          "Termination Event": with respect to any Pension Plan, (i) a
           -----------------
Reportable Event, (ii) the termination of a Pension Plan, or the filing of a
notice of intent to terminate a Pension Plan, or the treatment of a Pension Plan
amendment as a termination, in each case under Section 4041(c) of ERISA, (iii)
the institution of proceedings to terminate a Pension Plan under Section 4042 of
ERISA, or (iv) the appointment of a trustee to administer any Pension Plan under
Section 4042 of ERISA.

          "Term Loan" and "Term Loans":  as defined in the Term Loan Facility.
           ---------       ----------

          "Term Loan Facility": the Second Amended and Restated Term Loan
           ------------------
Agreement, dated as of the date hereof, by and among the Borrower, the lenders
party thereto, DLJ Capital Funding, Inc., as syndication agent, and BNY, as
administrative agent, together with all other documents executed in connection
therewith, as the same may be amended, supplemented, refinanced or otherwise
modified from time to time in accordance with Section 8.9. Upon any amendment,
supplement, refinancing or other modification of the Term Loan Facility, all
references herein to definitions or sections in the Term Loan Facility shall be
deemed to refer to the corresponding definitions or sections in the Term Loan
Facility as so amended, supplemented, refinanced or modified.

          "Term Prepayment Fraction": a fraction equal to 1.00 minus the
           ------------------------
Revolver Prepayment Fraction.

          "Term Tranche Commitment":  as to any Lender, such Lender's
           -----------------------
undertaking during the Revolving Credit Commitment Period to continue its Term
Tranche Loans, subject to

                                      -26-
<PAGE>

the terms and conditions hereof, in an aggregate outstanding principal amount
not exceeding the amount set forth next to the name of such Lender in Exhibit A
under the heading "Term Tranche Commitment", as the same may be reduced pursuant
to Section 2.6. No Lender shall have any obligation to make any new Term Tranche
Loan.

          "Term Tranche Loan" and "Term Tranche Loans": as defined in Section
           -----------------       ------------------


          "Term Tranche Note" and "Term Tranche Notes": as defined in Section
           -----------------       ------------------


          "Total Debt": the difference between (i) all Indebtedness (less
           ----------
Excluded Contingent Obligations) and (ii) cash and cash equivalents, in each
case, of the Borrower and its Subsidiaries on a Consolidated basis in accordance
with GAAP.

          "Transactions": the transactions contemplated under this Agreement,
           ------------
the other Loan Documents and the Term Loan Facility, including the borrowing of
Loans, the issuances of Letters of Credit and other transactions related to any
of the foregoing.

          "TRC": Total Renal Care, Inc., a California corporation.
           ---

          "Unfunded Pension Liabilities": with respect to any Pension Plan, at
           ----------------------------
any date of determination, the amount determined by taking the accumulated
benefit obligation, as disclosed in accordance with Statement of Accounting
Standards No. 87, "Employers' Accounting for Pensions", over the fair market
value of Pension Plan assets.

          "United States": the United States of America (including the States
           -------------
thereof, the District of Columbia, Guam and Puerto Rico).

          "Unqualified Amount": as defined in Section 2.10(c).
           ------------------

          "Unrecognized Retiree Welfare Liability": with respect to any Employee
           --------------------------------------
Benefit Plan that provides postretirement benefits other than pension benefits,
the amount of the transition obligation, as determined in accordance with
Statement of Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," as of the most recent valuation
date, that has not been recognized as an expense in an income statement of the
Borrower and its Subsidiaries, provided that (i) prior to the date such
Statement is applicable to the Borrower, such amount shall be based on an
estimate made in good faith of such transition obligation, and (ii) for purposes
of determining the aggregate amount of the Unrecognized Retiree Welfare
Liability, Plans maintained by a Subsidiary that is not otherwise an ERISA
Affiliate shall be included.

                                      -27-
<PAGE>

    1.2.   Principles of Construction
           --------------------------

      (a) All terms defined in this Agreement shall have the meanings given such
terms herein when used in the other Loan Documents or any certificate, opinion
or other document made or delivered pursuant hereto, unless otherwise expressly
provided therein.

      (b) As used in the Loan Documents and in any certificate, opinion or other
document made or delivered pursuant thereto, accounting terms not defined in
Section 1.1, and accounting terms partly defined in Section 1.1, to the extent
not defined, shall have the respective meanings given to them under GAAP.

      (c) The words "hereof", "herein", "hereto" and "hereunder" and similar
words when used in a Loan Document shall refer to such Loan Document as a whole
and not to any particular provision thereof, and Section, schedule and exhibit
references contained therein shall refer to Sections thereof or schedules or
exhibits thereto unless otherwise expressly provided therein.

      (d) The phrase "may not" is prohibitive and not permissive.

      (e) Unless the context otherwise requires, words in the singular number
include the plural, and words in the plural include the singular.

      (f) Unless specifically provided in a Loan Document to the contrary,
references to a time shall refer to New York City time.

      (g)  Unless specifically provided in a Loan Document to the contrary, in
the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and "until"
each mean "to but excluding".

2.  AMOUNT AND TERMS OF REVOLVING CREDIT LOANS AND LETTERS OF CREDIT
    ----------------------------------------------------------------

    2.1.  Revolving Credit Commitments and Revolving Credit Loans
          -------------------------------------------------------

          (a) The Aggregate Revolving Credit Commitments (under and as defined
in the Existing Revolving Credit Agreement) were $605,313,507 and the Aggregate
Credit Exposure (under and as defined in the Existing Revolving Credit
Agreement) was $472,806,407, in each case immediately prior to the effectiveness
of this Agreement (including, without limitation, immediately prior to the
reductions of such Aggregate Revolving Credit Commitments and the prepayment of
the Revolving Credit Loans referred to in Section 5.11 of this Agreement).
Simultaneously with the effectiveness of this Agreement (and after giving effect
to the reductions of such Aggregate Revolving Credit Commitments and the
prepayment of the Revolving Credit Loans referred to in Section 5.11 of this
Agreement): (i) such Aggregate

                                      -28-
<PAGE>

Revolving Credit Commitments and Aggregate Credit Exposure shall be and hereby
are deemed to be divided into: (A) Aggregate Term Tranche Commitments in an
amount equal to $299,332,078 with Term Tranche Loans in an aggregate outstanding
principal amount equal to the Aggregate Term Tranche Commitments and (B)
Aggregate Revolving Tranche Commitments in an amount equal to $150,000,000 with
Letter of Credit Exposure in an outstanding amount equal to $1,580,000 and
Revolving Tranche Loans in an aggregate outstanding principal amount equal to
$148,420,000, and (ii) each Lender's Revolving Credit Commitment and outstanding
Letter of Credit Exposure and Revolving Credit Loans under the Existing
Revolving Credit Agreement shall be and hereby are deemed to be divided into:
(A) a Term Tranche Commitment in the amount set forth next to its name in
Exhibit A under the heading "Term Tranche Commitment" with outstanding loans
(each a "Term Tranche Loan" and, as the context may require, collectively with
         -----------------
all other Term Tranche Loans of such Lender and with the Term Tranche Loans of
all other Lenders, the "Term Tranche Loans") in an aggregate principal amount
                        ------------------
equal to its Term Tranche Commitments, and (B) a Revolving Tranche Commitment in
the amount set forth next to its name in Exhibit A under the heading "Revolving
Tranche Commitment" with outstanding Letter of Credit Exposure and revolving
credit loans (each a "Revolving Tranche Loan" and, as the context may require,
                      ----------------------
collectively with all other Revolving Tranche Loans of such Lender and with the
Revolving Tranche Loans of all other Lenders, the "Revolving Tranche Loans") in
                                                   -----------------------
an aggregate principal amount equal to its Revolving Tranche Commitment (with
each such Lender's outstanding Letter of Credit Exposure and Revolving Tranche
Loans in an amount equal to such Lender's Commitment Percentage (with respect to
its Revolving Tranche Commitment) of the outstanding Letter of Credit Exposure
and Revolving Tranche Loans referenced in clause (i)(B) immediately above).

          (b) Subject to the terms and conditions hereof, each Lender having a
Revolving Tranche Commitment severally agrees to make additional Revolving
Tranche Loans to the Borrower in Dollars from time to time during the Revolving
Credit Commitment Period, provided, however, that immediately after giving
effect thereto (a) such Lender's Revolving Tranche Exposure shall not exceed
such Lender's Revolving Tranche Commitment and (b) the Aggregate Revolving
Tranche Exposure of all Lenders having a Revolving Tranche Commitment shall not
exceed the Aggregate Revolving Tranche Commitments.  During the Revolving Credit
Commitment Period, the Borrower may, subject to the terms and conditions of this
Agreement, (i) borrow, prepay in whole or in part and reborrow Revolving Tranche
Loans under the Revolving Tranche Commitments, and (ii) prepay in whole or in
part Term Tranche Loans, but may not borrow additional or reborrow Term Tranche
Loans.

2.2.  Revolving Credit Notes
      ----------------------

      (a)  Each Lender's Revolving Tranche Loans shall be evidenced by a
promissory note of the Borrower, substantially in the form of Exhibit B-1 (each,
as indorsed or modified from time to time, including all replacements thereof
and substitutions therefor, a "Revolving Tranche Note" and, collectively with
                               ----------------------
the Revolving Tranche Notes of all other Lenders, the "Revolving Tranche
                                                       -----------------
Notes"), payable to the order of such Lender for the account of
- -----

                                      -29-
<PAGE>

its Applicable Lending Office and representing the obligation of the Borrower to
pay the aggregate unpaid principal balance of all of such Lender's Revolving
Tranche Loans, with interest thereon as prescribed in Section 2.10.

      (b)  Each Lender's Term Tranche Loans shall be evidenced by a promissory
note of the Borrower, substantially in the form of Exhibit B-2 (each, as
indorsed or modified from time to time, including all replacements thereof and
substitutions therefor, a "Term Tranche Note" and, collectively with the
                           -----------------
Term Tranche Notes of all other Lenders, the "Term Tranche Notes"), payable
                                              ------------------
to the order of such Lender for the account of its Applicable Lending Office and
representing the obligation of the Borrower to pay the aggregate unpaid
principal balance of all of such Lender's Term Tranche Loans, with interest
thereon as prescribed in Section 2.10.

      (c)  Each Revolving Credit Note shall (i) be dated the Effective Date,
(ii) be stated to mature on the Maturity Date and (iii) bear interest from the
date thereof on the unpaid principal balance thereof at the applicable interest
rate or rates per annum determined as provided in Section 2.10. Interest on each
Revolving Credit Note shall be payable as specified in Section 2.10.

      (d)  The Revolving Credit Loans shall be due and payable on the Maturity
Date.

    2.3.   Swing Line Loans
           ----------------

           (a)  Subject to the terms and conditions of this Agreement, the Swing
Line Lender agrees to make swing line loans (each a "Swing Line Loan" and,
                                                     ---------------
collectively, the "Swing Line Loans") to the Borrower in Dollars from time
                   ----------------
to time during the Swing Line Commitment Period in an aggregate principal amount
at any one time outstanding not to exceed the Swing Line Commitment, provided
that immediately after making each Swing Line Loan, (i) the Swing Line Lender's
Credit Exposure would not exceed the Swing Line Lender's Revolving Tranche
Commitment, (ii) the aggregate unpaid balance of the Swing Line Loans would not
exceed the Swing Line Commitment, and (iii) the Aggregate Revolving Tranche
Exposure of all Lenders would not exceed the Aggregate Revolving Tranche
Commitments. During the Swing Line Commitment Period, the Borrower may borrow,
prepay in whole or in part and reborrow under the Swing Line Commitment, all in
accordance with the terms and conditions of this Agreement. Each Swing Line Loan
shall mature and be due and payable on the last day of the Interest Period
therefor.

           (b)  The Swing Line Lender shall not be obligated to make any Swing
Line Loan at a time when any Lender shall be in default of its obligations under
this Agreement unless the Swing Line Lender has entered into arrangements
satisfactory to it and the Borrower to eliminate the Swing Line Lender's risk
with respect to such defaulting Lender's participation in such Swing Line Loan.
The Swing Line Lender will not make a Swing Line Loan if the Administrative
Agent, or any Lender by notice to the Swing Line Lender and the Borrower no
later than one Business Day prior to the Borrowing Date with respect to such
Swing Line Loan,

                                      -30-
<PAGE>

shall have determined that the conditions set forth in Section 6 have not been
satisfied and such conditions remain unsatisfied as of the requested time of the
making such Loan. Each Swing Line Loan shall be due and payable on the day being
the earliest of the last day of the Interest Period applicable thereto, the date
on which the Swing Line Commitment shall have been voluntarily terminated by the
Borrower in accordance with Section 2.6, and the date on which the Swing Line
Loans shall become due and payable pursuant to the provisions hereof, whether by
acceleration or otherwise.

           (c)  On any Business Day on which a Swing Line Loan shall remain
unpaid, the Swing Line Lender may, in its sole discretion, give notice to the
Lenders having a Revolving Tranche Commitment and the Borrower that such
outstanding Swing Line Loan shall be funded with a borrowing of Revolving
Tranche Loans (provided that such notice shall be deemed to have been
automatically given upon the occurrence of a Default or an Event of Default
under Sections 9.1(h) or (i)), in which case a borrowing of Revolving Tranche
Loans made as ABR Advances (each such borrowing, a "Mandatory  Borrowing"),
                                                    --------------------
shall be made by all Lenders having Revolving Tranche Commitments pro rata based
on each such Lender's Commitment Percentage with respect to its Revolving
Tranche Commitment on the Business Day immediately succeeding the giving of such
notice. The proceeds of each Mandatory Borrowing shall be remitted directly to
the Swing Line Lender to repay such outstanding Swing Line Loan. Each Lender
having a Revolving Tranche Commitment irrevocably agrees to make a Revolving
Tranche Loan pursuant to each Mandatory Borrowing in the amount and in the
manner specified in the preceding sentence and on the date specified in writing
by the Swing Line Lender notwithstanding: (i) the amount of such Mandatory
Borrowing may not comply with the minimum amount for Loans otherwise required
hereunder, (ii) whether any condition specified in Section 6 is then
unsatisfied, (iii) whether a Default or an Event of Default then exists, (iv)
the Borrowing Date of such Mandatory Borrowing, (v) the aggregate principal
amount of all Loans then outstanding, (vi) the Aggregate Revolving Tranche
Exposure at such time and (vii) the amount of the Commitments at such time.

    2.4.   Swing Line Note
           ---------------

           The Swing Line Loans made by the Swing Line Lender shall be evidenced
by a promissory note of the Borrower, substantially in the form of Exhibit B-3,
with appropriate insertions therein as to date and principal amount (as indorsed
or modified from time to time, including all replacements thereof and
substitutions therefor, the "Swing Line Note"), payable to the order of the
                             ---------------
Swing Line Lender and representing the obligation of the Borrower to pay the
lesser of (i) the amount of the Swing Line Commitment and (ii) the aggregate
unpaid principal balance of all Swing Line Loans with interest thereon as set
forth in Section 2.10. The Swing Line Note shall be stated to mature on the
Swing Line Termination Date, and bear interest for the period from and including
the date thereof on the unpaid principal balance thereof from time to time
outstanding at the applicable interest rate or rates per annum determined as
provided in Section 2.10.  Interest on the Swing Line Note shall be payable as
specified in Section 2.10.

                                      -31-
<PAGE>

    2.5.   Procedure for Borrowing
           -----------------------

           (a)  Revolving Tranche Loans. The Borrower may borrow under the
                -----------------------
Aggregate Revolving Tranche Commitments on any Business Day during the Revolving
Credit Commitment Period, provided, however, that the Borrower shall notify the
Administrative Agent (by telecopy or other written notice) no later than: 2:00
P.M. three Business Days prior to the requested Borrowing Date in the case of
Eurodollar Advances, and 2:00 P.M. one Business Day prior to the requested
Borrowing Date, in the case of ABR Advances, specifying (i) the aggregate
principal amount to be borrowed under the Aggregate Revolving Tranche
Commitments, (ii) the requested Borrowing Date, (iii) whether such borrowing is
to consist of one or more Eurodollar Advances, ABR Advances, or a combination
thereof and (iv) if the borrowing is to consist of one or more Eurodollar
Advances, the length of the Interest Period for each such Eurodollar Advance,
provided, however, that no Interest Period selected in respect of any Revolving
Tranche Loan shall end after the Maturity Date. If the Borrower fails to give
timely notice in connection with a request for a Eurodollar Advance, the
Borrower shall be deemed to have elected that such Advance shall be made as an
ABR Advance. Each such notice shall be irrevocable and confirmed immediately by
delivery to the Administrative Agent of a Borrowing Request. Each ABR Advance
shall be in an aggregate principal amount equal to $1,000,000 or such amount
plus a whole multiple of $250,000 in excess thereof (or, if less, the unused
amount of the Aggregate Revolving Tranche Commitments), each Eurodollar Advance
shall be in an aggregate principal amount equal to $5,000,000 or such amount
plus a whole multiple of $500,000 in excess thereof.

           (b)  Swing Line Loans. The Borrower may borrow under the Swing Line
                ----------------
Commitment on any Business Day during the Swing Line Commitment Period,
provided, however, that the Borrower shall notify the Administrative Agent and
the Swing Line Lender (by telephone or fax) no later than 3:00 P.M. on the
requested Borrowing Date, specifying (i) the amount to be borrowed under the
Swing Line Commitment, (ii) the length of the Interest Period for each such
Swing Line Loan, provided, however, that no Interest Period selected in respect
of any Swing Line Loan shall end after the Swing Line Termination Date, and
(iii) the requested Borrowing Date. Each such notice shall be irrevocable and
confirmed immediately by delivery to the Administrative Agent of a Borrowing
Request. Each borrowing of Swing Line Loans shall be in an aggregate principal
amount equal to $250,000 or such amount plus an integral multiple of $100,000 in
excess thereof or, if less, the unused amount of the Swing Line Commitment. The
Swing Line Lender will then, subject to its determination that the terms and
conditions of this Agreement have been satisfied, make the requested amount
available promptly on that same day, to the Administrative Agent who, thereupon,
will promptly make such amount available to the Borrower at the office of the
Administrative Agent specified in Section 11.2 by crediting the account of the
Borrower on the books of such office of the Administrative Agent.

           (c)  Upon receipt of each notice of borrowing of Revolving Tranche
Loans from the Borrower, the Administrative Agent shall promptly notify each
Lender having a Revolving Tranche Commitment thereof. Subject to its receipt of
the notice referred to in the

                                      -32-
<PAGE>

preceding sentence, each such Lender will make the amount of its Commitment
Percentage of each Revolving Tranche Loan available to the Administrative Agent
for the account of the Borrower at the Agent Payment Office not later than 12:00
Noon on the relevant Borrowing Date requested by the Borrower in Dollars and in
funds immediately available to the Administrative Agent at such Agent Payment
Office. The amounts so made available to the Administrative Agent on such
Borrowing Date will then, subject to the satisfaction of the terms and
conditions of this Agreement, as determined by the Administrative Agent, be made
available on such date to the Borrower by the Administrative Agent at the
applicable Agent Payment Office in Dollars.

           (d)  Unless the Administrative Agent shall have received prior notice
from a Lender having a Revolving Tranche Commitment (by telephone or otherwise,
such notice to be promptly confirmed by fax or other writing) that such Lender
will not make available to the Administrative Agent such Lender's Commitment
Percentage of the Revolving Tranche Loans requested by the Borrower, the
Administrative Agent may assume that such Lender has made such share available
to the Administrative Agent on the Borrowing Date in accordance with this
Section, provided that such Lender received notice of the proposed borrowing
from the Administrative Agent, and the Administrative Agent may, in reliance
upon such assumption, make available to the Borrower on the Borrowing Date a
corresponding amount. If and to the extent such Lender shall not have so made
its Commitment Percentage of such Revolving Tranche Loans available to the
Administrative Agent, such Lender and the Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount (to the
extent not previously paid by the other), together with interest thereon for
each day from the date such amount is made available to the Borrower to the date
such amount is paid to the Administrative Agent, at a rate per annum equal to,
(i) in the case of the Borrower, the applicable interest rate set forth in
Section 2.10, and, (ii) in the case of such Lender, the Federal Funds Rate in
effect on each such day (as determined by the Administrative Agent) plus any
processing fee per the interbank compensation rules as then in effect. Such
payment by the Borrower, however, shall be without prejudice to its rights
against such Lender. If such Lender shall pay to the Administrative Agent such
corresponding amount, such amount so paid shall constitute such Lender's
Revolving Tranche Loan as part of the Revolving Tranche Loans for purposes of
this Agreement, which Revolving Tranche Loan shall be deemed to have been made
by such Lender on the Borrowing Date applicable to such Revolving Tranche Loans.

           (e)  If a Lender makes a Revolving Tranche Loan on a Borrowing Date
on which the Borrower is to repay a Revolving Tranche Loan from such Lender,
such Lender shall apply the proceeds of such Revolving Tranche Loan to make such
repayment, and only the excess of the proceeds of such Revolving Tranche Loan
over the Revolving Tranche Loan being repaid need be made available to the
Administrative Agent.

           (f) Notices of borrowing given by telecopy shall be deemed given when
received by telecopy and shall be promptly confirmed in writing within five
Business Days. The Administrative Agent and the Lenders may rely on a telecopied
notice of borrowing whether or not such notice is confirmed by the delivery of a
Borrowing Request.

                                      -33-
<PAGE>

    2.6.   Termination or Reduction of Aggregate Revolving Credit Commitments
           ------------------------------------------------------------------
    and Swing Line Commitment.
    --------------------------

           (a)  Voluntary Reductions.
                ---------------------

                (i)  The Borrower shall have the right, upon at least three
Business Days' prior written notice to the Administrative Agent, at any time, to
terminate the Aggregate Revolving Tranche Commitments or the Aggregate Term
Tranche Commitments or from time to time to reduce permanently the Aggregate
Revolving Tranche Commitments to an amount not less than the Aggregate Revolving
Tranche Exposure or the Aggregate Term Tranche Commitments, provided, however,
that any such reduction shall be in the amount of $10,000,000 or such amount
plus a whole multiple of $1,000,000 in excess thereof.

               (ii) The Borrower shall have the right, upon at least one
Business Day's prior written notice to the Administrative Agent and the Swing
Line Lender, at any time, to reduce permanently the Swing Line Commitment in
whole at any time, or in part from time to time, to an amount not less than the
aggregate principal balance of the Swing Line Loans then outstanding (after
giving effect to any contemporaneous prepayment thereof), provided, however,
that each partial reduction of the Swing Line Commitment shall be in an amount
equal to $1,000,000 or such amount plus a whole multiple of $1,000,000 in excess
thereof.
           (b)  Mandatory Scheduled Reductions.
                ------------------------------

                (i)  The Aggregate Revolving Credit Commitments shall be
reduced on (or, subject to Section 2.6(b)(ii) below, at the Borrower's option,
upon three Business Days' written notice to the Administrative Agent (which
notice shall be irrevocable), at any time prior to) each of the following dates
by the amount set forth next to such date:

                                      -34-
<PAGE>

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
                                                       Mandatory Scheduled
                                                           Commitment
      Dates                                                Reductions
      -----                                            -------------------
<S>                                                      <C>
- ------------------------------------------------------------------------------
September 30, 2000                                         $  9,565,000
- ------------------------------------------------------------------------------
December 31, 2000                                          $ 11,079,000
- ------------------------------------------------------------------------------
March 31, 2001                                             $ 11,312,000
- ------------------------------------------------------------------------------
June 30, 2001                                              $ 11,312,000
- ------------------------------------------------------------------------------
September 30, 2001                                         $ 11,312,000
- ------------------------------------------------------------------------------
December 31, 2001                                          $ 11,312,000
- ------------------------------------------------------------------------------
March 31, 2002                                             $ 12,370,000
- ------------------------------------------------------------------------------
June 30, 2002                                              $ 12,370,000
- ------------------------------------------------------------------------------
September 30, 2002                                         $ 12,370,000
- ------------------------------------------------------------------------------
December 31, 2002                                          $ 12,370,000
- ------------------------------------------------------------------------------
March 31, 2003                                             $333,960,078
- ------------------------------------------------------------------------------
</TABLE>
; provided that the Loans, all obligations in respect of Letters of Credit and
all other amounts owed hereunder with respect to the Loans and the Letters of
Credit shall be paid in full no later than the Maturity Date, and the final
installment payable by the Borrower in respect of the Loans on such date shall
be in an amount, if such amount is different from that specified above,
sufficient to repay all amounts owing by the Borrower under this Agreement with
respect to the Loans and the Letters of Credit.

    (ii)  The Borrower may not (x) make a reduction of the Aggregate Revolving
Credit Commitments (and corresponding payment of the Revolving Credit Loans)
pursuant to Section 2.6(b)(i) above prior to the scheduled due date thereof
unless, concurrently with such reduction, the Borrower makes a payment of the
Term Loans pursuant to Section 2.4(b) of the Term Loan Facility or (y) make a
payment of the Term Loans pursuant to Section 2.4(b) of the Term Loan Facility
prior to the scheduled due date thereof unless, concurrently with such payment,
the Borrower makes a reduction of the Aggregate Revolving Credit Commitments
(and corresponding payment of the Revolving Credit Loans) pursuant to this
Section 2.6(b).  In such event, (A) the Borrower shall specify the Mandatory
Scheduled Commitment Reduction and Mandatory Scheduled Payment against which
such reduction and payment shall be applied, which Mandatory Scheduled
Commitment Reduction and Mandatory Scheduled Payment shall have been originally
scheduled to have been reduced and paid on the same date, (B) such payment of
the Term Loans (when added to the concurrent reduction of the Aggregate
Revolving Credit Commitments (and corresponding payment of the Revolving Credit
Loans)) shall be in an aggregate amount of $1,000,000 or such amount plus a
whole multiple of $250,000 in excess thereof (or, if less, the aggregate amount
of the Mandatory Scheduled Commitment Reduction and Mandatory Scheduled Payment
against which such reduction and payment shall be applied), (C) such payment of
the Term Loans shall be in an amount equal to the aggregate amount of such

                                      -35-
<PAGE>

proposed payment of the Term Loans and reduction of the Aggregate Revolving
Credit Commitments (and corresponding payment of the Revolving Credit Loans)
multiplied by a fraction, (x) the numerator of which is the amount of the
originally scheduled Mandatory Scheduled Payment (as in effect on the Effective
Date) against which such payment is to be applied and (y) the denominator of
which is the sum of the amount of the originally scheduled Mandatory Scheduled
Payment (as in effect on the Effective Date) against which such payment is to be
applied and the amount of the originally scheduled Mandatory Scheduled
Commitment Reduction (as in effect on the Effective Date) against which such
reduction is to be applied, and (D) such reduction of the Aggregate Revolving
Credit Commitments (and corresponding payment of the Revolving Credit Loans)
shall be in an amount equal to the aggregate amount of such proposed payment of
the Term Loans and reduction of the Aggregate Revolving Credit Commitments (and
corresponding payment of the Revolving Credit Loans) multiplied by a fraction,
(x) the numerator of which is the amount of the originally scheduled Mandatory
Scheduled Commitment Reduction (as in effect on the Effective Date) against
which such payment is to be applied and (y) the denominator of which is the sum
of the amount of the originally scheduled Mandatory Scheduled Payment (as in
effect on the Effective Date) against which such payment is to be applied and
the amount of the originally scheduled Mandatory Scheduled Commitment Reduction
(as in effect on the Effective Date) against which such reduction is to be
applied.

           (c)  Mandatory Reductions Relating to a Change of Control. Upon the
                ----------------------------------------------------
occurrence of a Change of Control, the Aggregate Revolving Credit Commitments
and the Swing Line Commitment shall be reduced to $0.

           (d)  Mandatory Reductions Relating to Issuances of Public Debt,
                ----------------------------------------------------------
Subordinated Indebtedness, Sales of Property and Preferred Stock.  On each date
- -----------------------------------------------------------------
that a prepayment is made or required to be made pursuant to Section 2.7(d),
(e), (f) or (h), the Aggregate Revolving Credit Commitments shall be
automatically and permanently reduced in an amount equal to the amount of the
required prepayment (assuming, solely for purposes of this Section 2.6(d), that
the then outstanding amount of Revolving Credit Loans equals or exceeds the
amount of such prepayment).

           (e) Mandatory Reductions Relating to Prepayments of Term Tranche
               ------------------------------------------------------------
Loans. On each date that a prepayment of the Term Tranche Loans is made, and
- ------
without duplication of any reduction of the Aggregate Term Tranche Commitments
pursuant to any other provision of this Agreement, the Aggregate Term Tranche
Commitments shall be automatically and permanently reduced in an equal amount.
In no event shall the Aggregate Term Tranche Commitments exceed the aggregate
outstanding principal amount of the Term Tranche Loans.

           (f)  In General.
                -----------

                (i)  Reductions of the Aggregate Revolving Tranche Commitments
made pursuant to Section 2.6(a) shall be applied to the Revolving Tranche
Commitments pro

                                      -36-
<PAGE>

rata, and (ii) Reductions of the Aggregate Term Tranche Commitments made
pursuant to Section 2.6(a) and (e) shall be applied to the Term Tranche
Commitments pro rata.

               (ii)  Reductions of the Aggregate Revolving Credit Commitments
made pursuant to Section 2.6(b), (c) or (d) shall be applied (i) first to reduce
the Term Tranche Commitments of the Lenders having Term Tranche Commitments pro
rata, and (ii) second, after the Term Tranche Commitments have been reduced to
zero, to reduce the Revolving Tranche Commitments of the Lenders having
Revolving Tranche Commitments pro rata.

              (iii)  Reductions of the Aggregate Revolving Credit Commitments,
the Aggregate Revolving Tranche Commitments or the Aggregate Term Tranche
Commitments made pursuant to: (A) Section 2.6(a) shall be applied to the
remaining Mandatory Scheduled Commitment Reductions in inverse order of
maturity, (B) Section 2.6(b) shall be applied to the applicable Mandatory
Scheduled Commitment Reduction(s) being reduced, (C) Section 2.6(d) (with
respect to prepayments pursuant to Section 2.7(d) or 2.7(e)) shall be applied to
the remaining Mandatory Scheduled Commitment Reductions in inverse order of
maturity, (D) Section 2.6(d) (with respect to prepayments pursuant to Section
2.7(f)) shall be applied to the remaining Mandatory Scheduled Commitment
Reductions in accordance with the Asset Sales Application Method, (E) Section
2.6(d) (with respect to prepayments pursuant to Section 2.7(h)) shall be applied
on a pro rata weighted basis among the remaining Mandatory Scheduled Commitment
Reductions, and (F) Section 2.6(e) shall be applied to the Mandatory Scheduled
Commitment Reductions in inverse order.

               (iv)  Simultaneously with each reduction of the Aggregate
Revolving Tranche Commitments under this Section, the Borrower shall pay the
Commitment Fee accrued on the amount by which the Aggregate Revolving Tranche
Commitments have been reduced and prepay the Revolving Credit Loans and the
Swing Line Loans as required by Section 2.7(b).

    2.7.   Prepayments of the Revolving Credit Loans
           -----------------------------------------

           (a)  Voluntary Prepayments.
                ----------------------

                (i)  The Borrower may, at its option, prepay the Revolving
Tranche Loans or, subject to Section 2.7(a)(ii) below, the Term Tranche Loans,
without premium or penalty, in full at any time or in part from time to time, by
notifying the Administrative Agent in writing at least one Business Day prior to
the proposed prepayment date, in the case of Loans consisting of ABR Advances,
and at least three Business Days prior to the proposed prepayment date, in the
case of Loans consisting of Eurodollar Advances, specifying the Revolving
Tranche Loans or Term Tranche Loans to be prepaid, whether such Loans consist of
ABR Advances, Eurodollar Advances, or a combination thereof, the amount to be
prepaid and the date of prepayment. Such notice shall be irrevocable and the
amount specified in such notice shall be due and payable on the date specified,
together with accrued interest to the date of such payment on the amount
prepaid. Upon receipt of such notice, the Administrative Agent shall promptly
notify each Lender thereof. Each partial prepayment made pursuant to this
subsection of

                                      -37-
<PAGE>

Revolving Tranche Loans shall be in an aggregate principal amount of $1,000,000
or such amount plus a whole multiple of $250,000 in excess thereof (or, if less,
the outstanding principal balance of the Revolving Tranche Loans being prepaid).
Each partial prepayment made pursuant to this subsection of Term Tranche Loans
(when added to the prepayment of the Term Loans required by Section 2.7(a)(ii)
below) shall be in an aggregate principal amount of $1,000,000 or such amount
plus a whole multiple of $250,000 in excess thereof (or, if less, the
outstanding principal balance of the Term Tranche Loans and Term Loans being
prepaid). After giving effect to any partial prepayment with respect to
Eurodollar Advances that were made (whether as the result of a borrowing or a
conversion) on the same date and that had the same Interest Period, the
outstanding principal amount of such Eurodollar Advances shall equal (subject to
Section 2.9) $5,000,000 or such amount plus a whole multiple of $500,000 in
excess thereof.

               (ii)  The Borrower may not (x) make a voluntary prepayment of
the Term Tranche Loans pursuant to Section 2.7(a)(i) unless, concurrently with
such prepayment, the Borrower makes a voluntary prepayment of the Term Loans
pursuant to Section 2.4(a) of the Term Loan Facility or (y) make a voluntary
prepayment of the Term Loans pursuant to Section 2.4(a) of the Term Loan
Facility unless, concurrently with such prepayment, the Borrower makes a
voluntary prepayment of the Term Tranche Loans pursuant to this Section 2.7(a).
Such prepayments shall be in an amount equal to (A) in the case of the Term
Tranche Loans, the aggregate amount of such voluntary prepayment of the Term
Tranche Loans and Term Loans multiplied by the Revolver Prepayment Fraction and
(B) in the case of the Term Loans, the aggregate amount of such voluntary
prepayment of the Term Tranche Loans and Term Loans multiplied by the Term
Prepayment Fraction.

           (b)  Mandatory Prepayments Relating to Reductions of the Aggregate
                -------------------------------------------------------------
Revolving Credit Commitments and the Swing Line Commitment. Simultaneously with
- -----------------------------------------------------------
each reduction of the Aggregate Revolving Credit Commitments, the Aggregate
Revolving Tranche Commitments, the Aggregate Term Tranche Commitments or the
Swing Line Commitment under Section 2.6, the Borrower shall prepay the Revolving
Tranche Loans, the Term Tranche Loans or the Swing Line Loans, as the case may
be, by the amount, if any, by which (i) in the case of a reduction of the
Aggregate Revolving Tranche Commitments, the Aggregate Revolving Tranche
Exposure exceeds the amount of the Aggregate Revolving Tranche Commitments after
giving effect to such reduction, (ii) in the case of a reduction of the
Aggregate Term Tranche Commitments, the aggregate outstanding principal amount
of the Term Tranche Loans exceeds the amount of the Aggregate Term Tranche
Commitments after giving effect to such reduction, and (iii) in the case of a
reduction of the Swing Line Commitment, the outstanding principal balance of the
Swing Line Loans exceeds the amount of the Swing Line Commitment after giving
effect to such reduction. If, after giving effect to the prepayment of all
outstanding Revolving Tranche Loans and Swing Line Loans, the Letter of Credit
Exposure exceeds the Aggregate Revolving Tranche Commitments (after giving
effect to such reduction), the Borrower shall deposit an amount equal to such
excess in a cash collateral account (the "Cash Collateral Account") with and
                                          -----------------------
under the exclusive control of the Administrative Agent.

                                      -38-
<PAGE>

          (c)  Mandatory Prepayments Relating to a Change of Control.  Upon the
               -----------------------------------------------------
occurrence of a Change of Control, the Borrower shall (i) prepay in full the
outstanding principal balance of the Revolving Credit Loans and the Swing Line
Loans, together with accrued and unpaid interest thereon, (ii) pay in full all
fees and other amounts payable under the Loan Documents and (iii) deposit an
amount equal to the Letter of Credit Exposure in the Cash Collateral Account.

          (d)  Mandatory Prepayments Relating to Issuances of Public Debt.  Upon
               ----------------------------------------------------------
the date of any issuance of Public Debt by the Borrower, the Borrower shall
prepay the Revolving Credit Loans in an amount equal to the Revolver Prepayment
Fraction multiplied by the aggregate proceeds of such issuance of Public Debt
(net of sales and other commissions and legal and other related expenses
incurred in connection with such issuance).

          (e)  Mandatory Prepayments Relating to Issuances of Subordinated
               -----------------------------------------------------------
Indebtedness.  Upon the date of any issuance of Subordinated Indebtedness by the
- ------------
Borrower, the Borrower shall prepay the Revolving Credit Loans in an amount
equal to the Revolver Prepayment Fraction multiplied by the sum of the first
$100,000,000 plus 50% (100% if immediately before or after giving effect thereto
a Default or Event of Default shall exist) of the excess over $100,000,000 of
the aggregate proceeds (net of sales and other commissions and legal and other
related expenses incurred in connection with such issuance) received by the
Borrower in connection with such issuance of Subordinated Indebtedness.

          (f)  Mandatory Prepayments Relating to Sales of Property.  With
               ---------------------------------------------------
respect to each Asset Sale (excluding the Puerto Rico Asset Sale), (i) the
Borrower shall prepay the Revolving Credit Loans within one Business Day of each
date that it shall receive Net Cash Proceeds resulting from such Asset Sale in
an amount equal to the applicable Asset Sale Prepayment Percentage of the
Revolver Prepayment Fraction multiplied by such Net Cash Proceeds, and (ii) in
no event later than the earlier to occur of the first Business Day after the end
of the Reinvestment Period with respect to such Asset Sale or the occurrence of
an Event of Default, the Borrower shall prepay the Revolving Credit Loans in an
amount equal to the Revolver Prepayment Fraction multiplied by the Adjusted Net
Cash Proceeds applicable to such Asset Sale.

          (g)  Mandatory Prepayments Relating to Aggregate Credit Exposure.  If
               -----------------------------------------------------------
at any time the Aggregate Revolving Tranche Exposure shall exceed the Aggregate
Revolving Tranche Commitments, the Borrower shall prepay the Revolving Tranche
Loans in an aggregate principal amount such that immediately after giving effect
thereto the Aggregate Revolving Tranche Exposure shall not exceed the Aggregate
Revolving Tranche Commitments. If at any time the outstanding principal amount
of the Term Tranche Loans shall exceed the Aggregate Term Tranche Commitments,
the Borrower shall prepay the Term Tranche Loans in an aggregate principal
amount such that immediately after giving effect thereto the outstanding
principal amount of the Term Tranche Loans shall not exceed the Aggregate Term
Tranche Commitments. If, after giving effect to the prepayment of all
outstanding Revolving Tranche Loans and Swing

                                      -39-
<PAGE>

Line Loans, the Letter of Credit Exposure exceeds the Aggregate Revolving
Tranche Commitments, the Borrower shall deposit an amount equal to such excess
in the Cash Collateral Account.

          (h)  Mandatory Prepayments relating to Issuances of Preferred Stock.
               --------------------------------------------------------------
Upon the date of any issuance of Permitted Preferred Stock, the Borrower shall
prepay the Revolving Credit Loans in an amount equal to the Revolver Prepayment
Fraction multiplied by 50% (100% if immediately before or after giving effect
thereto a Default or Event of Default shall exist) of the aggregate proceeds
(net of sales and other commissions and legal and other related expenses
incurred in connection with such issuance) received by the Borrower in
connection with such issuance of Permitted Preferred Stock.

          (i)  Application of Revolving Credit Loan Prepayments. Prepayments of
               ------------------------------------------------
Revolving Credit Loans made pursuant to Section 2.7(a) shall be applied to the
prepayment of the Revolving Tranche Loans or Term Tranche Loans, as applicable.
Prepayments of Revolving Credit Loans made pursuant to Section 2.7(b) and (g)
shall be applied to the prepayment of the applicable Loans corresponding to the
Commitments as reduced. Prepayments of Revolving Credit Loans made pursuant to
Section 2.7(c), (d), (e), (f) and (h) shall be applied to the prepayment of the
Term Tranche Loans until such Loans are paid in full and thereafter to the
prepayment of the Revolving Tranche Loans.

          (j)  In General. Each prepayment of Revolving Tranche Loans or Term
               ----------
Tranche Loans shall first be applied to the ABR Advances thereunder. If any
prepayment is made in respect of any Eurodollar Advance or Swing Line Loan, in
whole or in part, prior to the last day of the applicable Interest Period, the
Borrower agrees to indemnify the Lenders in accordance with Section 2.15.

    2.8.  Participation in Swing Line Loans
          ---------------------------------

          (a) Upon each receipt by a Lender having a Revolving Tranche
Commitment of notice of an Event of Default from the Administrative Agent
pursuant to Section 10.5, such Lender shall purchase unconditionally,
irrevocably, and severally (and not jointly) from the Swing Line Lender a
participation in the outstanding Swing Line Loans (including accrued interest
thereon) in an amount equal to the product of its Commitment Percentage with
respect to its Revolving Tranche Commitment and the outstanding amount of the
Swing Line Loans (the "Swing Line Participation Amount"). Each Lender having a
                       -------------------------------
Revolving Tranche Commitment shall also be liable for an amount equal to the
product of its Commitment Percentage with respect to its Revolving Tranche
Commitment and any amounts paid by the Borrower pursuant to Section 2.8(c) that
are subsequently rescinded or avoided, or must otherwise be restored or
returned. Such liabilities shall be unconditional and without regard to the
occurrence of any Default or Event of Default or the compliance by the Borrower
with any of its obligations under the Loan Documents.

                                      -40-
<PAGE>

      (b)  In furtherance of subsection (a), upon each receipt by a Lender
having a Revolving Tranche Commitment of notice of an Event of Default from the
Administrative Agent pursuant to Section 10.5, such Lender shall promptly
make available to the Administrative Agent for the account of the Swing
Line Lender its Swing Line Participation Amount at the office of the
Administrative Agent specified in Section 11.2, in Dollars and in
immediately available funds.  The Administrative Agent shall deliver the
payments made by each Lender pursuant to the immediately preceding sentence
to the Swing Line Lender promptly upon receipt thereof in like funds as
received.  Each Lender having a Revolving Tranche Commitment shall
indemnify and hold harmless the Administrative Agent and the Swing Line
Lender from and against any and all losses, liabilities (including
liabilities for penalties), actions, suits, judgments, demands, costs and
expenses resulting from any failure on the part of such Lender to pay, or
from any delay in paying, the Administrative Agent any amount such Lender
is required to pay in accordance with this Section 2.8(b) upon receipt of
notice of Event of Default from the Administrative Agent pursuant to
Section 10.5 (except in respect of losses, liabilities or other obligations
suffered by the Administrative Agent or the Swing Line Lender, as the case
may be, resulting from the gross negligence or willful misconduct of the
Administrative Agent or the Swing Line Lender, as the case may be), and
such Lender shall be required to pay interest to the Administrative Agent
for the account of the Swing Line Lender from the date such amount was due
until paid in full, on the unpaid portion thereof, at a rate of interest
per annum equal to (i) from the date such amount was due until the third
day therefrom, the Federal Funds Rate, and (ii) thereafter, the Federal
Funds Rate plus 1%, payable upon demand by the Swing Line Lender.  The
           ----
Administrative Agent shall distribute such interest payments to the Swing
Line Lender upon receipt thereof in like funds as received.

      (c) Whenever the Administrative Agent is reimbursed by the Borrower, for
the account of the Swing Line Lender, for any payment in connection with
Swing Line Loans and such payment relates to an amount previously paid by a
Lender pursuant to this Section, the Administrative Agent will promptly pay
over such payment to such Lender.


  2.9.   Conversions and Continuations
         -----------------------------

      (a)  The Borrower may elect from time to time to convert Eurodollar
Advances to ABR Advances by giving the Administrative Agent at least one
Business Day's prior irrevocable notice of such election (confirmed by the
delivery of a Notice of Conversion/Continuation), specifying the amount to
be so converted.  In addition, the Borrower may elect from time to time to (i)
convert ABR Advances to Eurodollar Advances and (ii) continue Eurodollar
Advances by selecting a new Interest Period therefor, in each case by
giving the Administrative Agent irrevocable notice no later than 2:00 P.M.
at least three Business Days prior to such election (confirmed by the
delivery of a Notice of Conversion/Continuation), in the case of a
conversion to, or continuation of, Eurodollar Advances, specifying the
amount to be so converted or continued and the initial Interest Period
relating thereto, provided that any such conversion of ABR Advances to
Eurodollar Advances shall only be made on a Business Day and any such
continuation of Eurodollar Advances shall only be made on the last day of
the Interest

                                      -41-
<PAGE>

Period applicable to the Eurodollar Advances that are to be continued
as such new Eurodollar Advances.  The Administrative Agent shall
promptly provide the Lenders with a copy of each such Notice of
Conversion/Continuation.  Advances may be converted or continued pursuant
to this Section in whole or in part, provided that conversions of ABR
Advances to Eurodollar Advances, or continuations of Eurodollar Advances,
shall be in an aggregate principal amount of $5,000,000 or such amount plus
a whole multiple of $500,000 in excess thereof.

      (b)  Notwithstanding anything in this Section to the contrary, no ABR
Advance may be converted to a Eurodollar Advance and no Eurodollar Advance may
be continued if the Borrower or the Administrative Agent has knowledge that a
Default or Event of Default has occurred and is continuing either (i) at
the time the Borrower shall notify the Administrative Agent of its election
to convert or continue or (ii) on the requested Conversion/Continuation
Date.  In such event, (A) each ABR Advance shall be automatically continued
as an ABR Advance and (B) each Eurodollar Advance shall be automatically
converted to an ABR Advance on the last day of the Interest Period
applicable to such Eurodollar Advance.

      (c)  No Interest Period selected in respect of conversion or
continuation of any Eurodollar Advance shall end after the Maturity Date.
Notwithstanding anything herein to the contrary, the Borrower shall select
Interest Periods such that, on each date that a mandatory principal payment is
required to be made pursuant to Section 2.7(b) in connection with a Mandatory
Scheduled Commitment Reduction required to be made pursuant to Section 2.6(b),
the outstanding principal balance of all ABR Advances, when added to the
aggregate principal amount of each Eurodollar Advance, the applicable Interest
Period of which shall end on such date, shall equal or exceed the aggregate
principal amount of the Revolving Credit Loans required to be paid on such date
pursuant to Section 2.7(b).

      (d)  Each conversion or continuation shall be effected by each Lender by
applying the proceeds of its new ABR Advance or Eurodollar Advance, as the
case may be, to its Advances (or portion thereof) being converted (it being
understood that such conversion shall not constitute a borrowing for
purposes of Sections 4 or 6).

      (e)  Notwithstanding anything to the contrary contained in any Loan
Document, if the Borrower shall fail, for any reason, to convert or continue a
Eurodollar Advance under this Section 2.9 in connection with the expiration of
an Interest Period with respect to any existing Eurodollar Advance, then such
Eurodollar Advance shall be converted to an ABR Advance until such time, if any,
as the Borrower shall elect a new Eurodollar Advance pursuant to this Section
2.9.

      (f)  Notices in respect of a conversion or continuation given by telecopy
shall be deemed given when received by telecopy and shall be promptly confirmed
in writing within five Business Days. The Administrative Agent and the Lenders
may rely on a telecopied notice

                                      -42-
<PAGE>

of conversion or continuation whether such notice is confirmed by the delivery
of a Notice of Conversion/Continuation.

  2.10.   Interest Rate and Payment Dates
          -------------------------------

          (a)  Prior to Maturity. Except as otherwise provided in
               -----------------
Section 2.10(b), prior to maturity the Loans shall bear interest on the
outstanding principal balance thereof at the applicable interest rate or rates
per annum set forth below:

<TABLE>
<CAPTION>


          Advances/Loans                              Rate
          --------------                              ----
- ---------------------------------------------------------------------------
<S>                                   <C>
Each ABR Advance                       Alternate Base Rate plus the
                                       Applicable Margin.

- ---------------------------------------------------------------------------
Each Eurodollar Advance                Eurodollar Rate applicable to such
                                       Eurodollar Advance for the applicable
                                       Interest Period plus the Applicable
                                       Margin.

- ---------------------------------------------------------------------------
Each Swing Line Loan                   Either the Negotiated Rate
                                       applicable to such Swing Line Loan
                                       for the applicable Interest Period or,
                                       if the Borrower and the Swing Line
                                       Lender shall not have agreed to a
                                       Negotiated Rate with respect to such
                                       Swing Line Loan, the Alternate Base
                                       Rate plus the Applicable Margin for
                                       such Swing Line Loan for the
                                       applicable Interest Period.

- ---------------------------------------------------------------------------
</TABLE>

          (b)  Event of Default. After the occurrence and during the continuance
               ----------------
of an Event of Default under Section 9.1(a), (b) (with respect to interest, the
Commitment Fee, the LC Fronting Fee or the Letter of Credit Fee), (h) or
(i), the outstanding principal balance of the Loans shall bear interest at
a rate per annum equal to 2% plus the rate that would otherwise be
applicable under Section 2.10(a) until, in the case of Eurodollar Advances
and Swing Line Loans, the end of the applicable Interest Period therefor,
and, thereafter, at the Alternate Base Rate plus the Applicable Margin plus
2%, payable in the case of interest on any overdue principal, on demand.
Any overdue interest or other amount payable under the Loan Documents shall
bear interest at a rate per annum equal to the Alternate Base Rate plus 2%
and shall be payable on demand.  If all or any portion of any reimbursement
obligation in respect of a Letter of Credit shall not be paid when due
(whether at the stated maturity thereof, by acceleration or

                                      -43-
<PAGE>

otherwise), such overdue amount shall bear interest at a rate per annum equal to
the Alternate Base Rate plus the Applicable Margin plus 2%, from the date of
such nonpayment until paid in full (whether before or after the entry of a
judgment thereon) and shall be payable on demand.

          (c)  In General. Interest on (i) ABR Advances and Swing Line Loans, in
               ----------
each case to the extent based on the BNY Rate, shall be calculated on the basis
of a 365 or 366-day year (as the case may be), (ii) ABR Advances and Swing Line
Loans, in each case to the extent based on the Federal Funds Rate, and
Eurodollar Advances shall be calculated on the basis of a 360-day year, in each
case for the actual number of days elapsed, including the first day but
excluding the last, and (iii) Swing Line Loans to the extent based on a
Negotiated Rate shall be calculated on the basis of a 360-day year for the
actual number of days elapsed, including the first day but excluding the last.
Except as otherwise provided in Section 2.10(b), interest shall be payable in
arrears on each Interest Payment Date and upon each payment (including
prepayment) or conversion of the Loans. Any change in the interest rate on the
Loans resulting from a change in the Alternate Base Rate or reserve requirements
or charges described in clause (b) of the definition of "Eurodollar Rate" shall
become effective as of the opening of business on the day on which such change
shall become effective. The Administrative Agent shall, as soon as practicable,
notify the Borrower and the Lenders of the effective date and the amount of each
such change in the BNY Rate, but any failure to so notify shall not in any
manner affect the obligation of the Borrower to pay interest on the Loans in the
amounts and on the dates required. Each determination of the Alternate Base Rate
or a Eurodollar Rate by the Administrative Agent pursuant to this Agreement
shall be conclusive and binding on the Borrower absent manifest error. At no
time shall the interest rate payable on the Loans, together with the Commitment
Fee, the Letter of Credit Fee, the LC Fronting Fee, and all other amounts
payable under the Loan Documents, to the extent the same are construed to
constitute interest, exceed the Highest Lawful Rate. If in respect of any period
during the term of this Agreement, any amount paid hereunder, to the extent the
same shall (but for the provisions of this Section) constitute or be deemed to
constitute interest, would exceed the maximum amount of interest permitted by
the Highest Lawful Rate during such period (such excess amount being hereinafter
referred to as an "Unqualified Amount"), then (i) such Unqualified
                   ------------------
Amount shall be applied or shall be deemed to have been applied as a
prepayment of the Loans, and (ii) if in any subsequent period during the term of
this Agreement, all amounts payable hereunder in respect of such period that
constitute or shall be deemed to constitute interest shall be less than the
maximum amount of interest permitted by the Highest Lawful Rate during such
period, then the Borrower shall pay to the Lender in respect of such period an
amount (each a "Compensatory Interest Payment") equal to the lesser of (x) a sum
                -----------------------------
that, when added to all such amounts, would equal the maximum amount of interest
permitted by the Highest Lawful Rate during such period, and (y) an amount equal
to the Unqualified Amount less all other Compensatory Interest Payments made in
respect thereof. The Borrower acknowledges that to the extent interest payable
on ABR Advances or Swing Line Loans is based on the BNY Rate, such Rate is only
one of the bases for computing interest on loans made by the Lenders, and by
basing interest payable on ABR Advances or Swing Line Loans on the BNY Rate, the
Lenders have not committed to charge, and the Borrower has not in

                                      -44-
<PAGE>

any way bargained for, interest based on a lower or the lowest rate at which the
Lenders may now or in the future make loans to other borrowers.

    2.11. Substituted Interest Rate
          -------------------------

          In the event that (i) the Administrative Agent shall have determined
(which determination shall be conclusive and binding upon the Borrower) that by
reason of circumstances affecting the interbank eurocurrency market either
adequate and reasonable means do not exist for ascertaining the Eurodollar Rate
applicable pursuant to Section 2.10 or (ii) the Required Lenders shall have
notified the Administrative Agent that they have determined (which determination
shall be conclusive and binding on the Borrower) that the applicable Eurodollar
Rate will not adequately and fairly reflect the cost to such Lenders of
maintaining or funding loans bearing interest based on such Eurodollar Rate with
respect to any portion of the Loans that the Borrower has requested be made as
Eurodollar Advances or Eurodollar Advances that will result from the requested
conversion or continuation of any portion of the Advances into or as Eurodollar
Advances (each, an "Affected Advance"), the Administrative Agent shall promptly
                    ----------------
notify the Borrower and the Lenders (by telephone or otherwise, to be promptly
confirmed in writing) of such determination and the reasons therefor, on or, to
the extent practicable, prior to the requested Borrowing Date or
Conversion/Continuation Date for such Affected Advances.  If the Administrative
Agent shall give such notice, (A) any Affected Advances shall be made as ABR
Advances, (B) the Advances (or any portion thereof) that were to have been
converted to or continued as Affected Advances shall be converted to or
continued as ABR Advances and (C) any outstanding Affected Advances shall be
converted, on the last day of the then current Interest Period with respect
thereto, to ABR Advances.  Until any notice under clauses (i) or (ii), as the
case may be, of this Section has been withdrawn by the Administrative Agent (by
notice to the Borrower and the Lenders promptly upon either (x) the
Administrative Agent having determined that such circumstances affecting the
interbank eurocurrency market no longer exist and that adequate and reasonable
means do exist for determining the Eurodollar Rate pursuant to Section 2.10 or
(y) the Administrative Agent having been notified by such Required Lenders that
circumstances no longer render the Advances (or any portion thereof) Affected
Advances), (1) no further Eurodollar Advances shall be required to be made by
the Lenders and (2) the Borrower shall not have the right to convert or continue
all or any portion of the Loans to or as Eurodollar Advances.

    2.12. Taxes
          -----

          (a)  Payments to Be Free and Clear.  Subject to Sections 2.12(d),
               -----------------------------
2.12(e) and 2.12(f), all payments by each Credit Party under the Loan Documents
shall be made free and clear of, and without any deduction or withholding for,
any Indemnified Tax. If any Credit Party or any other Person is required by any
law, rule, regulation, order, directive, treaty or guideline to make any
deduction or withholding (which deduction or withholding would constitute an
Indemnified Tax) from any amount required to be paid by any Credit Party to or
on behalf of any Indemnified Tax Person under any Loan Document (each a
"Required Payment"), then:
 ----------------

                                      -45-
<PAGE>

          (i)   such Credit Party shall notify the Administrative Agent and such
Indemnified Tax Person of any such requirement or any change in any such
requirement as soon as such Credit Party becomes aware thereof;

          (ii)  such Credit Party shall pay such Indemnified Tax prior to the
date on which penalties attach thereto, such payment to be made (to the extent
that the liability to pay is imposed on such Credit Party) for its own account
or (to the extent that the liability to pay is imposed on such Indemnified Tax
Person) on behalf and in the name of such Indemnified Tax Person;

          (iii) such Credit Party shall pay to such Indemnified Tax Person an
additional amount such that such Indemnified Tax Person shall receive on the due
date therefor an amount equal to the Required Payment had no such deduction or
withholding been required; and

          (iv)  such Credit Party shall, within 30 days after paying such
Indemnified Tax, deliver to the Administrative Agent and such Indemnified Tax
Person satisfactory evidence of such payment to the relevant Governmental
Authority.

      (b) Other Indemnified Taxes.  If any Indemnified Tax Person or any
          -----------------------
affiliate thereof is required by any law, rule, regulation, order, directive,
treaty or guideline to pay any Indemnified Tax (excluding an Indemnified Tax
which is subject to Section 2.12(a)) with respect to any sum paid or payable by
any Credit Party to such Indemnified Tax Person under the Loan Documents, then,
within five days after such Indemnified Tax Person shall have notified such
Credit Party thereof (which notice shall be accompanied by a statement setting
forth the reasonable calculation thereof), such Credit Party shall pay to such
Indemnified Tax Person the amount of such Indemnified Tax.

      (c) Tax on Indemnified Taxes.  If any amounts are payable by any Credit
          ------------------------
Party in respect of Indemnified Taxes pursuant to Section 2.12(a) or (b), such
Credit Party agrees to pay to the applicable Indemnified Tax Person, within
five days of written request therefor (which request shall set forth the
reasonable calculations thereof), an amount equal to all Taxes imposed with
respect to such amounts as such Indemnified Tax Person shall determine in
good faith are payable by such Indemnified Tax Person or any affiliate
thereof in respect of such amounts and in respect of any amounts paid to or
on behalf of such Indemnified Tax Person pursuant to this Section 2.12(c).

      (d) Exception for Existing Taxes.  No amount shall be required to be paid
          ----------------------------
to any Indemnified Tax Person under Section 2.12(a) or (b) with respect to any
Indemnified Tax to the extent that such Indemnified Tax would have been
required to have been paid under any law, rule, regulation, order,
directive, treaty or guideline in effect on the Relevant Date.

      (e) U.S. Tax Certificates.  Each Lender that is organized under the laws
          ---------------------
of any jurisdiction other than the United States or any political subdivision
thereof shall deliver to the

                                      -46-
<PAGE>

Administrative Agent for transmission to the Borrower, on or prior to the
Relevant Date, and at such other times as may be necessary in the determination
of the Borrower, any other Credit Party or the Administrative Agent (each in the
reasonable exercise of its discretion), such certificates, documents or other
evidence, properly completed and duly executed by such Lender (including
Internal Revenue Service Form 1001 or Form 4224 (or, in each case, any
equivalent or successor form)) to establish that such Lender is not subject to
deduction or withholding of United States federal income tax under Section 1441
or 1442 of the Code or otherwise (or under any comparable provisions of any
successor statute) with respect to any payments to such Lender of principal,
interest, fees or other amounts payable under the Loan Documents or in the case
of a Lender that is claiming an 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" two accurate and complete signed original Forms
W-8 (or any successor form prescribed by the Internal Revenue Service,
certifying that such Lender is exempt from United States withholding tax on
payments under this Agreement or the Notes) and, if such Lender delivers such
Forms W-8 (or successor form), two signed certificates that such Lender is not
(1) a "bank" for purposes of Section 881(c) of the Internal Revenue Code, (2) is
not a 10% shareholder (within the meaning of Section 871(h)(3)(B) of the
Internal Revenue Code) of the Borrower and (3) is not a controlled foreign
corporation related to the Borrower (within the meaning of Section 864(d)(4) of
the Internal Revenue Code). No Credit Party shall be required to pay any
additional amount to any such Lender under Section 2.12(a)(iii) if such Lender
shall have failed to satisfy the requirements of the immediately preceding
sentence; provided that, if such Lender shall have satisfied such requirements
on the Relevant Date, nothing in this Section 2.12(e) shall relieve any Credit
Party of its obligation to pay any additional amounts pursuant to Section
2.12(a)(iii) in the event that, as a result of any change in applicable law
(including any change in the interpretation thereof), such Lender is no longer
properly entitled to deliver certificates, forms, documents or other evidence at
a subsequent date establishing the fact that such Lender is not subject to
deduction or withholding as described in the immediately preceding sentence.

      (f) Other Tax Certificates.  Each Indemnified Tax Person agrees to use
          ----------------------
reasonable efforts to deliver to any Credit Party or the Administrative
Agent, promptly upon any reasonable request therefor from time to time by
such Credit Party or the Administrative Agent, such certificates, forms,
documents and information as may be required by applicable law, regulation,
order, directive, guideline or treaty from time to time and to file all
appropriate forms to obtain a certificate, form or other appropriate
documents from the appropriate Governmental Authorities to establish that
payments made in respect of any Alternate Currency Advance by such Credit
Party can be made without (or at a reduced rate of) deduction or
withholding of Indemnified Taxes, provided, however, that if such
                                  --------  -------
Indemnified Tax Person is or becomes unable by virtue of any change in
applicable law, regulation or treaty, to establish such exemption or
reduction, such Credit Party shall nonetheless remain obligated under
Section 2.12(a) to pay the amounts described therein, and provided further
                                                          -------- -------
that no Indemnified Tax Person shall be required to take any action under
this Section 2.12(f) which, in the sole discretion of such Indemnified Tax
Person, would cause such Indemnified Tax Person or any affiliate thereof to
suffer a material economic, legal or regulatory disadvantage.

                                      -47-
<PAGE>

          (g)  Other Taxes.  Each Credit Party agrees to pay any current or
               -----------
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies that arise from any payment made hereunder or from the
execution, delivery or registration of, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, the Loan
Documents or otherwise with respect to, the Loan Documents.

          (h)  Refunds.  Upon the reasonable request of a Credit Party, and at
               -------
such Credit Party's expense, each Indemnified Tax Person shall cooperate with
such Credit Party in seeking to obtain refunds of Taxes paid by such Credit
Party, provided that each such Indemnified Tax Person shall have no obligation
to (i) engage in any litigation, hearing or proceeding with respect thereto or
(ii) disclose any tax return or other confidential information other than
information reasonably requested by the applicable taxing authority which, in
the opinion of such Indemnified Tax Person, is not detrimental to such
Indemnified Tax Person. If an Indemnified Tax Person shall receive a refund (or
a refund in the form of a credit) from a taxing authority (as a result of any
error in the imposition of Tax by such taxing authority) of any Taxes paid by
such Credit Party pursuant to this Section 2.12, such Indemnified Tax Person, so
long as no Event of Default shall then exist, shall promptly pay to such Credit
Party the amount so received.

    2.13. Illegality
          ----------

          Notwithstanding any other provisions herein, if any law, regulation,
treaty or directive, or any change therein or in the interpretation or
application thereof, in each case enacted, adopted, promulgated, approved or
issued after the date hereof, shall make it unlawful for any Lender to make or
maintain its Eurodollar Advances as contemplated by this Agreement, (i) the
commitment of such Lender hereunder to (A) make Eurodollar Advances, (B) convert
ABR Advances to Eurodollar Advances or (C) continue Eurodollar Advances to new
Eurodollar Advances, shall forthwith be suspended and (ii) such Lender's Loans
then outstanding as Eurodollar Advances affected hereby, if any, shall be
converted automatically to ABR Advances on the last day of the then current
Interest Period applicable thereto or within such earlier period as required by
law.  If the commitment of any Lender with respect to Eurodollar Advances is
suspended pursuant to this Section and such Lender shall notify the
Administrative Agent and the Borrower that it is once again legal for such
Lender to make or maintain Eurodollar Advances, such Lender's commitment to make
or maintain Eurodollar Advances shall be reinstated.

    2.14. Increased Costs
          ---------------

          In the event that any law, regulation, treaty or directive hereafter
enacted, adopted, promulgated, approved or issued or any change in any existing
law, regulation, treaty or directive or in the interpretation or application
thereof by any Governmental Authority charged with the administration thereof or
compliance by any Lender (or any Person directly or indirectly owning

                                      -48-
<PAGE>

or controlling such Lender) with any request or directive from any central bank
or other Governmental Authority made or issued after the date hereof:

          (a)  does or shall subject any Lender to any Taxes of any kind
whatsoever with respect to any Eurodollar Advances or any Alternate Currency
Advances or its obligations under this Agreement to make Eurodollar Advances or
Alternate Currency Advances, or change the basis of taxation of payments to any
Lender of principal, interest or any other amount payable hereunder in respect
of its Eurodollar Advances or Alternate Currency Advances, including any Taxes
required to be withheld from any amounts payable under the Loan Documents
(except for imposition of, or change in the rate of, Tax on the Income of such
Lender or its Applicable Lending Office for any of such Advances by the
jurisdiction in which such Lender is incorporated or has its principal office or
such Applicable Lending Office, including, in the case of Lenders incorporated
in any State of the United States, such tax imposed by the United States); or

          (b)  does or shall impose, modify or make applicable any reserve,
special deposit, compulsory loan, assessment, increased cost or similar
requirement against assets held by, or deposits of, or advances or loans by, or
other credit extended by, or any other acquisition of funds by, any office of
such Lender in respect of its Eurodollar Advances or Alternate Currency Advances
that is not otherwise included in the determination of a Eurodollar Rate or
Alternate Currency Euro Rate, as the case may be;

and the result of any of the foregoing is to increase the cost to such Lender of
making, renewing, converting, continuing or maintaining its Eurodollar Advances
or Alternate Currency Advances or its commitment to make such Eurodollar
Advances or Alternate Currency Advances, or  to reduce any amount receivable
hereunder in respect of its Eurodollar Advances or Alternate Currency Advances,
then, in any such case, the Borrower shall pay such Lender, upon its demand, any
additional amounts necessary to compensate such Lender for such additional cost
or reduction in such amount receivable that such Lender deems to be material as
determined by such Lender; provided, however, that nothing in this Section shall
require the Borrower to indemnify the Lenders with respect to Taxes for which
the Borrower has no obligation under Section 2.12.  No failure by any Lender to
demand compensation for any increased cost during any Interest Period shall
constitute a waiver of such Lender's right to demand such compensation at any
time.  A statement setting forth the calculations of any additional amounts
payable pursuant to the foregoing sentence submitted by a Lender to the Borrower
shall be conclusive absent manifest error.

    2.15. Indemnification for Loss
          ------------------------

          Notwithstanding anything contained herein to the contrary, if (i) the
Borrower shall fail to borrow or convert or continue a Eurodollar Advance or an
Alternate Currency Advance on a Borrowing Date or Conversion/Continuation Date
after it shall have given notice to do so in which it shall have requested a
Eurodollar Advance or an Alternate Currency

                                      -49-
<PAGE>

Advance, as the case may be, or if the Borrower shall fail to borrow a Swing
Line Loan after it shall have agreed to a Negotiated Rate with respect thereto,
(ii) a Eurodollar Advance or Alternate Currency Advance or Swing Line Loan
bearing interest at a Negotiated Rate shall be terminated for any reason prior
to the last day of the Interest Period applicable thereto, or (iii) while a
Eurodollar Advance or an Alternate Currency Advance or Swing Line Loan bearing
interest at a Negotiated Rate is outstanding, any repayment or prepayment of
such Eurodollar Advance, Alternate Currency Advance or Swing Line Loan is made
for any reason (including, without limitation, as a result of acceleration or
illegality) on a date which is prior to the last day of the Interest Period
applicable thereto, the Borrower agrees to indemnify each Lender against, and to
pay on demand directly to such Lender, any loss or expense suffered by such
Lender as a result of such failure to borrow, convert or continue, termination,
repayment or prepayment, including, without limitation, an amount, if greater
than zero, equal to:

                               A x (B-C) x  D/360

where:

"A" equals, in the case of a Eurodollar Advance or an Alternate Currency
Advance, such Lender's Commitment Percentage of the Affected Principal Amount
or, in the case of a Swing Line Loan bearing interest at a Negotiated Rate, the
Affected Principal Amount;

"B" equals the Eurodollar Rate, Alternate Currency Euro Rate or Negotiated Rate,
as the case may be (expressed as a decimal), applicable to such Eurodollar
Advance, Alternate Currency Advance  or Swing Line Loan;

"C" equals the applicable Eurodollar Rate or an Alternate Currency Advance, as
the case may be (expressed as a decimal) in effect on or about the first day of
the applicable Remaining Interest Period, based on the applicable rates offered
or bid, as the case may be, on or about such date, for deposits in an amount
equal approximately to such Lender's Commitment Percentage of the Affected
Principal Amount, or the rate (expressed as a decimal), as determined by the
Swing Line Lender, which the Swing Line Lender in good faith would have offered
as a Negotiated Rate on or about the first day of the applicable Remaining
Interest Period with respect to an amount equal approximately to the Affected
Principal Amount, as the case may be, in each case, with an Interest Period
equal approximately to the applicable Remaining Interest Period, as determined
by such Lender; and

"D" equals the number of days from and including the first day of the applicable
Remaining Interest Period to but excluding the last day of such Remaining
Interest Period;

and any other out-of-pocket loss or expense (including any internal processing
charge customarily charged by such Lender) suffered by such Lender in connection
with such Eurodollar Advance, Alternate Currency Advance or Swing Line Loan
bearing interest at a Negotiated Rate to the extent based on a Negotiated Rate,
as the case may be, including, without limitation, in liquidating or employing
deposits acquired to fund or maintain the funding of its

                                      -50-
<PAGE>

Commitment Percentage of the Affected Principal Amount, or redeploying funds
prepaid or repaid, in amounts that correspond to its Commitment Percentage of
the Affected Principal Amount or, in the case of a Swing Line Loan bearing
interest at a Negotiated Rate, the amount of such Swing Line Loan. Each
determination by the Administrative Agent or a Lender pursuant to this Section
shall be conclusive and binding on the Borrower absent manifest error.

    2.16. Option to Fund
          --------------

          Each Lender has indicated that, if the Borrower requests a Eurodollar
Advance, an Alternate Currency Advance or Swing Line Loan, such Lender may wish
to purchase one or more deposits in order to fund or maintain its funding of
such Eurodollar Advance, Alternate Currency Advance or Swing Line Loan during
the Interest Period in question; it being understood that the provisions of this
Agreement relating to such funding are included only for the purpose of
determining the rate of interest to be paid on such Eurodollar Advance,
Alternate Currency Advance or Swing Line Loan and for purposes of determining
amounts owing under Sections 2.14, 2.15 and 2.18.  Each Lender shall be entitled
to fund and maintain its funding of all or any part of each Eurodollar Advance,
Alternate Currency Advance or Swing Line Loan made by it in any manner it sees
fit, but all such determinations shall be made as if such Lender had actually
funded and maintained its funding of such Eurodollar Advance, Alternate Currency
Advance or Swing Line Loan during the applicable Interest Period through the
purchase of deposits in an amount equal to such Eurodollar Advance, Alternate
Currency Advance or Swing Line Loan and having a maturity corresponding to such
Interest Period.  The obligations of the Borrower under Sections 2.11, 2.12,
2.13, 2.14, 2.15, 2.18 and 2.22 shall survive the termination of the Aggregate
Revolving Credit Commitments, the payment of the Notes, the reimbursement
obligations in respect of drawings under Letters of Credit and all other amounts
payable under the Loan Documents.

    2.17. Use of Proceeds
          ---------------

          The proceeds of the Loans have been and shall be used for Permitted
Acquisitions and the general corporate purposes of the Borrower and its
Subsidiaries.  Notwithstanding anything to the contrary contained in any Loan
Document, the Borrower agrees that no part of the proceeds of any Loan has been
or will be used, directly or indirectly, for a purpose that violates any law,
including, without limitation, the provisions of Regulations T, U or X of the
Board of Governors of the Federal Reserve System, as amended.

    2.18.   Capital Adequacy
            ----------------

          If (i) the enactment or promulgation of, or any change or phasing in
of, any United States or foreign law or regulation or in the interpretation
thereof by any Governmental Authority charged with the administration thereof
after the date hereof or (ii) compliance with any directive or guideline from
any central bank or United States or foreign Governmental Authority (whether
having the force of law) promulgated or made after the date hereof, affects or
would affect the amount of capital required to be maintained by a Lender (or any
lending office

                                      -51-
<PAGE>

of such Lender) or any Person directly or indirectly owning or controlling such
Lender, or imposes any restriction on or otherwise adversely affects such Lender
(or any lending office of such Lender) or any Person directly or indirectly
owning or controlling such Lender, and such Lender shall have determined that
such enactment, promulgation, change or compliance has the effect of reducing
the rate of return on such Lender's (or such Person's) capital or the asset
value to such Lender of any Loan made by, or any Letter of Credit issued or
participated in by, such Lender as a consequence, directly or indirectly, of its
obligations to make and maintain the funding of its Loans and Letters of Credit
at a level below that which such Lender (or such Person) could have achieved but
for such enactment, promulgation, change or compliance (after taking into
account such Lender's policies (or such Person's) regarding capital adequacy) by
an amount deemed by such Lender to be material, then, upon demand by such
Lender, the Borrower shall promptly pay to such Lender such additional amount or
amounts as shall be sufficient to compensate such Lender (or such Person) for
such reduction in such rate of return or asset value. A certificate in
reasonable detail as to such amounts submitted to the Borrower and the
Administrative Agent setting forth the determination of such amount or amounts
that will compensate such Lender for such reductions shall be presumed correct
absent manifest error.

    2.19. Letter of Credit Sub-Facility
          -----------------------------

          (a)  Subject to the terms and conditions of this Agreement, the Letter
of Credit Issuer agrees, in reliance on the agreement of the Lenders having a
Revolving Tranche Commitment set forth in Section 2.20, to issue standby letters
of credit (the "Letters of Credit"; each, individually, a "Letter of Credit")
                -----------------                          ----------------
in Dollars during the Revolving Credit Commitment Period for the account of the
Borrower, provided that immediately after the issuance of each Letter of Credit,
(i) the Letter of Credit Exposure of all Lenders having a Revolving Tranche
Commitment at any one time shall not exceed $25,000,000, and (ii) the Aggregate
Revolving Tranche Exposure shall not exceed the Aggregate Revolving Tranche
Commitments. Each Letter of Credit issued pursuant to this Section shall have a
termination date that shall be not later than the earlier of one year from the
date of issuance or 5 days prior to the Maturity Date, except that the Existing
Letter of Credit (as defined in the definition of "Letter of Credit") may have a
termination date of March 31, 2003. At the request of the Borrower, and upon 3
Business Days' prior written notice to the Administrative Agent, and provided
that no Default or Event of Default shall then exist, each Letter of Credit
termination date may be extended, from time to time, for a period not to exceed
the earlier of (i) one year or (ii) the 5th day prior to the Maturity Date. No
Letter of Credit shall be issued if the Administrative Agent, or any Lender by
notice to the Administrative Agent no later than 1:00 P.M. one Business Day
prior to the requested date of issuance of such Letter of Credit, shall have
determined that the conditions set forth in Section 6 have not been satisfied.

          (b)  Each Letter of Credit shall be issued for the account of the
Borrower in support of an obligation of the Borrower or a Subsidiary of the
Borrower in favor of a beneficiary who has requested the issuance of such Letter
of Credit as a condition to a transaction entered into in connection with the
Borrower's ordinary course of business. The Borrower shall give the

                                      -52-
<PAGE>

Administrative Agent a Letter of Credit Request for the issuance of each Letter
of Credit by 2:00 P.M., three Business Days prior to the requested date of
issuance. Such Letter of Credit Request shall be accompanied by the Letter of
Credit Issuer's standard Application and Agreement for
Standby Letter of Credit (each, a "Reimbursement Agreement") executed by an
                                   -----------------------
Authorized Signatory of the Borrower and shall specify (i) the beneficiary
of such Letter of Credit and the obligations of the Borrower or a
Subsidiary of the Borrower in respect of which such Letter of Credit is to
be issued, (ii) the Borrower's proposal as to the conditions under which a
drawing may be made under such Letter of Credit and the documentation to be
required in respect thereof, (iii) the maximum amount to be available under
such Letter of Credit, and (iv) the requested date of issuance.  Upon
receipt of such Letter of Credit Request from the Borrower, the
Administrative Agent shall promptly notify the Letter of Credit Issuer and
each Lender having a Revolving Tranche Commitment thereof.  The Letter of
Credit Issuer shall, on the proposed date of issuance and subject to the
other terms and conditions of this Agreement, issue the requested Letter of
Credit.  Each Letter of Credit shall be in form and substance reasonably
satisfactory to the Letter of Credit Issuer, with such provisions with
respect to the conditions under which a drawing may be made thereunder and
the documentation required in respect of such drawing as the Letter of
Credit Issuer shall reasonably require.  Each Letter of Credit shall be
used solely for the purposes described therein.

          (c)  Each payment by the Letter of Credit Issuer of a draft drawn
under a Letter of Credit shall give rise to an obligation on the part of the
Borrower to reimburse the Letter of Credit Issuer immediately for the amount
thereof.

    2.20. Letter of Credit Participation and Funding Commitments
          ------------------------------------------------------

          (a) Each Lender having a Revolving Tranche Commitment hereby
unconditionally and irrevocably, severally for itself only and without any
notice to or the taking of any action by such Lender, takes an undivided
participating interest in the obligations of the Letter of Credit Issuer under
and in connection with each Letter of Credit in an amount equal to such Lender's
Commitment Percentage with respect to its Revolving Tranche Commitment of the
amount of such Letter of Credit. Each Lender having a Revolving Tranche
Commitment shall be liable to the Letter of Credit Issuer for its Commitment
Percentage with respect to its Revolving Tranche Commitment of the unreimbursed
amount of any draft drawn and honored under each Letter of Credit. Each Lender
having a Revolving Tranche Commitment shall also be liable for an amount equal
to the product of its Commitment Percentage with respect to its Revolving
Tranche Commitment and any amounts paid by the Borrower pursuant to Section 2.21
that are subsequently rescinded or avoided or must otherwise be restored or
returned. Such liabilities shall be unconditional and without regard to the
occurrence of any Default or Event of Default or the compliance by the Borrower
with any of its obligations under the Loan Documents, provided, however, that no
Lender shall have any liability to the Letter of Credit Issuer under this
Section 2.20 for any payment under a Letter of Credit to the extent made as a
result of the Letter of Credit Issuer's gross negligence or willful misconduct.

                                      -53-
<PAGE>

          (b)  The Administrative Agent will promptly notify each Lender having
a Revolving Tranche Commitment (which notice shall be promptly confirmed in
writing) of the date and the amount of any draft presented under any Letter
of Credit with respect to which full reimbursement of payment is not made
by the Borrower as provided in Section 2.19(c), and forthwith upon receipt
of such notice, such Lender (other than the Letter of Credit Issuer) shall
make available to the Administrative Agent for the account of the Letter of
Credit Issuer its Commitment Percentage with respect to its Revolving
Tranche Commitment of the amount of such unreimbursed draft at the office
of the Administrative Agent specified in Section 11.2, in immediately
available funds, before 4:00 P.M., on the day such notice was given by the
Administrative Agent, if the relevant notice was given by the
Administrative Agent at or prior to 1:00 P.M., on such day, or before 12:00
Noon, on the next Business Day, if the relevant notice was given by the
Administrative Agent after 1:00 P.M., on such day.  The Administrative
Agent shall distribute the payments made by each Lender (other than the
Letter of Credit Issuer) pursuant to the immediately preceding sentence to
the Letter of Credit Issuer promptly upon receipt thereof in like funds as
received.  Each Lender having a Revolving Tranche Commitment shall
indemnify and hold harmless the Administrative Agent and the Letter of
Credit Issuer from and against any and all losses, liabilities (including
liabilities for penalties), actions, suits, judgments, demands, costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses) resulting from any failure on the part of such Lender to provide,
or from any delay in providing, the Administrative Agent with such Lender's
Commitment Percentage with respect to its Revolving Tranche Commitment of
the amount of any payment made by the Letter of Credit Issuer under a
Letter of Credit in accordance with this clause (b) above (except in
respect of losses, liabilities or other obligations suffered by the
Administrative Agent or the Letter of Credit Issuer resulting from the
gross negligence or willful misconduct of the Letter of Credit Issuer).  If
any such Lender does not make available to the Administrative Agent when
due such Lender's Commitment Percentage with respect to its Revolving
Tranche Commitment of any unreimbursed payment made by the Letter of Credit
Issuer under a Letter of Credit (other than payments made by the Letter of
Credit Issuer by reason of its gross negligence or willful misconduct),
such Lender shall be required to pay interest to the Administrative Agent
for the account of the Letter of Credit Issuer, from the date such Lender's
payment is due until the date such payment is received by the
Administrative Agent, on such Lender's Commitment Percentage with respect
to its Revolving Tranche Commitment of such payment at a rate of interest
per annum equal to (i) from the date such amount was due until the third
day therefrom, the Federal Funds Rate, and (ii) thereafter, the Federal
Funds Rate plus 1%.  The Administrative Agent shall distribute such
interest payments to the Letter of Credit Issuer upon receipt thereof in
like funds as received.

          (c)  Whenever the Administrative Agent is reimbursed by the Borrower,
for the account of the Letter of Credit Issuer, for any payment under a Letter
of Credit and such payment relates to an amount previously paid by a Lender in
respect of its Commitment Percentage of the amount of such payment under such
Letter of Credit, the Administrative Agent will pay over such payment to such
Lender (i) before 4:00 P.M. on the day such payment from the Borrower is
received, if such payment is received at or prior to 1:00 P.M. on such day, or
(ii)

                                      -54-
<PAGE>

before 12:00 Noon on the next succeeding Business Day, if such payment from
the Borrower is received after 1:00 P.M. on such day.

    2.21. Absolute Obligation with respect to Letter of Credit Payments
          -------------------------------------------------------------

          The Borrower's obligation to reimburse the Administrative Agent for
the account of the Letter of Credit Issuer in respect of a Letter of Credit for
each payment under or in respect of such Letter of Credit shall be absolute and
unconditional under any and all circumstances and irrespective of any set-off,
counterclaim or defense to payment that the Borrower may have or have had
against the beneficiary of such Letter of Credit, the Administrative Agent, the
Letter of Credit Issuer, any Lender or any other Person, including, without
limitation, any defense based on the failure of any drawing to conform to the
terms of such Letter of Credit, any drawing document proving to be forged,
fraudulent or invalid, or the legality, validity, regularity or enforceability
of such Letter of Credit; provided, however, that the Borrower shall not be
obligated to reimburse the Administrative Agent for the account of the Letter of
Credit Issuer for any wrongful payment under such Letter of Credit to the extent
made as a result of the Letter of Credit Issuer's gross negligence or willful
misconduct.

    2.22. Increased Costs Based on Letters of Credit
          ------------------------------------------

         Without limiting the provisions of Section 2.14, if any law or
regulation adopted or enacted after the date hereof or any change after the date
hereof in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof shall either (a) impose,
modify or make applicable any reserve, special deposit, assessment or similar
requirement against letters of credit issued or participated in by the Letter of
Credit Issuer or any Lender, or (b) impose on the Administrative Agent, the
Letter of Credit Issuer or such Lender any other condition regarding the Letters
of Credit (except for imposition of, or changes in the rate of, Tax on the
Income of the Administrative Agent, the Letter of Credit Issuer  or such Lender)
and the result of any event referred to in clause (a) or (b) above shall be to
increase the cost to the Letter of Credit Issuer or any such Lender of issuing
or maintaining the Letters of Credit or its obligations pursuant to Section
2.20, or the cost to the Administrative Agent of performing its functions
hereunder with respect to the Letters of Credit, in any case by an amount that
the Administrative Agent, the Letter of Credit Issuer, or any Lender, as the
case may be, deems material, then, upon demand by the Administrative Agent, the
Letter of Credit Issuer or such Lender, as the case may be, the Borrower shall
immediately pay to the Administrative Agent, the Letter of Credit Issuer or such
Lender, as the case may be, from time to time as specified by the Administrative
Agent, the Letter of Credit Issuer or such Lender, additional amounts that shall
be sufficient to compensate the Administrative Agent, the Letter of Credit
Issuer or such Lender, as the case may be, for such increased cost.  A statement
in reasonable detail as to such increased cost incurred by the Administrative
Agent, the Letter of Credit Issuer or such Lender, as the case may be, as a
result of any event mentioned in clauses (a) or (b) above, submitted by the
Administrative Agent, the Letter of Credit Issuer or such Lender, as the case
may be, to the Borrower shall be conclusive, absent manifest error, as to the
amount thereof.

                                      -55-
<PAGE>

    2.23. Administrative Agent's Records
          ------------------------------

          The Administrative Agent's records regarding the amount of each Loan
and Letter of Credit, each payment by the Borrower of principal and interest on
the Loans and reimbursement obligations in respect of Letters of Credit and
other information relating to the Loans shall be presumptively correct absent
manifest error.

3.   FEES; PAYMENTS
     --------------

     3.1. Commitment Fee
          --------------

          (a)  The Borrower agrees to pay to the Administrative Agent, for the
account of each Lender having a Revolving Tranche Commitment in accordance with
such Lender's Commitment Percentage with respect to its Revolving Tranche
Commitment, a fee (the "Commitment Fee") for each day during the period
                        --------------
from and including the Effective Date to, but excluding, the Maturity Date,
equal to (i) the excess of, for each day during the Revolving Credit
Commitment Period, the Revolving Tranche Commitment of such Lender on such
day over the sum of the aggregate outstanding principal balance of the
Revolving Tranche Loans and the Letter of Credit Exposure of such Lender on
such day multiplied by  (ii) the percentage set forth below for the
applicable pricing level in effect on such day:

                                      -56-
<PAGE>

<TABLE>
<CAPTION>

                                                             Commitment
                  Pricing Level                            Fee Percentage
                 ---------------                          ----------------
- -------------------------------------------------------------------------------
<S>                                                       <C>
When the Leverage Ratio is equal to or greater                   0.500%
 than 3.75:1.00
- -------------------------------------------------------------------------------
When the Leverage Ratio is less than 3.75:1.00                   0.350%
 but equal to or greater than 3.50:1.00
- -------------------------------------------------------------------------------
When the Leverage Ratio is less than 3.50:1.00                   0.300%
 but equal to or greater than 3.00:1.00
- -------------------------------------------------------------------------------
When the Leverage Ratio is less than 3.00:1.00                   0.250%
 but equal to or greater than 2.00:1.00
- -------------------------------------------------------------------------------
When the Leverage Ratio is less than 2.00:1.00                   0.200%
 but equal to or greater than 1.50:1.00
- -------------------------------------------------------------------------------
When the Leverage Ratio is less than 1.50:1.00                   0.175%
- -------------------------------------------------------------------------------
</TABLE>

          (b)  Changes in the Commitment Fee resulting from a change in the
Leverage Ratio, as evidenced by a Compliance Certificate delivered to the
Administrative Agent pursuant to Section 7.1(c) evidencing such a change, shall
become effective upon delivery of such Compliance Certificate. If the Borrower
shall fail to deliver a Compliance Certificate in accordance with
Section 7.1(c) (each a "certificate delivery date"), for purposes of
                        -------------------------
calculating the Commitment Fee, the Leverage Ratio from and including such
certificate delivery date to the date of delivery by the Borrower to the
Administrative Agent of such Compliance Certificate shall be conclusively
presumed to be greater than 3.75:1.00.

          (c)  The Commitment Fee shall be payable quarterly in arrears on the
last day of each March, June, September and December of each year, commencing on
the first such day following the Effective Date, on any date the Aggregate
Revolving Tranche Commitments are reduced pursuant to Section 2.6, and on the
Maturity Date. The Commitment Fee shall be calculated on the basis of a 360-day
year for the actual number of days elapsed.

                                      -57-
<PAGE>

    3.2.  Letter of Credit Fees
          ---------------------

          (a)  The Borrower agrees to pay to the Administrative Agent, for the
account of the Lenders having a Revolving Tranche Commitment in accordance with
each Lender's Commitment Percentage with respect to its Revolving Tranche
Commitment, a fee (the "Letter of Credit Fee") with respect to each Letter
                        --------------------
of Credit for the period from and including the date of issuance thereof to
and including the expiration date thereof, at the LC Rate on the maximum
amount available to be drawn (under any contingency) under such Letter of
Credit on such day.

          (b)  The Borrower further agrees to pay to the Letter of Credit
Issuuer, for its own account, a fee (the "LC Fronting Fee") with respect to each
                                          ---------------
Letter of Credit for each day during the period from and including the date of
issuance thereof to and including the expiration date thereof, at a rate per
annum equal to 0.075% on the maximum amount available to be drawn (under any
contingency) under such Letter of Credit on such day.

          (c)  The Letter of Credit Fee and the LC Fronting Fee shall be (i)
calculated on the basis of a 360-day year for the actual number of days elapsed,
(ii) payable quarterly in arrears on the last day of each March, June, September
and December of each year and on the Maturity Date and (iii) nonrefundable. In
addition to the Letter of Credit Fee and the LC Fronting Fee, the Borrower
agrees to pay to the Letter of Credit Issuer, for its own account, its standard
fees and charges customarily charged to customers similar to the Borrower with
respect to any Letter of Credit.


    3.3.  Pro Rata Treatment and Application of Principal Payments
          --------------------------------------------------------

          Each payment, including each prepayment, of principal and interest on
the Loans and of the Commitment Fee and the Letter of Credit Fee shall be made
by the Borrower without set-off or counterclaim and shall be made to the
Administrative Agent in Dollars at the applicable Agent Payment Office in funds
immediately available to the Administrative Agent at such office by 1:30 P.M. on
the due date for such payment, and, promptly upon receipt thereof by the
Administrative Agent, shall be remitted by the Administrative Agent, in like
funds as received, (i) to the Lenders having a Revolving Tranche Commitment
according to the Commitment Percentage of each Lender with respect to its
Revolving Tranche Commitment, in the case of the Commitment Fee and the Letter
of Credit Fee, (ii) to the Lenders pro rata according to the aggregate
outstanding principal balance of the Revolving Tranche Loans and Term Tranche
Loans, as the case may be, in the case of principal and interest due thereon and
(iii) to the Swing Line Lender in the case of principal and interest due on the
Swing Line Loan.  The failure of the Borrower to make any such payment by such
time shall not constitute a default hereunder, provided that such payment is
made on such due date, but any such payment made after 1:30 P.M. on such due
date shall be deemed to have been made on the next Business Day for the purpose
of calculating interest on amounts outstanding on the Loans.  If any payment
hereunder or under the Notes shall be due and payable on a day that is not a
Business Day, the due date thereof (except as otherwise provided in the
definition of Interest Period) shall be

                                      -58-
<PAGE>

extended to the next Business Day and (except with respect to payments in
respect of the Commitment Fee and the Letter of Credit Fee) interest shall be
payable at the applicable rate specified herein during such extension. If any
payment is made with respect to any Eurodollar Advance prior to the last day of
the applicable Interest Period, the Borrower shall indemnify each Lender in
accordance with Section 2.15.

4.  REPRESENTATIONS AND WARRANTIES
    ------------------------------

          In order to induce the Administrative Agent and the Lenders to enter
into this Agreement and to make the Revolving Credit Loans, the Letter of Credit
Issuer to issue the Letters of Credit and the Lenders to participate therein,
and the Swing Line Lender to make the Swing Line Loans and the Lenders to
participate therein, the Borrower makes the following representations and
warranties to the Administrative Agent and each Lender:

    4.1.  Subsidiaries; Capitalization
          ----------------------------

          The Borrower has only the Subsidiaries permitted by this Agreement.
Schedule 4.1 sets forth the Subsidiaries of the Borrower as of the Effective
Date.  The shares of each corporate Subsidiary are duly authorized, validly
issued, fully paid and nonassessable and are owned free and clear of any Liens
(except for Liens created in favor of the Collateral Agent by the Collateral
Documents).  The interest of the Borrower in each non-corporate Subsidiary is
owned free and clear of any Liens (except for Liens created in favor of the
Collateral Agent by the Collateral Documents).  The outstanding capital Stock of
each corporate Subsidiary of the Borrower on the Effective Date and the
ownership interest in each non-corporate Subsidiary are as set forth on Schedule
4.1.  As of the Effective Date, the owner of each issue of capital Stock listed
on Schedule 4.1 is the registered and beneficial owner thereof.  No Subsidiary
has issued any securities convertible into Stock (or other equity interest) of
such Subsidiary and there are no outstanding options or warrants to purchase
Stock of such Subsidiary of any class or kind, and there are no voting trusts or
similar agreements with respect thereto or other agreements or understandings
with respect thereto which would restrict or limit the sale, pledge, assignment
or other disposition thereof, including, without limitation, any right of first
refusal, option, redemption, call or other rights with respect thereto, whether
similar or dissimilar to any of the foregoing, or which would dilute the
interest of the Borrower therein.

    4.2.  Existence and Power
          -------------------

Each of the Borrower, its Subsidiaries and the Credit Parties is duly organized
or formed and validly existing in good standing under the laws of the
jurisdiction of its incorporation or formation, has all requisite power and
authority to own its Property and to carry on its business as now conducted, and
is in good standing and authorized to do business as a foreign corporation in
each jurisdiction in which the nature of the business conducted therein or the
Property owned therein makes such qualification necessary, except in each case
where such failure so to qualify, and, in the case of East End Dialysis Center,
Inc., Elberton Dialysis Facility, Inc., Carroll County

                                      -59-
<PAGE>

Dialysis Facility, Inc. and RTC Texas Acquisition, Inc., where such failure so
to be in good standing under the laws of the jurisdiction of its incorporation
or formation (which such failure to be in good standing shall be promptly
remedied following the Effective Date), could not reasonably be expected to have
a Material Adverse Effect.

    4.3.  Authority
          ---------

          Each of the Borrower, its Subsidiaries and the Credit Parties has full
legal power and authority to enter into, execute, deliver and perform the terms
of the Loan Documents to which it is a party, and the transactions contemplated
thereby (including the Transactions) and, in the case of the Borrower, to make
the borrowings contemplated hereby and by the Notes, to execute, deliver and
carry out the terms of the Notes and to incur the obligations provided for
herein and therein, all of which have been duly authorized by all proper and
necessary corporate or other applicable action and are in full compliance with
its Certificate of Incorporation or By-Laws or its other organization documents.

    4.4.  Binding Agreement
          -----------------

          The Loan Documents (other than the Notes) constitute, and the Notes,
when issued and delivered pursuant hereto for value received, will constitute,
the valid and legally binding obligations of the Credit Parties in each case, to
the extent it is a party thereto, enforceable in accordance with their
respective terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium  or other similar laws
affecting the enforcement of creditors' rights generally.

    4.5.  Litigation
          ----------

          Except as set forth on Schedule 4.5, there are no actions, suits or
proceedings at law or in equity or by or before any Governmental Authority
(whether purportedly on behalf of the Borrower, any of its Subsidiaries or any
Credit Party) pending or, to the knowledge of the Borrower, threatened against
the Borrower, any of its Subsidiaries or any Credit Party or any of their
respective Properties or rights, that (i) if adversely determined, could
reasonably be expected to have a Material Adverse Effect, (ii) expressly call
into question the validity or enforceability of any of the Loan Documents, or
(iii) could reasonably be expected to result in the rescission, termination or
cancellation of any material franchise, right, license, permit or similar
authorization held by the Borrower or any of its Subsidiaries or any Credit
Party.

    4.6.  Required Consents
          -----------------

          Except for information filings required to be made in the ordinary
course of business that are not a condition to the Borrower's performance under
the Loan Documents, no consent, authorization or approval of, filing with,
notice to, or exemption by, stockholders, any Governmental Authority or any
other Person is required to authorize, or is required in connection with the
execution, delivery and performance of the Loan Documents and the transactions

                                      -60-
<PAGE>

contemplated thereby (including the Transactions), or is required as a condition
to the validity or enforceability of the Loan Documents.

    4.7.  No Conflicting Agreements
          -------------------------

          Neither the Borrower, any of its Subsidiaries nor any Credit Party is
in default under any mortgage, indenture, contract or agreement to which it is a
party, or by which it or any of its Property is bound, the effect of which
default could reasonably be expected to have a Material Adverse Effect.  The
execution, delivery or carrying out of the terms of the Loan Documents and the
transactions contemplated hereby and thereby (including the Transactions), will
not constitute a default under, or result in the creation or imposition of, or
obligation to create, any Lien upon any Property of the Borrower or any of its
Subsidiaries or result in a breach of or require the mandatory repayment of or
other acceleration of payment under or pursuant to the terms of any such
mortgage, indenture, contract or agreement.

    4.8.  Compliance with Applicable Laws
          -------------------------------

          Neither the Borrower, any of its Subsidiaries nor any Credit Party is
in default with respect to any judgment, order, writ, injunction, decree or
decision of any Governmental Authority the effect of which default could
reasonably be expected to have a Material Adverse Effect.  The Borrower, each of
its Subsidiaries and each Credit Party is complying in all material respects
with all statutes, regulations, rules and orders applicable to Borrower, such
Subsidiary or such Credit Party of all Governmental Authorities, including,
without limitation, Environmental Laws and ERISA, the violation of which could
reasonably be expected to have a Material Adverse Effect, provided that this
sentence shall not extend to matters relating to compliance with federal
Medicaid and Medicare statutes or the regulations promulgated pursuant to such
statutes or related state or local statutes or regulations to the extent such
matters are covered by Sections 4.19 and 4.20.

    4.9.  Taxes
          -----

          Except as provided on Schedule 4.9, all tax returns required to be
filed by or on behalf of the Borrower, its Subsidiaries and each Credit Party
have been filed and payment, and adequate provision for the payment, has been
made for all taxes shown to be due and payable on said returns or in any
assessments made against the Borrower, its Subsidiaries or any Credit Party
(other than those being contested as required under Section 7.4) that would be
material to the Borrower or its Subsidiaries taken as a whole, and no tax liens
(other than a Permitted Lien described in Section 8.2(i)) have been filed with
respect to the Borrower, its Subsidiaries or any Credit Party.  The charges,
accruals and reserves on the books of the Borrower, each of its Subsidiaries and
each Credit Party with respect to all federal, state, local and other taxes are,
to the best knowledge of the Borrower, adequate for the payment of all such
material taxes, and the Borrower knows of no unpaid assessment that is due and
payable against it, any of its Subsidiaries or any Credit Party or any claims
being asserted that could reasonably be expected

                                      -61-
<PAGE>

to have a Material Adverse Effect, except such thereof as are being contested as
required under Section 7.4, and for which adequate reserves have been set aside
in accordance with GAAP.

    4.10. Governmental Regulations
          ------------------------

          Neither the Borrower, any of its Subsidiaries nor any Credit Party is
subject to regulation under the Public Utility Holding Company Act of 1935, as
amended, the Federal Power Act or the Investment Company Act of 1940, as
amended, and neither the Borrower, any of its Subsidiaries nor any Credit Party
is subject to any statute or regulation that prohibits or restricts the
incurrence of Indebtedness under the Loan Documents, including, without
limitation, statutes or regulations relative to common or contract carriers or
to the sale of electricity, gas, steam, water, telephone, telegraph or other
public utility services.

    4.11. Federal Reserve Regulations; Use of Proceeds
          --------------------------------------------

          Neither the Borrower, any of its Subsidiaries nor any Credit Party is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any Margin Stock.  No
part of the proceeds of the Loans or Letters of Credit has been or will be used,
directly or indirectly, for a purpose that violates any law, rule or regulation
of any Governmental Authority, including, without limitation, the provisions of
Regulations T, U or X of the Board of Governors of the Federal Reserve System,
as amended.  No part of the proceeds of the Loans or Letters of Credit has been
or will be used, directly or indirectly, to purchase or carry Margin Stock or to
extend credit to others for the purpose of purchasing or carrying Margin Stock.

    4.12. Plans
          -----

          The only Pension Plans in effect as of the Effective Date (the
"Existing Pension Plans") are listed on Schedule 4.12.  Each Employee Benefit
 ----------------------
Plan of the Borrower, its Subsidiaries, the Credit Parties and the ERISA
Affiliates is in compliance with ERISA and the Code, where applicable, in all
material respects.  As of the Effective Date (i) the amount of all Unfunded
Pension Liabilities under the Pension Plans, excluding any plan that is a
Multiemployer Plan, does not exceed $0, and (ii) the amount of the aggregate
Unrecognized Retiree Welfare Liability under all applicable Employee Benefit
Plans does not exceed $100,000.  Each of the Borrower, its Subsidiaries, the
Credit Parties and the ERISA Affiliates has complied with the requirements of
Section 515 of ERISA with respect to each Pension Plan that is a Multiemployer
Plan.  As of the Effective Date, the aggregate potential annual withdrawal
liability payments, as determined in accordance with Title IV of ERISA, of the
Borrower, its Subsidiaries, the Credit Parties and the ERISA Affiliates with
respect to all Pension Plans that are Multiemployer Plans is approximately $0.
Each of the Borrower, its Subsidiaries, the Credit Parties and/or any ERISA
Affiliate has, as of the Effective Date, made all material contributions or
payments to or under each such Pension Plan required by law or the terms of such
Pension Plan or any contract or agreement with respect thereto.  No material
liability to the PBGC has been, or is expected by the Borrower, any of its
Subsidiaries, any Credit Party or any ERISA

                                      -62-
<PAGE>

Affiliate to be, incurred by the Borrower, such Subsidiary, such Credit Party or
any ERISA Affiliate. Liability, as referred to in this Section includes any
joint and several liability. Each Employee Benefit Plan that is a group health
plan within the meaning of Section 5000(b)(1) of the Code is in material
compliance with the continuation of health care coverage requirements of Section
4980B of the Code.

    4.13. Financial Statements
          --------------------

          The Borrower has heretofore delivered to the Administrative Agent and
the Lenders copies of (i) the audited consolidated balance sheet of the Borrower
as of December 31, 1999 and the related consolidated statements of income,
stockholders' equity and cash flows for the fiscal year then ended and (ii) the
unaudited consolidated balance sheet of the Borrower as of March 31, 2000 and
the related consolidated statements of income and cash flows for the fiscal
quarter then ended (with the related notes and schedules, the "Financial
                                                               ---------
Statements").  The Financial Statements fairly present the consolidated
- ----------
financial condition and results of the operations of the Borrower and its
Subsidiaries, as the case may be, as of the dates and for the periods indicated
therein and have been prepared in conformity with GAAP (except that the March
31, 2000 Financial Statements are subject to customary year end adjustments and
do not include all footnotes required by GAAP).  As of the Effective Date,
except as reflected in the Financial Statements or in the notes thereto, neither
the Borrower nor any of its Subsidiaries has any obligation or liability of any
kind (whether fixed, accrued, contingent, unmatured or otherwise) that, in
accordance with GAAP, should have been shown on the Financial Statements and was
not.  Since March 31, 2000 there has been no Material Adverse Change.

    4.14. Property
          --------

          Each of the Borrower, its Subsidiaries and each Credit Party has good
and marketable title to all of its Property, title to which is material to the
Borrower and its Subsidiaries taken as a whole, subject to no Liens, except for
Permitted Liens.

    4.15. Franchises, Intellectual Property, Etc.
          ---------------------------------------

          Each of the Borrower, its Subsidiaries and each Credit Party possesses
or has the right to use all franchises, Intellectual Property, licenses and
other rights as are material and necessary for the conduct of its business, and
with respect to which it is in compliance, with no known conflict with the valid
rights of others that would reasonably be expected to have a Material Adverse
Effect.  No event has occurred that permits or, to the best knowledge of the
Borrower, after notice or the lapse of time or both, or any other condition,
could reasonably be expected to permit, the revocation or termination of any
such franchise, Intellectual Property, license or other right which revocation
or termination could reasonably be expected to have a Material Adverse Effect.

                                      -63-
<PAGE>

    4.16. Environmental Matters
          ---------------------

          (a)  The Borrower, each of its Subsidiaries and each Credit Party is
in material compliance with the requirements of all applicable Environmental
Laws.

          (b)  No Hazardous Substances have been generated or manufactured on,
transported to or from, treated at, stored at or discharged from any Real
Property in material violation of any Environmental Laws; no Hazardous
Substances have been discharged into subsurface waters under any Real
Property in material violation of any Environmental Laws; no Hazardous
Substances have been discharged from any Real Property on or into Property
or waters (including subsurface waters) adjacent to any Real Property in
material violation of any Environmental Laws; and there are not now, nor
ever have been, on any Real Property any underground or above ground
storage tanks in material violation of any Environmental Laws.

          (c)  Neither the Borrower, nor any of its Subsidiaries or any Credit
Party (i) has received notice (written or oral) or otherwise learned of any
claim, demand, suit, action, proceeding, event, condition, report, directive,
Lien, violation, non-compliance or investigation indicating or concerning any
potential or actual material liability (including, without limitation, potential
material liability for enforcement, investigatory costs, cleanup costs,
government response costs, removal costs, remedial costs, natural resources
damages, Property damages, personal injuries or penalties) arising in connection
with: (x) any non-compliance with or violation of the requirements of any
applicable Environmental Laws, or (y) the presence of any Hazardous Substance on
any Real Property (or any Real Property previously owned by the Borrower, any of
its Subsidiaries or any Credit Party) or the release or threatened release of
any Hazardous Substance into the environment, (ii) has knowledge of any
threatened or actual material liability in connection with the presence of any
Hazardous Substance on any Real Property (or any Real Property previously owned
by the Borrower, any of its Subsidiaries or any Credit Party) or the release or
threatened release of any Hazardous Substance into the environment, (iii) has
received notice of any federal or state investigation evaluating whether any
material remedial action is needed to respond to the presence of any Hazardous
Substance on any Real Property (or any Real Property previously owned by the
Borrower, any of its Subsidiaries or any Credit Party) or a release or
threatened release of any Hazardous Substance into the environment for which the
Borrower, any of its Subsidiaries or any Credit Party is or may be liable, or
(iv) has received notice that the Borrower, any of its Subsidiaries or any
Credit Party is or may be liable for a material amount to any Person under any
Environmental Law.

          (d)  For purposes of subsections (a), (b) and (c) of this Section 4.16
"material" shall mean any liability or potential liability of the Borrower
and its Subsidiaries on a Consolidated basis for an aggregate amount in
excess of $1,000,000.

                                      -64-
<PAGE>

    4.17. Labor Relations
          ---------------

          There are no material controversies pending between the Borrower, any
of its Subsidiaries or any Credit Party and any of their respective employees,
that could reasonably be expected to have a Material Adverse Effect.

    4.18. Burdensome Obligations
          ----------------------

          Neither the Borrower, any of its Subsidiaries nor any Credit Party is
a party to or bound by any franchise, agreement, deed, lease or other
instrument, or subject to any restriction that, in the opinion of the management
of the Borrower, is so unusual or burdensome, in the context of its business, as
in the foreseeable future might materially and adversely affect or impair the
revenue or cash flow of the Borrower and its Subsidiaries taken as a whole, or
the ability of the Borrower or its Subsidiaries taken as a whole to perform its,
or their, obligations under the Loan Documents to which it is, or they are, a
party.  The Borrower does not presently anticipate that future expenditures by
the Borrower, any of its Subsidiaries or any Credit Party needed to meet the
provisions of federal or state statutes, orders, rules or regulations will be so
burdensome as to result in a Material Adverse Effect or Material Adverse Change.

    4.19. Medicare Participation/Accreditation
          ------------------------------------

          Except as set forth in Schedule 4.19, the facilities operated by each
of the Borrower and its Subsidiaries (the "Facilities") are qualified for
                                           ----------
participation in the Medicare and Medicaid programs (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 it participates or has participated.  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 it participates or has 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 it
participates or has 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 it participates or has
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.

                                      -65-
<PAGE>

    4.20. Fraud and Abuse
          ---------------

          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 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 third-party 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 third-
party 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.

    4.21. No Misrepresentation
          --------------------

          The information provided by the Borrower, any of its Subsidiaries or
any Credit Party in connection with the transactions contemplated hereby, taken
as a whole does not contain a misstatement of material fact, or, to the best
knowledge of the Borrower, omit to state a material fact required to be stated
in order to make the statements therein contained not misleading in the light of
the circumstances under which made.  All financial projections, if any,
delivered by the Borrower to the Administrative Agent and the Lenders were based
on good faith estimates and assumptions believed by the Borrower to be
reasonable at the time made.

    4.22. Subordinated Indebtedness
          -------------------------

          The subordination provisions of (i) the RTC Convertible Subordinated
Indenture, (ii) the RTC Convertible Subordinated Notes, (iii) the RTC
Convertible Subordinated Guaranty, (iv) any Subordinated Indebtedness now
existing or hereafter incurred or assumed by the Borrower and (v) any guarantee
by any Subsidiary of the Borrower of any Subordinated Indebtedness will be
enforceable against the holders thereof, and the Loans and all other

                                      -66-
<PAGE>

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.

    4.23. Survival of Rights Created under Existing Revolving Credit Agreement
          --------------------------------------------------------------------

          The Borrower acknowledges and agrees that any choses in action or
other rights created in favor of any Lender and their respective successors and
assigns arising out of the representations and warranties of the Borrower
contained in or delivered (including representations and warranties delivered in
connection with the making of loans and issuance of letters of credit
thereunder) in connection with the Existing Revolving Credit Agreement, shall
survive the execution and delivery of this Agreement.  The Borrower and Lenders
acknowledge that certain representations and warranties made by the Borrower
under the Existing Revolving Credit Agreement (including representations and
warranties as to the future consequences of certain events which occurred prior
to the date of this Agreement) were made subject to changes in the facts and
conditions on which such representations and warranties were based, which such
changes were permitted or required under the Existing Revolving Credit Agreement
or this Agreement and any such representations and warranties incorporated
herein are so incorporated subject to such changes permitted or required under
the Existing Revolving Credit Agreement or this Agreement.

5.  CONDITIONS TO EFFECTIVENESS OF AGREEMENT
    ----------------------------------------

         The effectiveness of this Agreement shall be subject to the
fulfillment of the following conditions precedent:

    5.1.  Evidence of Action
          ------------------

          (a)  The Borrower.  The Administrative Agent shall have received a
               ------------
certificate dated the Effective Date, of the Secretary or Assistant Secretary of
the Borrower (i) attaching a true and complete copy of the resolutions of its
Board of Directors and of all documents evidencing other necessary corporate
action (in form and substance satisfactory to the Administrative Agent) taken by
it to authorize the Loan Documents to which it is a party and the transactions
contemplated thereby, (ii) attaching a true and complete copy of its Certificate
of Incorporation and By-Laws, (iii) setting forth the incumbency of its officer
or officers who may sign such Documents, including therein a signature specimen
of such officer or officers and (iv) attaching a certificate of good standing of
the Secretary of State of the States of Delaware and California.

          (b)  The Guarantors.  The Administrative Agent shall have received a
               --------------
certificate, dated the Effective Date, of the Secretary or Assistant Secretary
of each Guarantor (i) attaching a true and complete copy of the resolutions of
its Board of Directors and of all documents evidencing other necessary corporate
action (in form and substance satisfactory to the


                                      -67-
<PAGE>

Administrative Agent) taken by it to authorize the Loan Documents to which it is
a party and the transactions contemplated thereby, (ii) attaching a true and
complete copy of its Articles of Incorporation and By-Laws, (iii) setting forth
the incumbency of its officer or officers who may sign such Documents, including
therein a signature specimen of such officer or officers and (iv) attaching a
certificate of good standing of the Secretary of State of such Guarantor's
jurisdiction of organization and principal place of business.

    5.2.  This Agreement
          --------------

          The Administrative Agent shall have received counterparts of this
Agreement signed by each of the Borrower, the Administrative Agent, the
Documentation Agent, the Syndication Agent, the Letter of Credit Issuer, the
Swing Line Lender and the Required Lenders (or receipt by the Administrative
Agent from a party hereto of a fax signature page signed by such party which
shall have agreed to promptly provide the Administrative Agent with originally
executed counterparts hereof).

    5.3.  Notes
          -----

          The Administrative Agent shall have received the Revolving Tranche
Notes, the Term Tranche Notes and the Swing Line Note, duly executed by an
Authorized Signatory of the Borrower.  Each Lender upon its receipt of its
Revolving Credit Note and Term Tranche Note and the Swing Line Lender upon its
receipt of its Swing Line Note shall promptly return to the Borrower for
cancellation its existing revolving credit note, and in the case of the Swing
Line Lender its existing swing line note, delivered to it pursuant to the
Existing Revolving Credit Agreement, upon which such existing revolving credit
note and swing line note shall be deemed null and void.

    5.4.  Subsidiary Guaranty
          -------------------

          The Administrative Agent shall have received counterparts of the
Subsidiary Guaranty duly signed by each Guarantor.

    5.5.  Security Agreement
          ------------------

          The Administrative Agent shall have received counterparts of the
Security Agreement duly signed by the Borrower and each Guarantor, together with
the following:

          (a)  any stock certificates representing shares of capital stock
owned by or on behalf of any Credit Party constituting Collateral as of the
Effective Date;

          (b) any promissory notes and other instruments evidencing all loans,
advances and other debt owed or owing to any Credit Party constituting
Collateral as of the Effective Date;

                                      -68-
<PAGE>

          (c)  stock powers and instruments of transfer, endorsed in blank, with
respect to such stock certificates, promissory notes and other instruments; and

          (d)  all instruments and other documents, including Uniform Commercial
Code financing statements and grants of intellectual property interests as
required by the Security Agreement, required by law or reasonably requested by
the Collateral Agent to be filed, registered or recorded to create or perfect
the Liens intended to be created under the Security Agreement.

    5.6.  Intercreditor Agreement
          -----------------------

          The Intercreditor Agreement shall have been executed and delivered by
the Administrative Agent, the Administrative Agent (under and as defined in the
Term Loan Facility), the Collateral Agent and the Credit Parties.

    5.7.  Term Loan Facility
          ------------------

          The Term Loan Facility shall have been duly executed and shall have
become effective, and the Administrative Agent shall have received a certificate
of an Authorized Signatory of the Borrower attaching a true and correct copy of
the executed Term Loan Facility.  The Lenders hereby consent to the Term Loan
Facility as in effect on the Effective Date.

    5.8.  Litigation
          ----------

          There shall be no injunction, writ, preliminary restraining order or
other order of any nature issued by any Governmental Authority in any respect
affecting the transactions provided for herein and no action or proceeding by or
before any Governmental Authority shall have been commenced and be pending or,
to the knowledge of the Borrower, threatened, seeking to prevent or delay the
transactions contemplated by the Loan Documents or challenging any other terms
and provisions thereof or seeking any damages in connection therewith, and the
Administrative Agent shall have received a certificate of an Authorized
Signatory of the Borrower to the foregoing effects.

    5.9.  Opinion of Counsel to the Credit Parties
          ----------------------------------------

          The Administrative Agent shall have received opinions of (i) the
general counsel to the Borrower and the other Credit Parties, addressed to the
Administrative Agent, the Collateral Agent, the Letter of Credit Issuer, the
Swing Line Lender, the Documentation Agent, the Syndication Agent and the
Lenders, and dated the Effective Date, substantially in the form of Exhibit F-1,
and (ii) Riordan & McKinzie, special counsel to the Borrower and the other
Credit Parties, addressed to the Administrative Agent, the Collateral Agent, the
Letter of Credit Issuer, the Swing Line Lender, the Documentation Agent, the
Syndication Agent and the Lenders, and dated the Effective Date, substantially
in the form of Exhibit F-2.  It is understood that such opinions are being
delivered to the Administrative Agent, the Collateral Agent, the Letter of

                                      -69-
<PAGE>

Credit Issuer, the Swing Line Lender, the Documentation Agent, the Syndication
Agent and the Lenders upon the direction of the Borrower and the Credit Parties
and that the Administrative Agent, the Collateral Agent, the Letter of Credit
Issuer, the Swing Line Lender, the Documentation Agent, the Syndication Agent
and the Lenders may and will rely upon such opinions.

    5.10.  Compliance Certificate
           ----------------------

           The Administrative Agent shall have received a compliance
certificate, dated the Effective Date, certified by an Authorized Signatory of
the Borrower to the effect that the Borrower is in compliance with Sections 7.12
through 7.15 and 8.17 on the Effective Date (after giving effect to this
Agreement).

    5.11.  Aggregate Revolving Credit Commitment Reduction and Prepayment
           --------------------------------------------------------------

           (a) Immediately prior to the effectiveness of this Agreement, the
Aggregate Revolving Credit Commitments (as defined in the Existing Revolving
Credit Agreement) in the amount of $605,313,507 (which equals the amount of such
Aggregate Revolving Credit Commitments as in effect immediately prior to the
effectiveness of this Agreement) shall be deemed reduced to $472,806,407 (which
equals the aggregate outstanding principal amount of the Aggregate Credit
Exposure, as defined in the Existing Revolving Credit Agreement, as in effect
immediately prior to the effectiveness of this Agreement and the prepayment
referred to in clause (b) below), which reduction shall be deemed to have been
applied to the scheduled reductions in such Aggregate Revolving Credit
Commitments required by Section 2.6(b) of the Existing Revolving Credit
Agreement in direct order of their maturity.

           (b) Immediately prior to the effectiveness of this Agreement, the
Borrower shall have made a prepayment of the Revolving Credit Loans (as defined
in the Existing Revolving Credit Agreement) in an amount equal to $23,474,329,
which prepayment shall be deemed to effect a reduction of the Aggregate
Revolving Credit Commitments (as defined in the Existing Revolving Credit
Agreement), as in effect immediately prior to the effectiveness of this
Agreement, in an equal amount (and the resulting Aggregate Revolving Credit
Commitments, after giving effect to the reduction referred to in (a) above,
shall be deemed reduced to $449,332,078), which reduction shall be deemed to
have been applied to the scheduled reductions in such Aggregate Revolving Credit
Commitments required by Section 2.6(b) of the Existing Revolving Credit
Agreement in direct order of their maturity.

    5.12.  Fees
           ----
           All fees payable to the Administrative Agent, the Co-Arrangers, the
Syndication Agent and the Lenders on or prior to the Effective Date shall have
been paid.

                                      -70-
<PAGE>

    5.13.  Fees and Expenses of Steering Committee, Agents and Special Counsel
           -------------------------------------------------------------------

           The reasonable fees and expenses of the steering committee, its
counsel, the Administrative Agent, the Syndication Agent and the Special Counsel
in connection with the preparation, negotiation and closing of the Loan
Documents shall have been paid.

    5.14.  Documentation and Proceedings
           -----------------------------

           All corporate or other organizational and legal proceedings and all
documents and papers in connection with the transactions contemplated by the
Loan Documents shall be satisfactory in form and substance to the Administrative
Agent, and the Administrative Agent shall have received all information and
copies of all documents that the Administrative Agent or the Required Lenders
may reasonably have requested in connection therewith, such documents (where
appropriate) to be certified by an Authorized Signatory of the Borrower or
proper Governmental Authorities.

    5.15.  Required Acts and Conditions
           ----------------------------

           All acts, conditions and things (including, without limitation, the
obtaining of any necessary regulatory approvals and the making of any filings,
recordings or registrations) required to be done, performed and to have happened
on or prior to the Effective Date and that are necessary for the continued
effectiveness of the Loan Documents shall have been done and performed and shall
have happened in due compliance with all applicable laws.

    5.16.  Approval of Special Counsel
           ---------------------------
           All legal matters in connection with the effectiveness of this
Agreement shall be reasonably satisfactory to Special Counsel.

    5.17.  Other Documents
           ---------------
           The Administrative Agent shall have received such other documents as
the Administrative Agent or the Required Lenders shall reasonably request.

    5.18.  Officers' Certificate Regarding Certain Conditions.
           ---------------------------------------------------

           The following conditions shall be satisfied and the Borrower shall
have delivered to the Administrative Agent a certificate of an Authorized
Signatory of the Borrower in form and substance satisfactory to the
Administrative Agent, to the following effect:

           (a)  Representations and Warranties.  The representations and
                ------------------------------
warranties contained herein and in the other Loan Documents shall be true,
correct and complete in all material respects on and as of the Effective Date
(after giving effect to this Agreement) to the same extent as though made on and
as of that date, except to the extent such representations and


                                      -71-
<PAGE>

warranties specifically relate to an earlier date, in which case such
representations and warranties shall have been true, correct and complete in all
material respects on and as of such earlier date.

          (b)  No Event of Default.  No event shall have occurred and be
               -------------------
continuing as the Effective Date (after giving effect to this Agreement) that
would constitute a Default or an Event of Default.

          (c)  Performance of Agreements.  Each Credit Party shall have
               -------------------------
performed in all material respects all agreements and satisfied all conditions
which the Loan Documents provide shall be performed or satisfied by such Credit
Party on or before the Effective Date.

6.  CONDITIONS OF LENDING - ALL LOANS AND LETTERS OF CREDIT
    -------------------------------------------------------

          The obligation of each Lender having a Revolving Tranche Commitment to
make any Revolving Tranche Loan, the Swing Line Lender to make a Swing Line Loan
or the Letter of Credit Issuer to issue any Letter of Credit on a Borrowing Date
and each Lender having a Revolving Tranche Commitment to participate therein is
subject to the satisfaction of the following conditions precedent as of the date
of such Loan or the issuance of such Letter of Credit, as the case may be:

    6.1.  Compliance
          ----------

          On each Borrowing Date and after giving effect to the Loans to be made
or the Letters of Credit to be issued thereon, (a) each Credit Party shall be in
compliance with all of the terms, covenants and conditions of each Loan Document
to which it is a party, (b) there shall exist no Default or Event of Default,
(c) the representations and warranties contained in the Loan Documents shall be
true and correct with the same effect as though such representations and
warranties had been made on such Borrowing Date, (d) the Aggregate Credit
Exposure will not exceed the Aggregate Revolving Credit Commitments, and (e) the
Aggregate Revolving Tranche Exposure will not exceed the Aggregate Revolving
Tranche Commitments and (f) the aggregate outstanding principal balance of the
Swing Line Loans will not exceed the Swing Line Commitment.  Each borrowing by
the Borrower and each request by the Borrower for the issuance of a Letter of
Credit shall constitute a certification by the Borrower as of such Borrowing
Date that each of the foregoing matters is true and correct in all respects.

    6.2.  Loan Closings
          -------------

          All documents required by the provisions of the Loan Documents to be
executed or delivered to the Administrative Agent on or before the applicable
Borrowing Date shall have been executed and shall have been delivered at the
office of the Administrative Agent set forth in Section 11.2 on or before such
Borrowing Date.

                                      -72-
<PAGE>

    6.3.  Borrowing Request
          -----------------

          With respect to the making of each Loan, the Administrative Agent
shall have received a Borrowing Request duly executed by an Authorized Signatory
of the Borrower.

    6.4.  Letter of Credit Request
          ------------------------

          With respect to the issuance of each Letter of Credit, the
Administrative Agent shall have received a Letter of Credit Request and a
Reimbursement Agreement, in each case duly executed by an Authorized Signatory
of the Borrower.

    6.5.  Documentation and Proceedings
          -----------------------------

          All corporate or other organizational and legal proceedings and all
documents and papers in connection with the transactions contemplated by the
Loan Documents shall be satisfactory in form and substance to the Administrative
Agent and the Administrative Agent shall have received all information and
copies of all documents that the Administrative Agent or the Required Lenders
may reasonably have requested in connection therewith, such documents (where
appropriate) to be certified by an Authorized Signatory of the Borrower or
proper Governmental Authorities.

    6.6.  Required Acts and Conditions
          ----------------------------

          All acts, conditions and things (including, without limitation, the
obtaining of any necessary regulatory approvals and the making of any filings,
recordings or registrations) required to be done, performed and to have happened
on or prior to such Borrowing Date and that are necessary for the continued
effectiveness of the Loan Documents shall have been done and performed and shall
have happened in due compliance with all applicable laws.

    6.7.  Approval of Special Counsel
          ---------------------------
          All legal matters in connection with the making of each Loan shall be
reasonably satisfactory to Special Counsel.

    6.8.  Supplemental Opinions
          ---------------------

         If requested by the Administrative Agent with respect to the
applicable Borrowing Date, there shall have been delivered to the Administrative
Agent favorable supplementary opinions of counsel to the Borrower or the
Guarantors, addressed to the Administrative Agent, the Co-Arrangers, the
Documentation Agent, the Syndication Agent, the Lenders and Special Counsel and
dated such Borrowing Date, covering such matters incident to the transactions
contemplated herein as the Administrative Agent may reasonably request.


                                      -73-
<PAGE>

    6.9.  Other Documents
          ---------------

          The Administrative Agent shall have received such other documents as
the Administrative Agent or the Required Lenders shall reasonably request.

7.  AFFIRMATIVE COVENANTS
    ---------------------

          The Borrower agrees that, so long as this Agreement is in effect, any
Loan or reimbursement obligation (contingent or otherwise) in respect of any
Letter of Credit remains outstanding and unpaid, or any other amount is owing
under any Loan Document to any Lender or the Administrative Agent, the Borrower
shall:

    7.1.  Financial Statements
          --------------------

          Maintain a standard system of accounting in accordance with sound
business practices sufficient to permit preparation of financial statements in
conformity with GAAP, and furnish or cause to be furnished to the Administrative
Agent and each Lender:

          (a)  As soon as available, but in any event within 90 days after the
end of each fiscal year, (i) a copy of the consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such fiscal year, together with
the related consolidated statements of income, stockholders' equity and cash
flows as of and through the end of such fiscal year, setting forth in each case
in comparative form the figures for the preceding fiscal year, (ii) a copy of
the letter (such letter to conform to the then existing AICPA reporting
guidelines) of the Accountants addressed to the board of directors of the
Borrower to the effect that, in connection with the procedures performed in
obtaining a basis for certification of the audited consolidated financial
statements of the Borrower, the Accountants obtained no knowledge, in the course
of performing their audit, that would indicate that the Borrower was in
violation of any financial covenant contained in this Agreement or of the
existence of any Default by the Borrower under this Agreement, and (iii) a copy
of any management letter delivered by the Accountants. The consolidated balance
sheet and consolidated statements of income, stockholders' equity and cash flows
shall be audited and certified without qualification by the Accountants, which
certification shall (i) state that the examination by such Accountants in
connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards and, accordingly, included
such tests of the accounting records and such other auditing procedures as were
considered necessary in the circumstances, and (ii) include the opinion of such
Accountants that such consolidated financial statements have been prepared in
accordance with GAAP in a manner consistent with prior fiscal periods, except as
otherwise specified in such opinion.

      (b)  As soon as available, but in any event within 45 days after the end
of each fiscal quarter (90 days after the end of the fourth quarter), a copy of
the consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries as at the end of each such

                                      -74-
<PAGE>

quarterly period, together with the related consolidated and consolidating
statements of income and cash flows for such period and for the elapsed portion
of the fiscal year through such date, setting forth in each case in comparative
form the figures for the corresponding periods of the preceding fiscal year,
certified by the chief financial officer of the Borrower (or such other officer
acceptable to the Administrative Agent), as being complete and correct in all
material respects and as presenting fairly the consolidated and consolidating
financial condition and the consolidated and consolidating results of operations
of the Borrower and its Subsidiaries; provided that such consolidating financial
statements shall not be required when the Leverage Ratio shall be less than
3.75:1.00 at all times during the immediately preceding two fiscal quarters in
respect of which financial statements and a Compliance Certificate have been
delivered to the Administrative Agent and the Lenders pursuant to this Section
7.1.

          (c)  Within 45 days after the end of each of the first three fiscal
quarters in each year and within 90 days after the end of the last fiscal
quarter in each year, a Compliance Certificate, certified by the chief financial
officer of the Borrower (or such other officer as shall be acceptable to the
Administrative Agent).

          (d)  Within 90 days after the end of each fiscal year, updated
projections in reasonable detail prepared on a quarterly basis for the current
fiscal year and on an annual basis for each fiscal year thereafter through the
Maturity Date, and at least once each year hold an annual meeting for the
Lenders regarding the Borrower's performance, projections and business plan.

          (e) Such other information as the Administrative Agent, the
Documentation Agent, the Syndication Agent or any Lender may reasonably request
from time to time.

    7.2.  Certificates; Other Information
          -------------------------------

          Furnish to the Administrative Agent and each Lender:

          (a)  Prompt written notice if: (i) any Indebtedness of the Borrower
and/or any of its Subsidiaries in excess of $1,000,000 on an aggregate basis is
declared or shall become due and payable prior to its stated maturity, or is
called and not paid when due, (ii) a default shall have occurred under any note
(other than the Notes) or the holder of any such note, or other evidence of
Indebtedness, certificate or security evidencing any such Indebtedness or any
obligee with respect to any other Indebtedness of the Borrower and/or any of its
Subsidiaries in excess of $1,000,000 on an aggregate basis has the right to
declare any such Indebtedness due and payable prior to its stated maturity, or
(iii) there shall occur and be continuing a Default or an Event of Default;

          (b)  Prompt written notice of: (i) 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

                                      -75-
<PAGE>

of the Loan Documents, and include with such notice a copy of such citation,
summons, subpoena, order to show cause or other document, (ii) 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 (iii) any refusal by
any Person or Governmental Authority to renew or extend any 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;

          (c)  Promptly upon becoming available, copies of all (i) regular,
periodic or special reports, schedules and other material that the Borrower or
any of its Subsidiaries may now or hereafter be required to file with or deliver
to any securities exchange or the SEC, or any other Governmental Authority
succeeding to the functions thereof and (ii) material news releases and annual
reports relating to the Borrower or any of its Subsidiaries;

          (d)  Prompt written notice in the event that the Borrower, any of its
Subsidiaries or any ERISA Affiliate knows, or has reason to know, that (i)
any Termination Event with respect to a Pension Plan has occurred or will
occur, (ii) any condition exists with respect to a Pension Plan that
presents a material risk of termination  of the Pension Plan, imposition of
an excise tax, requirement to provide security to the Pension Plan or other
liability on the Borrower, any of its Subsidiaries or any ERISA Affiliate,
(iii) the Borrower, any of its Subsidiaries or any ERISA Affiliate has
applied for a waiver of the minimum funding standard under Section 412 of
the Code with respect to a Pension Plan, (iv) the aggregate amount of the
Unfunded Pension Liabilities under all Pension Plans is in excess of
$500,000, (v) the aggregate amount of Unrecognized Retiree Welfare
Liability under all applicable Employee Benefit Plans is in excess of
$500,000, (vi) the Borrower, any of its Subsidiaries or any ERISA Affiliate
has engaged in a Prohibited Transaction with respect to an Employee Benefit
Plan in which the aggregate "amount involved" (as defined in Section
4975(f) of the Code) is in excess of $500,000, (vii) the imposition of any
tax in excess of $500,000 in the aggregate on the Borrower, its
Subsidiaries and ERISA Affiliates under Section 4980B(a) of the Code or
(viii) the assessment of a civil penalty under Section 502(c) of ERISA in
excess of $500,000 in the aggregate on the Borrower, its Subsidiaries and
ERISA Affiliates, together with a certificate of the president or chief
financial officer of the Borrower (or such other officer as shall be
acceptable to the Administrative Agent) setting forth the details of such
event and the action that the Borrower, such Subsidiary or such ERISA
Affiliate proposes to take with respect thereto, together with a copy of
all notices and filings with respect thereto.

          (e)  Prompt written notice in the event that the Borrower, any of its
Subsidiaries or any ERISA Affiliate shall receive a demand letter from the
PBGC notifying the Borrower, such Subsidiary or such ERISA Affiliate of any
final decision finding liability in an aggregate amount in excess of
$500,000 and the date by which such liability must be paid, together with a
copy of such letter and a certificate of the president or chief financial
officer of the Borrower (or such other officer as shall be acceptable to
the Administrative Agent) setting

                                      -76-
<PAGE>

forth the action that the Borrower, such Subsidiary or such ERISA Affiliate
proposes to take with respect thereto.

          (f)  Promptly upon the same becoming available, and in any event by
the date such amendment is adopted, a copy of any Pension Plan amendment that
the Borrower, any of its Subsidiaries or any ERISA Affiliate proposes to adopt
that would require the posting of security under Section 401(a)(29) of the Code,
together with a certificate of the president or chief financial officer of the
Borrower (or such other officer as shall be acceptable to the Administrative
Agent) setting forth the reasons for the adoption of such amendment and the
action that the Borrower, such Subsidiary or such ERISA Affiliate proposes to
take with respect thereto.

          (g)  As soon as possible and in any event by the tenth Business Day
after any required installment or other payment under Section 412 of the Code
owed to a Pension Plan shall have become due and owing and remain unpaid, a copy
of the notice of failure to make required contributions provided to the PBGC by
the Borrower, any of its Subsidiaries or any ERISA Affiliate under Section
412(n) of the Code, together with a certificate of the president or chief
financial officer of the Borrower (or such other officer as shall be acceptable
to the Administrative Agent) setting forth the action that the Borrower, such
Subsidiary or such ERISA Affiliate proposes to take with respect thereto.

          (h)  Prompt written notice of any order, notice, claim or proceeding
recieved by, or brought against, the Borrower or any of its Subsidiaries, or
with respect to any of the Real Property, under any Environmental Law that could
have a Material Adverse Effect.

          (i)  Prompt written notice of any loss, forfeiture, non-renewal or
termination or the commencement of any action or proceeding or the issuance of
any notice to effect any of the foregoing, with respect to any license,
agreement or authorization that could reasonably be expected to have a Material
Adverse Effect.

          (j)  A certificate no later than three Business Days prior to the
consummation of any Permitted Acquisition: (i) identifying such Permitted
Acquisition, (ii) specifying the total consideration to be paid with respect to
such Permitted Acquisition, the aggregate total consideration paid with respect
to all Permitted Acquisitions (including such proposed Permitted
Acquisition) made after the Effective Date and such other information as
the Administrative Agent shall reasonably require, and (iii) certifying
that immediately before and after giving effect thereto no Default or Event
of Default shall exist.

          (k)  Within 40 days after the end of each calendar month, a report
specifying (in a format reasonably acceptable to the Administrative Agent):  (i)
Permitted Acquisitions made (A) during such calendar month and (B) during
the period from July 1, 2000 through the end of such calendar month, (ii)
Maintenance Capital Expenditures and Development Capital Expenditures
(stated separately) of the Borrower and its Subsidiaries (on a Consolidated
basis determined in accordance with GAAP) made (A) during such calendar
month and (B) during the

                                      -77-
<PAGE>

period from July 1, 2000 through the end of such calendar month, and (iii) an
accounts receivable aging summary by account debtor group as at the end of such
month, provided that this subsection (k) shall not be applicable when the
Leverage Ratio shall be less than 3.75:1.00 at all times during the immediately
preceding two fiscal quarters in respect of which financial statements and a
Compliance Certificate have been delivered to the Administrative Agent and the
Lenders pursuant to Section 7.1.

  7.3.  Legal Existence
        ---------------

        Maintain, and cause each of its Subsidiaries so to maintain, its
corporate, partnership or other existence, as the case may be, in good standing
in the jurisdiction of its incorporation or formation and in each other
jurisdiction in which it is required to do so, except, in each case, where the
failure to do so could not reasonably be expected to have a Material Adverse
Effect.

  7.4.  Taxes
        -----

        Pay and discharge when due, and cause each of its Subsidiaries so to
do, all Taxes, assessments and governmental charges, license fees and levies
upon, or with respect to the Borrower or such Subsidiary and all Taxes upon the
income, profits and Property of the Borrower and its Subsidiaries, that, if
unpaid, could reasonably be expected to have a Material Adverse Effect or become
a Lien on the Property of the Borrower or such Subsidiary (other than a Lien
described in Section 8.2(i)), unless and to the extent only that such Taxes,
assessments, charges, license fees and levies shall be contested in good faith
and by appropriate proceedings diligently conducted by the Borrower or such
Subsidiary, provided that the Borrower shall give the Administrative Agent
prompt notice of such contest and that such reserve or other appropriate
provision as shall be required by the Accountants in accordance with GAAP shall
have been made therefor.

  7.5.  Insurance
        ---------

      (a)  Maintain, and cause each of its Subsidiaries to maintain, (i)
insurance with financially sound insurance carriers on such of its Property,
against at least such risks, and in at least such amounts, as are usually
insured against by similar businesses, including, without limitation, public
liability (bodily injury and property damage), fidelity, and workers'
compensation, and file with the Administrative Agent within ten Business Days
after request therefor a detailed list of such insurance then in effect, stating
the names of the carriers thereof, the policy numbers, the insureds thereunder,
the amounts of insurance, dates of expiration thereof, and the Property and
risks covered thereby, together with a certificate of the chief financial
officer of the Borrower (or such other officer as shall be acceptable to the
Administrative Agent) certifying that in the opinion of such officer such
insurance is adequate in nature and amount, complies with the obligations of the
Borrower under this Section, and is in full force and effect, and (ii) such
other insurance as is required under the Collateral Documents.

                                      -78-
<PAGE>

    (b) Maintain, and cause each of its Subsidiaries to maintain, insurance
covering (i) physical loss or damage to the Collateral against all risks and
(ii) liability arising from the use or intended use, or otherwise attributable
or relating to, the Collateral, in each case in accordance with Section 7.5(a).
The policies covering such insurance (A) shall, in the case of each policy under
clause (i) of this subsection, contain a standard loss payable clause and shall
name the Collateral Agent as loss payee (and, if required by the Collateral
Agent, sole loss payee) in respect of each claim relating to the Collateral and
resulting in a payment thereunder in excess of $100,000, (B) shall, in the case
of each policy under clause (ii) of this paragraph, be indorsed to provide, in
respect of the interests of the Collateral Agent and the other secured parties
under the Collateral Documents, that the Collateral Agent shall be an additional
insured and (C) shall, in the case of each policy under clauses (i) and (ii) of
this subsection, provide (if required by the Collateral Agent) that 30 days'
prior written notice of any cancellation or modification thereof or any
reduction of amounts payable thereunder shall be given to the Collateral Agent
and in the event that the Borrower at any time or times shall fail to pay any
premium in whole or part relating thereto, the Administrative Agent or the
Collateral Agent may, in its sole discretion, pay such premium. The Borrower, on
behalf of itself and each of its Subsidiaries, irrevocably makes, constitutes
and appoints each of the Administrative Agent and the Collateral Agent (and all
officers, employees or agents designated by the Administrative Agent or the
Collateral Agent) as its true and lawful agent (and attorney-in-fact) for the
purpose, during the continuance of an Event of Default, of making, settling and
adjusting claims in respect of Collateral under policies of insurance, endorsing
the name of the Borrower or such Subsidiary on any check, draft, instrument or
other item of payment for the proceeds of such policies of insurance and for
making all determinations and decisions with respect thereto. In the event that
the Borrower or any Subsidiary at any time or times shall fail to obtain or
maintain any of the policies of insurance required hereby or to pay any premium
in whole or part relating thereto, the Administrative Agent or the Collateral
Agent may, without waiving or releasing any obligation or liability of the
Borrower hereunder or any Event of Default, in its sole discretion, obtain and
maintain such policies of insurance and pay such premium and take any other
actions with respect thereto as the Administrative Agent or the Collateral Agent
deems advisable. All sums disbursed by the Administrative Agent or the
Collateral Agent in connection with this subsection, including reasonable
attorneys' fees, court costs, expenses and other charges relating thereto, shall
be payable, upon demand, by the Borrower to the Administrative Agent or the
Collateral Agent, as applicable, and shall be additional Obligations secured by
the Collateral. Provided that no Event of Default shall exist, the Collateral
Agent, upon its receipt thereof, shall pay over to the Borrower the proceeds of
any such insurance payment received by the Collateral Agent in its capacity as
Collateral Agent to enable the Borrower to repair or replace the Property in
respect of which such insurance payment was received. To the extent that the
Borrower shall not repair or replace such Property within 365 days from its
receipt of such insurance payment or if an Event of Default shall exist, the
Borrower, at the request of the Administrative Agent, shall prepay the Term
Tranche Loans (and if no Term Tranche Loans are outstanding, the Revolving
Tranche Loans) and the Term Loans (based on the Revolver Prepayment Fraction and
the Term Prepayment Fraction thereof) in an amount equal to the total amount of
such insurance payment less any amounts previously applied to the repair or
replacement of the Property in respect of

                                      -79-
<PAGE>

which such property insurance proceeds were received and, until such time, any
such amount held by the Collateral Agent shall continue to be held by the
Collateral Agent as Collateral.

    7.6.  Payment of Indebtedness and Performance of Obligations
          ------------------------------------------------------

          Pay and discharge when due, and cause each of its Subsidiaries to pay
and discharge when due, all lawful Indebtedness, obligations and claims for
labor, materials and supplies or otherwise that, if unpaid, could reasonably be
expected to (i) have a Material Adverse Effect or (ii) become a Lien upon
Property of the Borrower or any of its Subsidiaries in excess of $1,000,000 on
an aggregate consolidated basis for the Borrower and its Subsidiaries, other
than a Permitted Lien, unless and to the extent only that the validity of such
Indebtedness, obligation or claim shall be contested in good faith and by
appropriate proceedings diligently conducted by it, provided that the Borrower
shall give the Administrative Agent prompt notice of any such contest and that
such reserve or other appropriate provision as shall be required by the
Accountants in accordance with GAAP shall have been made therefor.

    7.7.  Condition of Property
          ---------------------

          At all times, maintain, protect and keep in good repair, working order
and condition (ordinary wear and tear excepted), and cause each of its
Subsidiaries so to do, all Property necessary to the operation of the Borrower's
or such Subsidiary's business.

    7.8.  Observance of Legal Requirements
          --------------------------------

          Observe and comply in all respects, and cause each of its Subsidiaries
so to do, with all laws, ordinances, orders, judgments, rules, regulations,
certifications, franchises, permits, licenses, directions and requirements of
all Governmental Authorities, that now or at any time hereafter may be
applicable to it, including, without limitation, ERISA and all Environmental
Laws, a violation of which could reasonably be expected to have a Material
Adverse Effect, except such thereof as shall be contested in good faith and by
appropriate proceedings diligently conducted by it, provided that the Borrower
shall give the Administrative Agent prompt notice of such contest and that such
reserve or other appropriate provision as shall be required by the Accountants
in accordance with GAAP shall have been made therefor.

    7.9.  Inspection of Property; Books and Records; Discussions
          ------------------------------------------------------

          Keep proper books of record and account in which full, true and
correct entries sufficient to permit preparation of financial statements in
conformity with GAAP and all requirements of law shall be made of all dealings
and transactions in relation to its business and activities and permit
representatives of the Administrative Agent, the Documentation Agent, the
Syndication Agent and any Lender to visit its offices, to inspect any of its
Property and examine and make copies or abstracts from any of its books and
records at any reasonable time and as often as may reasonably be desired, and to
discuss the business, operations, prospects, licenses, Property and financial
condition of the Borrower and its Subsidiaries with the officers thereof

                                      -80-
<PAGE>

and the Accountants (provided that the Borrower is given reasonable notice and
an opportunity to attend or participate in any such discussion).

    7.10. Licenses, Intellectual Property
          -------------------------------

          Maintain, and cause each of its Subsidiaries to maintain, in full
force and effect, all licenses, franchises, Intellectual Property, permits,
licenses, authorizations and other rights as are necessary for the conduct of
its business, the failure of which to maintain could reasonably be expected to
have a Material Adverse Effect.

    7.11. Additional Guarantors; Additional Collateral
          --------------------------------------------

          Within 30 days after the occurrence of an Additional Guarantor Event,
(i) cause such Person that became a wholly-owned Domestic Subsidiary of the
Borrower and that is not a Guarantor to become a party to the Subsidiary
Guaranty and the Security Agreement, and (ii) deliver or cause to be delivered
to the Administrative Agent with respect to each such Subsidiary, simultaneously
with the execution and delivery of the same, (A) a certificate, dated the date
such Subsidiary shall have become a party to the Subsidiary Guaranty and the
Security Agreement, executed by such Subsidiary and substantially in the form
of, and with substantially the same attachments as, the certificate which would
have been required under Section 5.1 if such Subsidiary had become a party to
the Subsidiary Guaranty and the Security Agreement on or before the Effective
Date, (B) an opinion of counsel to such Subsidiary, in form and substance
satisfactory to the Administrative Agent, (C) for delivery by the Administrative
Agent to the Collateral Agent, 100% of the issued and outstanding capital Stock
of such Subsidiary owned directly or indirectly, by the Borrower, together with
an undated stock power, executed in blank by an Authorized Signatory of each
applicable owner of such Stock, and (D) such UCC-1 forms and such other
documents as may by required by the Security Agreement and as the Administrative
Agent or the Collateral Agent shall request.

    7.12. Interest Coverage Ratio
          -----------------------
          Maintain at all times an Interest Coverage Ratio of not less than the
applicable ratio set forth below with respect to the applicable period set forth
below:

                                      -81-
<PAGE>

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
                Period                                    Ratio
               --------                                 ---------
- ---------------------------------------------------------------------------
<S>                                                     <C>
         Effective Date through
         September 30, 2000                             1.80:1.00
- ---------------------------------------------------------------------------
         October 1, 2000 through
         June 30, 2001                                  2.00:1.00
- ---------------------------------------------------------------------------
         July 1, 2001 through
         September 30, 2002                             2.25:1.00
- ---------------------------------------------------------------------------
         October 1, 2002 and
         thereafter                                     2.50:1.00
- ---------------------------------------------------------------------------
</TABLE>

    7.13. Minimum Net Worth
          --------------------

          Maintain at all times a Consolidated net worth of the Borrower and its
Subsidiaries of not less than $261,385,000, less (i) the after-tax effect of any
                                            ----
Non-Recurring Charges (as defined in the definition of EBITDA) excluded in the
calculation of Consolidated EBITDA, plus (ii) the sum of 85% of quarterly
                                    ----
Consolidated net income of the Borrower and its Subsidiaries (excluding net
losses in any fiscal quarter) and 85% of the net cash proceeds received by the
Borrower from its issuance of Stock, in each case for clauses (i) and (ii)
determined on a cumulative basis for the period commencing April 1, 2000.

    7.14. Minimum Consolidated EBITDA Ratio
          ---------------------------------

          Maintain at all times a ratio of (i) Consolidated EBITDA to (ii)
Consolidated Pre-Minority EBITDA of not less than 0.80:1.00, in each case for
(a) the two fiscal quarter period ending June 30, 2000, if the date of
determination is at any time during the period from the Effective Date through
September 29, 2000, (b) the three fiscal quarter period ended September 30,
2000, if the date of determination is at any time during the period from
September 30, 2000 through December 30, 2000, and (c) the immediately preceding
four fiscal quarters (or, in the event that the date of determination is a
fiscal quarter ending date, the four fiscal quarter period then ended), if the
date of determination is at any time during the period from and after December
31, 2000.

                                      -82-
<PAGE>

    7.15. Leverage Ratio
          --------------
          Maintain at all times a Leverage Ratio not greater than the applicable
ratio set forth below with respect to the applicable period set forth below:

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
                Period                                    Ratio
                ------                                    -----
- ---------------------------------------------------------------------------
         <S>                                            <C>
         Effective Date through
         September 30, 2000                             5.25:1.00
- ---------------------------------------------------------------------------
         October 1, 2000 through
         March 31, 2001                                 5.00:1.00
- ---------------------------------------------------------------------------
         April 1, 2001 through
         December 31, 2001                              4.75:1.00
- ---------------------------------------------------------------------------
         January 1, 2002 through
         September 30, 2002                             4.50:1.00
- ---------------------------------------------------------------------------
         October 1, 2002 and
         thereafter                                     4.25:1.00
- ---------------------------------------------------------------------------
</TABLE>

    7.16. Asset Swap Transactions
          -----------------------

          (a)  Deliver to the Administrative Agent, no later than three Business
Days prior to the consummation of the first transaction constituting a part of
an Asset Swap Transaction, a certificate in reasonable detail describing such
first transaction and stating the intent of the Borrower with regard to the
second transaction, together with such other information as the Administrative
Agent shall reasonably request in connection therewith.

          (b) If the first transaction constituting a part of an Asset Swap
Transaction is an Asset Sale, the Borrower shall deposit the Net Cash Proceeds
(without giving effect to clause (ii)(F) and the proviso contained in clause (i)
of the definition of Net Cash Proceeds) thereof with the Collateral Agent to be
held as Collateral, which Collateral shall be eligible for release to the extent
necessary to close the Permitted Acquisition constituting the second transaction
of such Asset Swap transaction, provided that at the time of such release, and
immediately before and after giving effect to the consummation of such Permitted
Acquisition, no Default or Event of Default shall exist.  Alternatively, with
respect to the Revolver Prepayment Fraction of such Net Cash Proceeds, the
Borrower shall be permitted to prepay the Revolving Tranche Loans up to an
amount equal to such Revolver Prepayment Fraction of such Net Cash Proceeds,
provided that the Borrower may not reborrow the amount prepaid under the
Revolving Tranche Commitments until the consummation of such Permitted
Acquisition.  Substantially simultaneously with the consummation of such
Permitted Acquisition, the Borrower shall prepay the Revolving Credit

                                      -83-
<PAGE>

Loans and the Term Loans to the extent required by Section 2.7(f) hereof and
Section 2.4(f) of the Term Loan Facility.

    7.17. Cash Management
          ---------------

          Establish and maintain the cash management and collateral program
required by Schedule 7.17 in the manner and at the times required therein.

    7.18. Further Assurances
          ------------------
          (a)  Execute, and will cause each Guarantor to execute, any and all
further documents, financing statements, agreements (including guarantee
agreements and security agreements) and instruments, and take all such further
actions (including the filing and recording of financing statements, fixture
filings and other documents), that may be required under any applicable law, or
which the Collateral Agent, the Administrative Agent or the Required Lenders may
reasonably request, to effectuate the transactions contemplated by the Loan
Documents or to grant, preserve, protect or perfect (including as a result of
any change in applicable law) the Liens created or intended to be created by the
Collateral Documents or the validity or priority of any such Lien, all at the
expense of the Borrower, and provide to the Collateral Agent and the
Administrative Agent, from time to time upon request, evidence reasonably
satisfactory to the Collateral Agent and the Administrative Agent as to the
perfection and priority of the Liens created or intended to be created by the
Collateral Documents.

          (b) If any material assets (including any real property or
improvements thereto or any interest therein other than leasehold interests in
real property) are acquired by the Borrower or any Guarantor after the Effective
Date (other than assets constituting Collateral under the Collateral Documents
that automatically become subject to the Lien of the Collateral Documents upon
acquisition thereof), the Borrower will notify the Administrative Agent thereof,
and, subject to the provisions of the Collateral Documents, if requested by the
Administrative Agent or the Required Lenders, the Borrower will cause such
assets to be subjected to a Lien securing the Obligations and will take, and
cause the Subsidiary Guarantors to take, such actions as shall be necessary or
reasonably requested by the Administrative Agent to grant and perfect such
Liens, including actions described in subsection (a) of this Section, all at the
expense of the Borrower.

8.  NEGATIVE COVENANTS
    ------------------

          The Borrower agrees that, so long as this Agreement is in effect, any
Loan or reimbursement obligations (contingent or  otherwise) in respect of any
Letter of Credit remains outstanding and unpaid, or any other amount is owing
under any Loan Document to any Lender or the Administrative Agent, the Borrower
shall not, directly or indirectly:

                                      -84-
<PAGE>

    8.1.  Indebtedness
          ------------

          Create, incur, assume or suffer to exist any liability for
Indebtedness, or permit any of its Subsidiaries so to do, except (i)
Indebtedness due under the Loan Documents, (ii) Indebtedness of the Borrower or
any of its Subsidiaries existing on the date hereof as set forth on Schedule
8.1, as the same may be refinanced from time to time, containing repayment terms
and conditions no less favorable to the Borrower or such Subsidiary than the
Indebtedness being refinanced, (iii) purchase money Indebtedness and Capital
Lease Obligations of the Borrower or its Subsidiaries, as the case may be,
incurred after the Effective Date in connection with the purchase or lease of
Property (including Permitted Acquisitions), in an aggregate outstanding
principal amount not to exceed $25,000,000 at any one time, in the case of the
Borrower, and $25,000,000 at any one time, in the case of TRC and its
Subsidiaries taken as a whole, as the same may be refinanced from time to time,
containing repayment terms and conditions no less favorable to the Borrower or
its Subsidiaries, as the case may be, than the Indebtedness being refinanced,
(iv) other Contingent Obligations of the Borrower or TRC in an aggregate amount
not exceeding $20,000,000 at any one time, (v) other Contingent Obligations of
the Borrower and its Subsidiaries for the benefit of one or more of the Borrower
or its Subsidiaries in an aggregate outstanding amount not exceeding
$30,000,000, (vi) unsecured Indebtedness of the Domestic Subsidiaries of the
Borrower provided that the aggregate outstanding principal amount of such
Indebtedness shall not exceed $20,000,000 at any one time, (vii) [Intentionally
Omitted], (viii) Indebtedness of TRC (excluding Indebtedness incurred under
clause (iii)) assumed in connection with a Permitted Acquisition, provided that
the aggregate outstanding principal amount of such Indebtedness shall not exceed
$40,000,000 at any one time, (ix) [Intentionally Omitted], (x) Hedging
Obligations that are incurred by the Borrower or any of its Subsidiaries for the
purpose of fixing or hedging foreign currency exchange risks or interest rate
risks with respect to any floating rate Indebtedness that is permitted by the
terms of this Agreement to be outstanding, (xi) unsecured Indebtedness of the
Borrower in an aggregate outstanding principal amount not to exceed $25,000,000
at any one time, provided that immediately before and after giving effect to the
incurrence thereof no Default or Event of Default shall exist, (xii) unsecured
Indebtedness of the Borrower to one or more investors under an indenture subject
to the Trust Indenture Act of 1939, as amended ("Public Debt"), provided that
                                                 -----------
(A) such Indebtedness shall be designated by the Borrower in a certificate
delivered to the Administrative Agent as constituting Public Debt covered under
this Section 8.1(xii), (B) immediately before and after giving effect to the
incurrence thereof no Default or Event of Default shall exist, (C) such
Indebtedness shall require no payment or prepayment prior to one year after the
Maturity Date, (D) the terms, conditions and covenants of such Indebtedness
shall be less restrictive as to the Borrower and its Subsidiaries than the
terms, covenants and conditions of this Agreement and the terms, amount,
covenants and conditions of such Indebtedness shall be reasonably satisfactory
to the Required Lenders, and (E) the Borrower shall make the prepayment as
required by Section 2.7(d) upon the issuance of such Public Debt, (xiii)
Subordinated Indebtedness, provided that immediately before and after giving
effect to the incurrence thereof no Default or Event of Default shall exist,
provided that the Borrower shall make the prepayment as required by Section
2.7(e) upon the issuance of such Subordinated Indebtedness, (xiv) subordinated
guaranties by any Guarantor of

                                      -85-
<PAGE>

the Borrower's obligations under any Subordinated Indebtedness permitted
hereunder, provided that (A) all Obligations of the Borrower are guarantied by
such Guarantor under the Subsidiary Guaranty, (B) each such Guaranty is
subordinated to at least the same extent as the Subordinated Indebtedness
guarantied thereby is subordinated to the Obligations of the Borrower, (C) each
such subordinated guaranty contains a limitation as to the maximum amount
guarantied thereby similar to that set forth in subsection 2.2(a) of the
Subsidiary Guaranty, provided that in no event shall the liability of the
Guarantor under such subordinated guaranty exceed the maximum amount permissible
under applicable fraudulent conveyance or similar law, and (D) each such
subordinated guaranty is otherwise on market terms for guaranties of
subordinated debt instruments prevailing at or around the time that such
subordinated guaranty is entered into, (xv) Indebtedness permitted under Section
8.5(d), (xvi) Indebtedness under the Term Loan Facility, (xvii) Indebtedness of
RTC under the RTC Convertible Subordinated Indenture and the RTC Convertible
Subordinated Notes, (xviii) other Indebtedness of RTC and its Subsidiaries
existing on February 27, 1998 and (xix) Indebtedness under the RTC Convertible
Subordinated Guaranty.

    8.2.  Liens
          -----

          Create, incur, assume or suffer to exist any Lien upon any of its
Property, whether now owned or hereafter acquired, or permit any of its
Subsidiaries so to do, or enter into any agreement, other than this Agreement,
the Term Loan Facility and secured purchase money Indebtedness and Capital Lease
Obligations permitted by this Agreement (in which cases, any prohibition or
limitation shall only be effective against the Property acquired or leased
thereby), or permit any Subsidiary so to do, which prohibits or limits the
ability of the Borrower or such Subsidiary to create, incur, assume or suffer to
exist any Lien upon any of its Property or revenues, whether now owned or
hereafter acquired, except (i) Liens for Taxes, assessments or similar charges
incurred in the ordinary course of business that are not delinquent or that are
being contested in accordance with Section 7.4, provided that enforcement of
such Liens is stayed pending such contest, (ii) Liens in connection with
workers' compensation, unemployment insurance or other social security
obligations (but not ERISA), (iii) deposits or pledges to secure bids, tenders,
contracts (other than contracts for the payment of money), leases, statutory
obligations, surety and appeal bonds and other obligations of like nature
arising in the ordinary course of business, (iv) zoning ordinances, easements,
rights of way, minor defects, irregularities, and other similar restrictions
affecting Real Property that do not adversely affect the value of such Real
Property or the financial condition of the Borrower or such Subsidiary or impair
its use for the operation of the business of the Borrower or such Subsidiary,
(v) Liens arising by operation of law such as mechanics', materialmen's,
carriers', and warehousemen's liens incurred in the ordinary course of business
that are not delinquent or that are being contested in accordance with Section
7.6, provided that enforcement of such Liens is stayed pending such contest,
(vi) Liens arising out of judgments or decrees that are being contested in
accordance with Section 7.6, provided that enforcement of such Liens is stayed
pending such contest, (vii) purchase money Liens and Liens arising out of
Capital Lease Obligations on Property of the Borrower or any of its Subsidiaries
acquired after the date hereof to secure Indebtedness (and replacement Liens on
such Property to secure refinancings of such Indebtedness in accordance

                                      -86-
<PAGE>

with Section 8.1(iii)) of the Borrower or its Subsidiaries permitted by Section
8.1(iii), incurred in connection with the acquisition or lease of such Property,
provided that each such Lien is limited to such Property so acquired or leased,
(viii) Liens on Property of the Borrower and its Subsidiaries existing on the
Effective Date as set forth on Schedule 8.2, (ix) [Intentionally Omitted], (x)
Liens to secure Indebtedness permitted by Section 8.1(viii), provided that such
Liens shall be limited to Liens on the Property acquired in connection with such
Permitted Acquisition, (xi) Liens created under the Collateral Documents, and
(xii) Liens to secure Indebtedness permitted by Section 8.1(xviii), provided
that such Liens shall be limited to Liens on the Property acquired in connection
with the merger contemplated by the RTC Merger Agreement.

    8.3.  Merger, Consolidation and  Certain Dispositions of Property
          -----------------------------------------------------------

          Consolidate with, be acquired by, or merge into or with any Person, or
sell, lease or otherwise dispose of all or substantially all of its Property, or
permit any of its Subsidiaries so to do, except (i) as permitted by Section 8.7,
(ii) any wholly-owned Subsidiary of the Borrower (other than TRC) may merge into
the Borrower or another wholly-owned Subsidiary of the Borrower, provided that
(a) no Event of Default shall exist immediately before or after giving effect
thereto, (b) the representations and warranties contained herein shall be true
and correct immediately before and after giving effect hereto, (c) the Borrower,
TRC or such wholly-owned Subsidiary is the survivor of such merger, (d) the
Borrower is the survivor in the case of any such merger involving the Borrower
and TRC is the survivor in the case of any such merger involving TRC, and (e)
the Borrower shall have delivered a certificate to the Administrative Agent on
the day of the merger as to its compliance with each of the requirements set
forth in clauses (a) through (d) above, and (iii) any Permitted Acquisition;
provided that, in the case of clauses (i) and (ii) above, neither the Borrower
nor TRC shall sell, lease or otherwise dispose of all or substantially all of
its Property and to the extent that the Borrower or TRC is a party to any merger
or consolidation, the Borrower or TRC shall be the survivor, and to the extent
that the Borrower is a party to any merger or consolidation, the Borrower shall
be the survivor.

    8.4.  Restricted Payments
          -------------------

          Declare or pay any Restricted Payments payable in cash or otherwise or
apply any of its Property thereto or set apart any sum therefor, or permit any
of its Subsidiaries so to do, except that: (i) a wholly-owned Subsidiary of the
Borrower may declare and pay Restricted Payments to the Borrower or any other
wholly-owned Subsidiary of the Borrower, (ii) provided that no Default or Event
of Default exists immediately before or after giving effect thereto, a non-
wholly-owned Subsidiary of the Borrower may declare and pay Restricted Payments
in cash provided that such Restricted Payments are ratable in accordance with
the respective equity ownership interests in such Subsidiary, (iii) each
Subsidiary may pay Restricted Payments  in the form of tax sharing payments to
the Borrower, and (iv) provided that no Default or Event of Default exists
immediately before and after giving effect thereto,  the Borrower may repurchase
its capital Stock owned by management or employees and physicians under contract
with the

                                      -87-
<PAGE>

Borrower or its Subsidiaries, such payments under this clause not to exceed
$5,000,000 in the aggregate (net of cash received by the Borrower from
management or employees and physicians under contract with the Borrower or its
Subsidiaries in exchange for capital Stock of the Borrower) in any twelve month
period, provided that such $5,000,000 amount shall be increased to $10,000,000
at any time when the Leverage Ratio is less than 3.75:1.00 immediately before
and after giving effect to the applicable Acquisition and at all times during
the immediately preceding two fiscal quarters in respect of which financial
statements and a Compliance Certificate have been delivered to the
Administrative Agent and the Lenders pursuant to Section 7.1; provided that in
no event shall the Borrower declare or pay, or become obligated to declare or
pay, any Restricted Payment in respect of Permitted Preferred Stock other than
Restricted Payments payable in Permitted Preferred Stock or common Stock of the
Borrower.

    8.5.  Investments, Loans, Etc.
          ------------------------

          At any time, purchase or otherwise acquire, hold or make any
Investment in or with any Person, or make an Acquisition, or permit any of its
Subsidiaries so to do, except:

          (a)  Investments in Cash Equivalents;

          (b)  Investments in accounts and notes payable acquired in the
ordinary course of business;

          (c)  Investments (i) existing on the date hereof in wholly-owned
Subsidiaries set forth on Schedule 4.1, (ii) existing on the date hereof in non-
wholly-owned Subsidiaries and otherwise as set forth on Schedule 8.5, and (iii)
acquired after the Effective Date and approved by the Board of Directors of the
Borrower and reasonably acceptable to the Administrative Agent, the Syndication
Agent, the Documentation Agent and the Required Lenders;

          (d) Investments of the Borrower or any of its Subsidiaries in any
Subsidiary of the Borrower for working capital and capital expenditure purposes
of such Subsidiary or to enable such Subsidiary to make Investments permitted by
subsections (f) and (g) below, provided that (i) such Investments in non-wholly
owned Subsidiaries shall be made in the form of demand loans, the aggregate
outstanding principal amount of which shall not exceed $20,000,000 at any one
time, and (ii) such Investments in wholly-owned Subsidiaries shall be made
either in the form of (x) demand loans or (y) additional paid in equity provided
that the aggregate amount of all such additional paid in equity shall not exceed
$20,000,000 at any one time;

          (e) Investments by the Borrower or TRC (i) in ESRD-Related Businesses
existing on the date hereof as set forth on Schedule 8.5, and (ii) in ESRD-
Related Businesses of Persons (other than the Borrower and its Subsidiaries)
made after the Effective Date in an aggregate amount not exceeding $20,000,000
at any one time, provided that immediately before and after giving effect
thereto no Event of Default shall exist;

                                      -88-
<PAGE>

          (f) Domestic Acquisitions by the Borrower or any wholly-owned
Subsidiary of the Borrower, provided that (i) no Default or Event of Default
shall exist immediately before or after giving effect to such Acquisition, (ii)
each such Acquisition was initially approved by the board of directors (or other
Person performing similar functions) of each of the parties thereto, and (iii)
the following conditions shall have been satisfied:

              (A) in the case of stock Acquisitions, the Person whose stock is
          to be acquired shall not be a publicly held Person,

              (B)  upon the consummation of each stock Acquisition, more than
          50% of the Stock or other equity interest of the Person so acquired
          shall be owned by the Borrower or its Subsidiaries,

              (C) the Person acquired in such Domestic Acquisition is in an
          ESRD-Related Business, or the assets acquired in such Domestic
          Acquisition have been and are to be used in an ESRD-Related Business,

              (D) within fifteen Business Days after the consummation of any
          Acquisition in respect of which the total consideration therefor
          exceeds $30,000,000, the Administrative Agent and the Lenders shall
          have received (x) a sources and uses analysis, an equity interest
          breakdown and a copy of the historical and pro-forma EBITDA analysis
          as provided to the Board of Directors of the Borrower, and (y) a
          certificate signed by an Authorized Signatory of the Borrower to the
          effect that, immediately before and after giving effect to such
          Acquisition, no Event of Default shall exist and setting forth
          calculations on a pro-forma basis showing compliance with Sections
          7.12 through 7.15 and 8.17,

              (E) if the Borrower plans to finance the Acquisition with proceeds
          of Loans, prior to the making of such Loans, the Administrative Agent
          and the Lenders shall have received a Borrowing Request, duly executed
          by an Authorized Signatory of the Borrower, containing calculations,
          on a pro-forma basis, that set forth the Leverage Ratio and
          demonstrate compliance with Section 7.15, in each case after giving
          effect to such Loans,

              (F) in the event the total consideration to be paid in connection
          with any one Acquisition (or series of related Acquisitions) shall
          exceed $40,000,000 ($75,000,000 if the consideration to be paid for
          such Acquisition is comprised solely of the common Stock of the
          Borrower), the Required Lenders shall have consented thereto, provided
          that the $40,000,000 amount shall be increased to $50,000,000 at any
          time when the Leverage Ratio is less than 3.75:1.00 immediately before
          and after giving effect to the applicable Acquisition and at all times
          during the immediately preceding two fiscal quarters in respect of
          which financial statements and a Compliance Certificate have been
          delivered to the Administrative Agent and the Lenders pursuant to
          Section 7.1,

                                      -89-
<PAGE>

              (G) in the case of stock Acquisitions, TRC shall have full control
          over all bank accounts of the Person so acquired, and

              (H) the Administrative Agent shall have received such other
          information or documents as the Administrative Agent shall have
          reasonably requested;

          (g) Investments by the Borrower or TRC in 50% or less of the voting
Stock or other equity interest in another Person (the "Minority Investment"),
                                                       -------------------
provided that (i) the Borrower or TRC owns at least 20% (on a fully diluted
basis) of the issued and outstanding Stock or other equity interest in such
Person, (ii) the aggregate outstanding amount of Minority Investments made by
the Borrower and TRC shall not exceed $60,000,000 at any one time, (iii) the
Borrower or TRC shall have full control over all bank accounts of such Person if
the Borrower or TRC is the largest holder of voting Stock or other equity
interests in such Person, (iv) the Borrower or TRC shall control or act as the
managing general partner of such Person if such Person is a partnership and if
the Borrower or TRC is the largest holder of equity interests in such Person,
and (v) immediately before and after giving effect thereto, no Event of Default
shall exist;

          (h)  Investments in notes permitted by Section 8.7(ii);

          (i) 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 in an aggregate amount at
any time outstanding not to exceed $10,000,000;

          (j) Investments in Hedging Obligations permitted by Section 8.1(x);
and

          (k)  Contingent Obligations to the extent permitted by Section 8.1.

          For purposes of this Section 8.5, the amount of any Investment shall
be the original cost of such Investment plus the cost of all additions thereto,
without any adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment.

    8.6.  Business Change
          ---------------

          Materially change the nature of the business of the Borrower and its
Subsidiaries as conducted on the Effective Date.

                                      -90-
<PAGE>

    8.7.  Sale of Property
          ----------------

          Consummate any Asset Sale, or permit any of its Subsidiaries so to do,
except the Puerto Rico Asset Sale, and except any other Asset Sale by the
Borrower or any of its Subsidiaries as to which the following conditions have
been satisfied:

              (i)  no Default or Event of Default shall exist immediately
    before or after giving effect thereto,

              (ii) the consideration received or to be received therefor by the
    Borrower or any of its Subsidiaries shall be payable (a) at least 75% in
    cash (for purposes of this clause (a), cash shall be deemed to include (i)
    amounts deposited in escrow or subject to holdback, in each case to secure
    customary indemnification and similar obligations, and (ii) any related
    forgiveness or assumption of Indebtedness of the Borrower or any of its
    Subsidiaries, provided that, in the case of any such assumption, the
    Borrower and its Subsidiaries shall be fully and unconditionally released
    from the Indebtedness assumed), by the purchaser on or before the closing
    thereof, and such cash consideration shall be in an amount greater than the
    product of (A) that portion of Consolidated Pre-Minority EBITDA attributable
    to the assets sold in such Asset Sale multiplied by (B) the Leverage Ratio
    at the end of the last fiscal quarter in respect of which the Borrower
    delivered financial statements and a Compliance Certificate to the
    Administrative Agent and the Lenders pursuant to Section 7.1 (provided that
    this clause (a) shall not be applicable with respect to any Asset Swap
    Transaction in which the Asset Sale and Permitted Acquisition shall occur
    substantially simultaneously if the Borrower shall have demonstrated to the
    reasonable satisfaction of the Administrative Agent that such Asset Swap
    Transaction will result in a reduction of the Leverage Ratio from that in
    effect as at the end of the last fiscal quarter in respect of which the
    Borrower delivered financial statements and a Compliance Certificate to the
    Administrative Agent and the Lenders pursuant to Section 7.1), and (b) not
    greater than 25% in senior notes, provided that each such note shall be due
    and payable within three years, and shall not be less than the fair market
    value thereof as reasonably determined by the Board of Directors of the
    Borrower,

              (iii) the aggregate sales price of all Asset Sales (excluding the
    Puerto Rico Asset Sale) shall not exceed $300,000,000, provided that (a)
    with respect to any Asset Sale constituting a part of an Asset Swap
    Transaction, the aggregate sales price of such Asset Sale shall be deemed
    decreased (but not below zero) by an amount equal to the purchase price of
    the Permitted Acquisition constituting a part of such Asset Swap Transaction
    and (b) this clause (iii) shall not be applicable when the Leverage Ratio is
    less than 3.75:1.00 immediately before and after giving effect to such Asset
    Sale and at all times during the immediately preceding two fiscal quarters
    in respect of which the Borrower delivered financial statements and a
    Compliance Certificate to the Administrative Agent and the Lenders pursuant
    to Section 7.1, and

                                      -91-
<PAGE>

              (iv) within fifteen Business Days after each such Asset Sale, the
    Administrative Agent and the Lenders shall have received a certificate with
    respect thereto signed by an Authorized Signatory of the Borrower
    identifying the Property sold and stating (a) that immediately before and
    after giving effect thereto, no Default or Event of 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 Board of Directors
    thereof to be not less than the fair market value of such Property and (c)
    the total consideration to be paid in respect of such Asset Sale and (d) the
    Net Cash Proceeds (including a calculation in reasonable detail thereof)
    resulting from such Asset Sale.

    8.8.  Subsidiaries
          ------------
          Create or acquire any other Subsidiary, or permit any of its
Subsidiaries so to do, unless the provisions of Sections 7.11, and 8.11 and 8.17
are satisfied.

    8.9.  Amendments, Etc. of Certain Documents
          -------------------------------------
          (a) Amend or otherwise modify its Articles of Incorporation or By-Laws
in any way that would adversely affect the interests of the Administrative Agent
and the Lenders under any of the Loan Documents, or permit any of its
Subsidiaries so to do.

          (b) Amend or otherwise modify (i) the Term Loan Facility by shortening
the scheduled final maturity of the Term Loan Facility, increasing the amount of
any scheduled repayment or shortening any scheduled date for repayment of the
Term Loans pursuant to Section 2.4(b) of the Term Loan Facility, or increasing
the outstanding principal amount of the Term Loans, (ii) the definition of
"Required Lenders" in the Term Loan Facility, (iii) any mandatory prepayment
required pursuant to the Term Loan Facility (including, without limitation, the
provisions of Section 2.4 of the Term Loan Facility and any definition used in
such Section) in any way that, with respect to this clause (iii), would
adversely affect the interests of the Lenders under any of the Loan Documents,
(iv) any affirmative covenant, negative covenant or default or event of default
contained in the Term Loan Facility (including, without limitation, the
provisions contained in Sections 7, 8 and 9 of the Term Loan Facility and any
definition used in such Sections), in any way that, with respect to this clause
(iv), would adversely affect the interests of the Lenders under any of the Loan
Documents, or (v) Section 2.4(a) or (b) of the Term Loan Facility in any way
that, with respect to this clause (v), would adversely affect the interests of
the Lenders under any of the Loan Documents.

          (c) Refinance the Term Loan Facility unless the terms and provisions
of such refinancing would be permitted under Section 8.9(b) as if the Term Loan
Facility were not being refinanced but were instead being amended to contain
such terms and provisions.

          (d) Amend or otherwise modify, or permit RTC or any other Subsidiary
so to do, the RTC Convertible Subordinated Indenture, the RTC Convertible
Subordinated Notes, the RTC Convertible Subordinated Guaranty or any other
indenture, instrument or other agreement

                                      -92-
<PAGE>

evidencing any Subordinated Indebtedness or any guaranties thereof in any way
that would adversely affect the interests of the Administrative Agent and the
Lenders under any of the Loan Documents.

          (e) The Borrower will not, and will not permit any of its Subsidiaries
to, voluntarily prepay, redeem or repurchase any Subordinated Indebtedness,
except that if such Subordinated Indebtedness is convertible into common stock
of the Borrower, the Borrower may exercise any right it may have to redeem at
any time after November 1, 2001 all or any part of such Subordinated
Indebtedness if on the Determination Date the Applicable Premium is at least
1.05. For purposes of this subsection 8.9(e):

          "Determination Date" shall mean, as applicable, either (i) the date on
           ------------------
    which such Subordinated Indebtedness is redeemed if no prior notice of
    redemption must be given or (ii) if the Borrower is required under the terms
    of such Subordinated Indebtedness to give prior irrevocable notice of
    redemption, the date (which date shall not be more than 45 days prior to the
    redemption date) on which such notice is given;

          "Applicable Premium" shall mean the fraction (i) the numerator of
           ------------------
    which is the "Average Market Value" and (ii) the denominator of which is
    the then applicable conversion price under the terms of such Subordinated
    Indebtedness; and

          "Average Market Value" shall mean the average of the last sale price
           --------------------
    of the Borrower's common stock as reported on the New York Stock Exchange
    (or if not listed for trading thereon, then on the principal national
    securities exchange or the principal automated quotation system on which
    such common stock is listed or admitted to trading) for the period of 10
    trading days ended two trading days prior to the date of redemption or the
    date on which notice of redemption is given, whichever is applicable with
    respect to such Subordinated Indebtedness.

    8.10. ERISA
          -----

          Permit any Pension Plan to have a Funded Current Liability Percentage
of less than 60 percent.

    8.11. Acquisition or Issuance of Additional Stock
          -------------------------------------------

          (a) Create or acquire the stock or other equity or ownership in, or
Property of, any Person that shall thereupon become a Foreign Subsidiary

          (b) Create or acquire the Stock or other equity or ownership in, or
Property of, any Person that shall thereupon become a Domestic Subsidiary (each,
a "New Subsidiary"), or issue any additional Stock or other equity or ownership
   --------------
interest, or permit any Subsidiary so to do, except as follows:

                                      -93-
<PAGE>

                (i)   in connection with a Permitted Acquisition;

                (ii)  any Subsidiary may issue additional Stock to the Borrower
    or TRC;

                (iii) a non-wholly-owned Subsidiary of the Borrower may issue
    additional Stock to its management or to physicians under contract, provided
    that after giving effect to such issuance, such Subsidiary shall remain a
    Subsidiary of the Borrower;

                (iv) The Borrower and its wholly-owned Subsidiaries may create
    new wholly-owned Subsidiaries and non-wholly-owned Subsidiaries of the
    Borrower may create new Subsidiaries;

                (v) the Borrower may issue additional common stock or Permitted
    Preferred Stock, provided that the Borrower shall make the prepayment as
    required by Section 2.7(h) upon the issuance of such Permitted Preferred
    Stock; and

                (vi) pursuant to the terms of the RTC Convertible Subordinated
    Indenture and the RTC Convertible Subordinated Notes;

provided, however, that, except for Permitted Preferred Stock issued pursuant to
subsection (b)(v) above, all Stock issued pursuant to this Section shall
constitute common stock with no mandatory dividend, redemption or similar
requirement, or warrants, options or other equivalents (however designated) to
acquire such common stock.

    8.12. Limitation on Upstream Dividends and Advances by Subsidiaries
          -------------------------------------------------------------

          Permit any Subsidiary to enter into or agree, or otherwise become
subject, to any restriction in any agreement, contract or other arrangement with
any Person pursuant to the terms of which (a) such Subsidiary is or would be
prohibited from or otherwise restricted in declaring or paying any cash
dividends or distributions on or on account of any class of its stock or other
equity interest owned directly or indirectly by the Borrower or (b) such
Subsidiary is or would be prohibited from or otherwise restricted in making
advances to the Borrower.

    8.13. Fiscal Year
          -----------

          Change its fiscal year from that in effect on the Effective Date, or
permit any of its Subsidiaries so to do.

    8.14. Transactions with Affiliates
          ----------------------------

          Sell, lease, transfer or otherwise dispose of any of its Properties
to, or purchase any Property from, or enter into any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, (i) any
Affiliate of the Borrower or any Subsidiary of the Borrower or (ii) any Person
directly or indirectly owning 5% or more of the voting Stock or other voting

                                      -94-
<PAGE>

equity interests of the Borrower or any of its Subsidiaries (each of the
foregoing, an "Affiliate Transaction"), or permit any of its Subsidiaries so to
               ---------------------
do, unless such Affiliate Transaction is on terms that are no less favorable to
the Borrower or the relevant Subsidiary than those that would have been obtained
in a comparable arm's-length transaction by the Borrower or such Subsidiary with
an unrelated Person; provided that this Section 8.14 shall not restrict the
                     --------
ability of the Borrower or any of its Subsidiaries to make Restricted Payments
otherwise permitted under Section 8.4.

    8.15. Limitation on Permitted Acquisitions and Development Capital
          ------------------------------------------------------------
          Expenditures
          ------------

          Permit the sum of all Permitted Acquisitions (including any Permitted
Acquisitions made during a Reinvestment Period) and Development Capital
Expenditures to exceed $55,000,000 during the period from the Effective Date
through December 31, 2000 and $110,000,000 during each fiscal year thereafter
(the "Designated Amount"), of which no more than $30,000,000 during the period
      -----------------
from the Effective Date through December 31, 2000 and $60,000,000 during each
fiscal year thereafter shall be permitted for Development Capital Expenditures,
provided that this Section 8.15 shall not be applicable at any time when the
Leverage Ratio is less than 3.50:1.00 immediately before and after giving effect
to such Permitted Acquisition or Development Capital Expenditure and at all
times during the immediately preceding two fiscal quarters in respect of which
financial statements and a Compliance Certificate have been delivered to the
Administrative Agent and the Lenders pursuant to Section 7.1.  The Designated
Amount for any fiscal year shall be increased by an amount equal to 100% of the
portion of net cash proceeds received by the Borrower in such fiscal year from
the issuance of Permitted Preferred Stock and 75% of the portion of Net Cash
Proceeds received by the Borrower or any of its Subsidiaries in such fiscal year
from Asset Sales, in each case that  is not required to be used to prepay the
Revolving Credit Loans and the Term Loans.  The unused amount of the Designated
Amount in any fiscal year (including the period from the Effective Date through
December 31, 2000) may be carried forward for the next two fiscal years, but not
thereafter, and such unused amount shall be added to the sublimits set forth
above proportionately with the sources of the unused amount.  In calculating the
utilization of the Designated Amount with respect to a Permitted Acquisition
that is part of an Asset Swap Transaction, the amount of such utilization shall
be the difference, if positive, between the purchase price of such Permitted
Acquisition and the sale consideration with respect to the Asset Sale
constituting a part of such Asset Swap Transaction.  For purposes of calculating
the Designated Amount, the payment when due (without any acceleration of the due
date) of the Scheduled Existing Deferred Payment Obligations shall not be deemed
a usage of the Designated Amount; provided that the payment of the Scheduled
Existing Deferred Payment Obligations made in respect of IHS of New York, Inc.,
if accelerated, shall constitute a usage of the Designated Amount for the
applicable period when paid (i) in the case of the period from the Effective
Date through December 31, 2000, in an amount equal to the amount by which such
Scheduled Existing Deferred Payment Obligations made during such period shall
exceed $7,000,000, provided that, to the extent that such Scheduled Existing
Deferred Payment Obligations made during such period shall exceed $7,000,000,
the Borrower may elect to carry

                                      -95-
<PAGE>

forward such excess as a usage of the Designated Amount for fiscal year 2001,
and (ii) in the case of fiscal year 2001, in an amount equal to the sum of such
payments made during fiscal year 2001 and the amount carried forward by the
Borrower pursuant to (i) above.

    8.16. Maintenance Capital Expenditures
          --------------------------------
          Permit Maintenance Capital Expenditures to exceed the applicable
amount set forth below during the applicable fiscal year set forth below:

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
                     Fiscal Year                         Amount
                     -----------                         ------
- --------------------------------------------------------------------------------
<S>                      <C>                           <C>
                         2000                          $35,600,000
- --------------------------------------------------------------------------------
                         2001                           36,100,000
- --------------------------------------------------------------------------------
                         2002                           38,600,000
- --------------------------------------------------------------------------------
                         2003                           41,200,000
- --------------------------------------------------------------------------------
</TABLE>

Unused amounts in any fiscal year may be carried forward to the next fiscal
year, but not thereafter.

    8.17. 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 8.5(f) to
the extent the proceeds thereof were used to acquire Stock or assets included in
(x) above) by the Credit 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.

9.  DEFAULT
    -------

    9.1.  Events of Default
          -----------------

          The following shall each constitute an "Event of Default" hereunder:
                                                  ----------------

                                      -96-
<PAGE>

          (a) The failure of the Borrower to pay any installment of principal on
any Loan or reimbursement obligation in respect of any Letter of Credit on the
date when due and payable; or

          (b) The failure of the Borrower to pay any installment of interest,
fees, expenses or other amounts payable under any Loan Document or otherwise to
the Administrative Agent, or to any other Person to whom such payment is to be
made, with respect to the loan facilities established hereunder within three
Business Days of the date when due and payable; or

          (c) The use of the proceeds of any Loan in a manner inconsistent with
or in violation of Section 2.17; or

          (d) The failure of the Borrower to observe or perform any covenant or
agreement contained in Section 7.3, 7.11, 7.12, 7.13, 7.14, 7.15, 7.16 or 7.17
or Section 8; or

          (e) The failure of any Credit Party to observe or perform any other
term, covenant, or agreement contained in any Loan Document and such failure
shall have continued unremedied for a period of 30 days after the Borrower shall
have obtained knowledge thereof; or

          (f) Any representation or warranty made in any Loan Document or in any
certificate, report, opinion (other than an opinion of counsel) or other
document delivered or to be delivered pursuant thereto, shall prove to have been
incorrect or misleading (whether because of misstatement or omission) in any
material respect when made; or

          (g) Any obligation or obligations of the Borrower (other than its
obligations under the Notes) and/or any of its Subsidiaries (whether as
principal, guarantor, surety, lessee or other obligor) in excess of $5,000,000
on an aggregate basis for the payment of any Indebtedness or operating leases
(i) shall become or shall be declared to be due and payable prior to the
expressed maturity or expiry thereof, or (ii) shall not be paid when due or
within any grace period for the payment thereof, or (iii) any holder of any such
obligation shall have the right, immediately or with the passage of time or the
giving of notice, to declare such obligation due and payable prior to the
expressed maturity thereof;

          (h) An involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of the Borrower or any of its Subsidiaries or its debts, or of a
substantial part of its assets, under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any of its Subsidiaries or for a
substantial part of its assets, and, in any such case, such proceeding or
petition shall continue undismissed for 45 days or an order or decree approving
or ordering any of the foregoing shall be entered; or

          (i) The Borrower or any of its Subsidiaries shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation, reorganization
or other relief under any

                                      -97-
<PAGE>

Federal, state or foreign bankruptcy, insolvency, receivership or similar law
now or hereafter in effect, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or petition described
in clause (h) above, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official for
the Borrower or any of its Subsidiaries or for a substantial part of its assets,
(iv) file an answer admitting the material allegations of a petition filed
against it in any such proceeding, (v) make a general assignment for the benefit
of creditors, (vi) take any action for the purpose of effecting any of the
foregoing or become unable, admit in writing its inability or fail generally to
pay its debts as they become due; or

          (j) Judgments or decrees against the Borrower and/or any of its
Subsidiaries in excess of $3,500,000 on an aggregate basis shall remain unpaid,
unstayed on appeal, undischarged, unbonded or undismissed for a period of 30
days; or

          (k) The occurrence of an Event of Default under and as defined in (i)
any Loan Document, or (ii) the Term Loan Facility; or

          (l) Any Loan Document shall cease, for any reason, to be in full force
and effect, or any Credit Party shall so assert in writing or shall disavow any
of its Obligations thereunder; or

          (m) (i) Any Termination Event (other than an event which constitutes a
Termination Event solely because it is a Reportable Event) shall occur that
could reasonably be expected to result in a liability to the Borrower, any of
its Subsidiaries or any ERISA Affiliate in excess of $2,500,000 in the
aggregate; (ii) any Accumulated Funding Deficiency in excess of $2,500,000 in
the aggregate, whether waived, shall exist with respect to any Pension Plan;
(iii) the Borrower, any of its Subsidiaries or any ERISA Affiliate shall fail to
pay when due an amount in excess of $2,500,000 in the aggregate that is payable
by it to the PBGC or to a Pension Plan under Title IV of ERISA; or

          (n) (i) Any Guarantor shall not be a wholly-owned Subsidiary of the
Borrower, or (ii) any Guarantor that was a wholly-owned Subsidiary of the
Borrower on the date such Guarantor became a party to the Subsidiary Guaranty
shall no longer be a wholly-owned Subsidiary of the Borrower, except as a result
of a transaction permitted under Section 8.3(ii); or

          (o) (i) A judgment creditor of the Borrower or any of its Subsidiaries
shall obtain possession of any material portion of the Collateral under the
Collateral Documents by any means, including, without limitation, levy,
distraint, replevin or self-help, (ii) any of the Collateral Documents shall
cease for any reason to be in full force and effect, or any party thereto shall
purport to disavow its obligations thereunder or shall declare that it does not
have any further obligations thereunder or shall contest the validity or
enforceability thereof or the Collateral Agent, for the benefit of the Lenders
and others, shall cease to have a valid and perfected first priority security
interest in any material Collateral therein, or (iii) the Collateral

                                      -98-
<PAGE>

Agent's security interests or liens on any material portion of the Collateral
under the Collateral Documents shall become otherwise impaired or unenforceable;
or

          (p) 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.

          Upon the occurrence of an Event of Default or at any time thereafter
during the continuance thereof, (a) if such event is an Event of Default
specified in clause (h) or (i) above, the Aggregate Revolving Credit Commitments
and the Swing Line Commitment shall immediately and automatically terminate and
the Loans, all accrued and unpaid interest thereon, any reimbursement
obligations owing in respect of all outstanding Letters of Credit and all other
amounts owing under the Loan Documents shall immediately become due and payable,
and the Borrower shall forthwith deposit an amount equal to the Letter of Credit
Exposure in the Cash Collateral Account, and the Administrative Agent may, and,
upon the direction of the Required Lenders shall, exercise any and all remedies
and other rights provided in the Loan Documents, and (b) if such event is any
other Event of Default, any or all of the following actions may be taken: (i)
with the consent of the Required Lenders, the Administrative Agent may, and upon
the direction of the Required Lenders shall, by notice to the Borrower, declare
the Aggregate Revolving Credit Commitments and the Swing Line Commitment to be
terminated forthwith, whereupon the Aggregate Revolving Credit Commitments and
the Swing Line Commitment shall immediately terminate, and (ii) with the consent
of the Required Lenders, the Administrative Agent may, and upon the direction of
the Required Lenders shall, by notice of default to the Borrower, declare the
Loans, all accrued and unpaid interest thereon, any reimbursement obligations
owing in respect of all outstanding Letters of Credit and all other amounts
owing under the Loan Documents to be due and payable forthwith, whereupon the
same shall immediately become due and payable, and the Borrower shall forthwith
deposit an amount equal to the Letter of Credit Exposure in the Cash Collateral
Account, and the Administrative Agent may, and upon the direction of the
Required Lenders shall, exercise any and all remedies and other rights provided
pursuant to the Loan Documents.  Except as otherwise provided in this Section,
presentment, demand, protest and all other notices of any kind are hereby
expressly waived.  To the extent permitted by applicable law, each Credit Party
hereby further expressly waives and covenants not to assert any appraisement,
valuation, stay, extension, redemption or

                                      -99-
<PAGE>

similar laws, now or at any time hereafter in force, that might delay, prevent
or otherwise impede the performance or enforcement of any Loan Document.

          In the event that the Aggregate Revolving Credit Commitments and the
Swing Line Commitment shall have been terminated or the Loans shall have been
declared due and payable pursuant to the provisions of this Section, any funds
received by the Administrative Agent and the Lenders from or on behalf of the
Borrower shall be applied by the Administrative Agent and the Lenders, subject
to the Intercreditor Agreement, in liquidation of the Loans and the obligations
of the Borrower under the Loan Documents and the applicable Interest Rate
Agreements in the following manner and order: (i) first, to the payment of
interest on, and then the principal portion of, any Loans that the
Administrative Agent may have advanced on behalf of any Lender for which the
Administrative Agent has not then been reimbursed by such Lender or the
Borrower; (ii) second, to the payment of any fees or expenses due the
Administrative Agent and the Syndication Agent from the Borrower; (iii) third,
to reimburse the Administrative Agent, the Letter of Credit Issuer and the
Lenders for any expenses (to the extent not paid pursuant to clause (ii) above)
due from the Borrower pursuant to the provisions of Section 11.5; (iv) fourth,
to the payment, in the following order, of accrued LC Fronting Fees, Commitment
Fees, Letter of Credit Fees and all other fees, expenses and amounts due under
the Loan Documents (other than principal and interest on the Loans and
reimbursement obligations with respect to Letters of Credit); (v) fifth, pro
rata according to the outstanding principal amount of the Loans and the
outstanding principal amount of reimbursement obligations with respect to
Letters of Credit, to the payment of interest due on the Loans and with respect
to such reimbursement obligations; (vi) sixth, pro rata according to the
outstanding principal amount of the Loans and the Secured Interest Rate
Obligations (as such term is defined in the Intercreditor Agreement) of the
Lenders and their Affiliates and the outstanding principal amount of
reimbursement obligations with respect to Letters of Credit, to the payment of
principal outstanding on the Loans, the principal amount of reimbursement
obligations with respect to Letters of Credit and such Secured Interest Rate
Obligations; and (vii) seventh, to the payment of any other amounts owing to the
Administrative Agent, the Syndication Agent, the Letter of Credit Issuer and the
Lenders under any Loan Document.

10. THE ADMINISTRATIVE AGENT
    ------------------------

    10.1. Appointment
          -----------

          Each Lender hereby irrevocably designates and appoints BNY as the
Administrative Agent of such Lender under the Loan Documents and each such
Lender hereby irrevocably authorizes BNY, as the Administrative Agent for such
Lender, to take such action on its behalf under the provisions of the Loan
Documents (including, without limitation, the Intercreditor Agreement) and to
exercise such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of the Loan Documents, together with such
other powers as are reasonably incidental thereto.  Notwithstanding any
provision to the contrary

                                     -100-
<PAGE>

elsewhere in any Loan Document, the Administrative Agent shall not have any
duties or responsibilities other than those expressly set forth therein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into the Loan
Documents or otherwise exist against the Administrative Agent.

    10.2. Delegation of Duties
          --------------------

          The Administrative Agent may execute any of its duties under the Loan
Documents by or through agents or attorneys-in-fact and shall be entitled to
rely upon the advice of counsel concerning all matters pertaining to such
duties.

    10.3. Exculpatory Provisions
          ----------------------

          Neither the Administrative Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any
action lawfully taken or omitted to be taken by the Administrative Agent or such
Person under or in connection with the Loan Documents (except the Administrative
Agent or such Person for its own gross negligence or willful misconduct), or
(ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by any Credit Party or any
officer thereof contained in the Loan Documents or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Administrative Agent under or in connection with, the Loan Documents or for the
value, validity, effectiveness, genuineness, perfection, enforceability or
sufficiency of any of the Loan Documents or for any failure of any Credit Party
or any other Person to perform its obligations thereunder.  The Administrative
Agent shall not be under any obligation to any Lender to ascertain or to inquire
as to the observance or performance of any of the agreements contained in, or
conditions of, the Loan Documents, or to inspect the properties, books or
records of any Credit Party.  The Administrative Agent shall not be under any
liability or responsibility whatsoever, as Administrative Agent, to any Credit
Party or any other Person as a consequence of any failure or delay in
performance, or any breach, by any Lender of any of its obligations under any of
the Loan Documents.

    10.4. Reliance by Administrative Agent
          --------------------------------

          The Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, opinion, letter, cablegram, telegram, fax, telex or
teletype message, email communication, statement, order or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to any Credit Party),
independent accountants and other experts and advisors selected by the
Administrative Agent.  The Administrative Agent may treat each Lender, or the
Person designated in the last notice filed with it under this Section, as the
holder of all of the interests of such Lender in its Loans and in its Notes
until written notice of transfer, signed by such Lender (or the Person
designated in the last notice filed with the Administrative Agent) and by the
Person designated in such written notice of transfer, in form

                                     -101-
<PAGE>

and substance satisfactory to the Administrative Agent, shall have been filed
with the Administrative Agent. The Administrative Agent shall not be under any
duty to examine or pass upon the validity, effectiveness, enforceability,
perfection or genuineness of the Loan Documents or any instrument, document or
communication furnished pursuant thereto or in connection therewith, and the
Administrative Agent shall be entitled to assume that the same are valid,
effective and genuine, have been signed or sent by the proper parties and are
what they purport to be. The Administrative Agent shall be fully justified in
failing or refusing to take any action under the Loan Documents unless it shall
first receive such advice or concurrence of the Required Lenders as it deems
appropriate. The Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, under the Loan Documents in accordance
with a request or direction of the Required Lenders (or, when expressly required
by a Loan Document, all the Lenders), and such request or direction and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Notes.

    10.5. Notice of Default
          -----------------

          The Administrative Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default unless the
Administrative Agent has received written notice thereof from a Lender or the
Borrower.  In the event that the Administrative Agent receives such a notice,
the Administrative Agent shall promptly give notice thereof to the Lenders, the
Letter of Credit Issuer and the Borrower.  The Administrative Agent shall take
such action with respect to such Default or Event of Default as shall be
directed by the Required Lenders, provided, however, 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 to be in the best interests of the Lenders.

    10.6. Non-Reliance on Administrative Agent and Other Lenders
          ------------------------------------------------------

          Each Lender expressly acknowledges that neither the Administrative
Agent nor any of its respective officers, directors, employees, agents,
attorneys-in-fact or affiliates has made any representations or warranties to it
and that no act by the Administrative Agent hereafter, including any review of
the affairs of any Credit Party, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any Lender.  Each
Lender represents to the Administrative Agent that it has, independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it has deemed appropriate, made its own
evaluation of and investigation into the business, operations, Property,
financial and other condition and creditworthiness of the Credit Parties and
made its own decision to enter into this Agreement.  Each Lender also represents
that it will, independently and without reliance upon the Administrative Agent
or any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
evaluations and decisions in taking or not taking action under any Loan
Document, and to make such investigation as it deems necessary to inform itself
as to the

                                     -102-
<PAGE>

business, operations, Property, financial and other condition and
creditworthiness of the Credit Parties. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, Property, financial and other condition or
creditworthiness of the Credit Parties that may come into the possession of the
Administrative Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates.

    10.7. Indemnification
          ---------------

          Each Lender agrees to indemnify and reimburse the Administrative Agent
in its capacity as such (to the extent not promptly reimbursed by the Borrower
and without limiting the obligation of any Credit Party to do so), according to
its Commitment Percentage, from and against any and all liabilities,
obligations, claims, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever, including, without
limitation, any amounts paid to the Lenders (through the Administrative Agent)
by the Borrower pursuant to the terms of the Loan Documents that are
subsequently rescinded or avoided or must otherwise be restored or returned,
that may at any time (including, without limitation, at any time following the
payment of the Loans) be imposed on, incurred by or asserted against the
Administrative Agent in any way relating to or arising out of the Loan Documents
or any other documents contemplated by or referred to therein or the
transactions contemplated thereby or any action taken or omitted to be taken by
the Administrative Agent under or in connection with any of the foregoing;
provided, however, that no Lender shall be liable for the payment of any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements to the extent resulting from
the gross negligence or willful misconduct of the Administrative Agent.  The
agreements in this Section shall survive the payment of all amounts payable
under the Loan Documents.

    10.8. Administrative Agent in Its Individual Capacity
          -----------------------------------------------

          BNY and its respective affiliates may make loans to, accept deposits
from, issue letters of credit for the account of, and generally engage in any
kind of business with, any Credit Party as though BNY were not Administrative
Agent hereunder.  With respect to the Commitment made or renewed by BNY and the
Notes issued to BNY, BNY shall have the same rights and powers under the Loan
Documents as any Lender and may exercise the same as though it were not the
Administrative Agent, and the terms "Lender" and "Lenders" shall in each case
include BNY.

    10.9. Successor Administrative Agent
          ------------------------------

          If at any time the Administrative Agent deems it advisable, in its
sole discretion, it may submit to each of the Lenders a written notice of its
resignation as Administrative Agent under the Loan Documents, such resignation
to be effective upon the earlier of (i) the written acceptance of the duties of
the Administrative Agent under the Loan Documents by a successor

                                     -103-
<PAGE>

Administrative Agent and (ii) on the 30th day after the date of such notice.
Upon any such resignation, the Required Lenders shall have the right to appoint
from among the Lenders a successor Administrative Agent. If no successor
Administrative Agent shall have been so appointed by the Required Lenders and
accepted such appointment in writing within 30 days after the retiring
Administrative Agent's giving of notice of resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, which successor Administrative Agent shall be a commercial
bank organized under the laws of the United States or any State thereof and
having a combined capital, surplus, and undivided profits of at least
$100,000,000. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent's rights, powers, privileges and duties as Administrative
Agent under the Loan Documents shall be terminated. The Borrower and the Lenders
shall execute such documents as shall be necessary to effect such appointment.
After any retiring Administrative Agent's resignation as Administrative Agent,
the provisions of the Loan Documents shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Administrative Agent
under the Loan Documents. If at any time there shall not be a duly appointed and
acting Administrative Agent, the Borrower agrees to make each payment due under
the Loan Documents directly to the Persons entitled thereto during such time.

    10.10. Appointment of Collateral Agent
           -------------------------------

           Each Lender hereby authorizes the Administrative Agent to enter into
the Intercreditor Agreement on behalf of and for the benefit of that Lender and
agrees to be bound by the terms of the Intercreditor Agreement.  Each Lender
hereby authorizes the Collateral Agent to enter into the Collateral Documents
and the Intercreditor Agreement and to accept the Subsidiary Guaranty and to
take all action contemplated by the Intercreditor Agreement, the Collateral
Documents, and Subsidiary Guaranty.  Each Lender agrees that no Lender shall
have any right individually to seek or to enforce the Subsidiary Guaranty or to
realize upon the security granted by any Collateral Document, it being
understood and agreed that such rights and remedies may be exercised by the
Collateral Agent for the benefit of the Lenders and the parties to the
Intercreditor Agreement upon the terms of the Subsidiary Guaranty, the
Collateral Documents and the Intercreditor Agreement.

    10.11. The Co-Arrangers
           ----------------

          The Co-Arrangers shall have no duties or obligations under the Loan
Documents in their capacity as Co-Arrangers.  The Co-Arrangers, in their
capacity as Co-Arrangers, shall have the same rights, protections, immunities
and indemnities as the Administrative Agent.

    10.12. The Syndication Agent
           ---------------------

          The Syndication Agent shall have no duties or obligations under the
Loan Documents in its capacity as Syndication Agent. The Syndication Agent, in
its capacity as

                                     -104-
<PAGE>

Syndication Agent, shall have the same rights, protections, immunities and
indemnities as the Administrative Agent.

    10.13. The Documentation Agent
           -----------------------

           The Documentation Agent shall have no duties or obligations under the
Loan Documents in its capacity as Documentation Agent. The Documentation Agent,
in its capacity as Documentation Agent, shall have the same rights, protections,
immunities and indemnities as the Administrative Agent.

11. OTHER PROVISIONS
    -----------------

    11.1.  Amendments and Waivers
           ----------------------

           With the written consent of the Required Lenders, the Administrative
Agent and the appropriate Credit Parties may, from time to time, enter into
written amendments, supplements or modifications of this Agreement, the Notes
and the Intercreditor Agreement and, with the consent of the Required Lenders,
the Administrative Agent on behalf of the Lenders may execute and deliver to any
such parties a written instrument waiving or a consent to a departure from, on
such terms and conditions as the Administrative Agent may specify in such
instrument, any of the requirements of this Agreement, the Notes and the
Intercreditor Agreement or any Default or Event of Default and its consequences;
provided that:

           (a) no such amendment, supplement, modification, waiver or consent
shall, without the consent of all of the Lenders, (i) increase the Commitment of
any Lender or the Aggregate Revolving Credit Commitments or the maximum amount
of allowable Aggregate Alternate Currency Exposure, (ii) extend the Maturity
Date; (iii) decrease the rate, or extend the time of payment, of the Commitment
Fee or the Letter of Credit Fee or of interest on, or change or forgive the
principal amount of, or change the pro rata allocation of payments under, any
Note, (iv) except as provided in Section 11.1(e), release or discharge any
Credit Party or release any Collateral, (v) change the provisions of Sections
2.12, 2.14, 2.15, 2.16, 2.18, 2.22, 11.1 or 11.7(a), (vi) change the definition
of Required Lenders, (vii) change the several nature of the obligations of the
Lenders, (viii) extend the date or decrease the amount of any required
Commitment reduction pursuant to Section 2.6(b), (ix) add any new currency to
the definition of Currencies, or (x) add any new borrower under this Agreement;
and

           (b) without the written consent of the Letter of Credit Issuer, no
such amendment, supplement, modification or waiver shall change the amount or
the time of payment of the Letter of Credit Fee or the LC Fronting Fee or change
any other term or provision that relates to the Letters of Credit; and

           (c) without the written consent of the Swing Line Lender, no such
amendment, supplement, modification or waiver shall change the Swing Line
Commitment or

                                     -105-
<PAGE>

change any other term or provision that relates to the Swing Line Commitment
or the Swing Line Loans; and

          (d) without the written consent of the Administrative Agent, no such
amendment, supplement, modification or waiver shall amend, modify or waive any
provision of Section 10 or otherwise change any of the rights or obligations of
the Administrative Agent hereunder or under the other Loan Documents; and

          (e) notwithstanding anything to the contrary contained in this Section
11.1, (i) the Collateral Documents, the Intercreditor Agreement and the
Subsidiary Guaranty may only be amended in accordance with the terms thereof and
of the Intercreditor Agreement, and (ii) the Collateral Agent may, at any time
and from time to time without the consent of any one or more of the Lenders, (A)
release all or any of the obligations of any one or more Subsidiaries under the
Collateral Documents in connection with a disposition of such Subsidiary as
permitted by Section 8.3 or 8.7, and (B) release any Collateral or any security
interest therein in connection with any release specifically provided for in the
Collateral Documents.

          Any such amendment, supplement, modification or waiver shall apply
equally to each of the Lenders and shall be binding upon the parties to the
applicable Loan Document, the Lenders, the Letter of Credit Issuer, the
Administrative Agent and all future holders of the Notes.  In the case of any
waiver, the parties to the applicable Loan Document, the Lenders, the Letter of
Credit Issuer and the Administrative Agent shall be restored to their former
position and rights hereunder and under the outstanding Notes and other Loan
Documents to the extent provided for in such waiver, and any Default or Event of
Default waived shall not extend to any subsequent or other Default or Event of
Default, or impair any right consequent thereon.  The Loan Documents may not be
amended orally or by any course of conduct.

    11.2. Notices
          -------

          All notices, requests and demands to or upon the respective parties to
the Loan Documents to be effective shall be in writing and, unless otherwise
expressly provided therein, shall be deemed to have been duly given or made when
delivered by hand, or when deposited in the mail, first-class postage prepaid,
or, in the case of notice by fax, when sent, addressed as follows in the case of
the Borrower or the Administrative Agent, at the Domestic Lending Office, in the
case of each Lender, and to the address of a Credit Party set forth in a Loan
Document, or to such other addresses as to which the Administrative Agent may be
hereafter notified by the respective parties thereto or any future holders of
the Notes:

          The Borrower:

          Total Renal Care Holdings, Inc.
          21250 Hawthorne Blvd., Suite 800
          Torrance, CA 90503-5517
          Attention:  Richard Whitney,

                                     -106-
<PAGE>

                      Chief Financial Officer
          Telephone:  (310) 750-2135
          Fax:        (310) 792-9281

          The Administrative Agent:

          The Bank of New York
          One Wall Street
          Agency Function Administration
          18th Floor
          New York, New York 10286
          Attention:  Kalyani Bose
          Telephone:  (212) 635-4693
          Fax:        (212) 635-6365 or 6366 or 6367

          with a copy to:

          The Bank of New York
          10990 Wilshire Blvd., Suite 1125
          Los Angeles, California 90024
          Attention:  Rebecca K. Levine
                      Vice President
          Telephone:  (310) 996-8659
          Fax:        (310) 996-8667


except that any notice, request or demand by the Borrower to or upon the
Administrative Agent or the Lenders pursuant to Sections 2.5, 2.6, 2.7, 2.9 or
2.19 shall not be effective until received.  Any party to a Loan Document may
rely on signatures of the parties thereto that are transmitted by fax or other
electronic means as fully as if originally signed.

    11.3. No Waiver; Cumulative Remedies
          ------------------------------

          No failure to exercise and no delay in exercising, on the part of the
Administrative Agent, the Letter of Credit Issuer or any Lender, any right,
remedy, power or privilege under any Loan Document shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege under any Loan Document preclude any other or further exercise thereof
or the exercise of any other right, remedy, power or privilege.  The rights,
remedies, powers and privileges under the Loan Documents are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.

                                     -107-
<PAGE>

    11.4. Survival of Representations and Warranties
          ------------------------------------------

          All representations and warranties made under the Loan Documents and
in any document, certificate or statement delivered pursuant thereto or in
connection therewith shall survive the execution and delivery of the Loan
Documents.

    11.5. Payment of Expenses and Taxes
          -----------------------------

          The Borrower agrees, promptly upon presentation of a statement or
invoice therefor, and whether any Loan is made (i) to pay or reimburse the
Administrative Agent, the Documentation Agent, the Syndication Agent and the Co-
Arrangers for all their out-of-pocket costs and expenses reasonably incurred in
connection with the development, preparation and execution of the Loan Documents
and any amendment, supplement or modification thereto (whether or not executed),
any documents prepared in connection therewith and the consummation of the
transactions contemplated thereby, including, without limitation, the reasonable
fees and disbursements of Special Counsel, (ii) to pay or reimburse the
Administrative Agent, the Documentation Agent, the Syndication Agent,  the Co-
Arrangers, the Letter of Credit Issuer, and the Lenders for all of their
respective costs and expenses, including, without limitation, reasonable fees
and disbursements of counsel (including allocated costs of internal counsel),
incurred in connection with (A) any Default or Event of Default and any
enforcement or collection proceedings resulting therefrom or in connection with
the negotiation of any restructuring or "work-out" (whether consummated or not)
of the obligations of the Credit Parties under any of the Loan Documents and (B)
the enforcement of this Section, (iii) to pay, indemnify, and hold the
Administrative Agent, the Documentation Agent, the Syndication Agent, the Co-
Arrangers, the Letter of Credit Issuer and each Lender harmless from and
against, any and all recording and filing fees and any and all liabilities with
respect to, or resulting from any delay in paying, stamp, excise and other
similar taxes, if any, that may be payable or determined to be payable in
connection with the execution and delivery of, or consummation of any of the
transactions contemplated by, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, the Loan Documents and any such
other documents, and (iv) to pay, indemnify and hold the Administrative Agent,
the Documentation Agent, the Syndication Agent, the Co-Arrangers, the Letter of
Credit Issuer and each Lender, and each of their respective officers, directors
and employees, harmless from and against any and all other liabilities,
obligations, claims, losses, damages, penalties, actions, judgments, suits,
costs, expenses and disbursements of any kind or nature whatsoever (including,
without limitation, reasonable counsel fees and disbursements) with respect to
the enforcement and performance of the Loan Documents, the use of the proceeds
of the Loans and the enforcement and performance of the provisions of any
subordination agreement in favor of the Administrative Agent and the Lenders
(all the foregoing, collectively, the "indemnified liabilities") and, if and to
                                       -----------------------
the extent that the foregoing indemnity may be unenforceable for any reason, the
Borrower agrees to make the maximum payment permitted or not prohibited under
applicable law; provided, however, that the Borrower shall have no obligation
hereunder to pay indemnified liabilities to the Administrative Agent, the
Documentation Agent, the Syndication Agent, the Co-Arrangers, the Letter of
Credit

                                     -108-
<PAGE>

Issuer or any Lender to the extent arising from such indemnified party's gross
negligence or willful misconduct or claims between one indemnified party and
another indemnified party. The agreements in this Section shall survive the
termination of the Aggregate Revolving Credit Commitments and the Swing Line
Commitment and the payment of all amounts payable under the Loan Documents.

    11.6. Lending Offices
          ---------------
          (a) Each Lender shall have the right at any time and from time to time
to transfer its Letter of Credit Exposure or Loans, as the case may be, to a
different office, provided that it shall promptly notify the Administrative
Agent and the Borrower of any such change of office. Such office shall thereupon
become, with respect to its Loans, its Lender's Domestic Lending Office or
Eurodollar Lending Office, as the case may be, provided, however, that it shall
not be entitled to receive any greater amount under Sections 2.12, 2.14, 2.15,
2.18 or 2.22 as a result of any such transfer to a different office than it
would be entitled to immediately prior thereto unless (i) such claim would have
arisen even if such transfer had not occurred, (ii) such transfer was made
pursuant to subsection (b) below, or (iii) such claims arose as a result of a
change of law after such transfer.

          (b) The Letter of Credit Issuer and each Lender agrees that, upon the
occurrence of any event giving rise to any increased cost or indemnity under
Sections 2.12, 2.14, 2.15, 2.18 or 2.22 with respect to the Letter of Credit
Issuer or such Lender, as the case may be, it will, if requested by the
Borrower, use reasonable efforts (subject to its overall policy considerations)
to designate another office for any part of its Letter of Credit Exposure or
Loans affected by such event, provided that such designation is made on such
terms that the Letter of Credit Issuer or such Lender, as the case may be, and
its office suffer no economic, legal or regulatory disadvantage, with the object
of avoiding the consequence of the event giving rise to the operation of any
such Section.

    11.7. Assignments and Participations
          ------------------------------

          (a) The Loan Documents shall be binding upon and inure to the benefit
of the Borrower, the Lenders, the Letter of Credit Issuer, the Administrative
Agent, all future holders of the Notes and their respective successors and
assigns, except that no Credit Party may assign, delegate or transfer any of its
rights or obligations under the Loan Documents without the prior written consent
of the Administrative Agent, the Letter of Credit Issuer and each Lender.

          (b) Each Lender shall have the right at any time, upon written notice
to the Administrative Agent of its intent to do so and the payment of a fee (the
"Assignment Fee") of $3,500 to the Administrative Agent by the assigning or
 --------------
assignee Lender, to sell, assign, transfer or negotiate all or any part of such
Lender's rights and obligations under the Loan Documents (i) to one or more of
the other Lenders, (ii) with the prior written consent of the Swing Line Lender
and the Letter of Credit Issuer (which consents shall not be unreasonably
withheld or delayed), to one or more of its affiliates or Approved Funds or the
affiliates or Approved Funds

                                     -109-
<PAGE>

of one or more of the other Lenders, or (iii) with the prior written consent of
the Borrower, the Administrative Agent, the Swing Line Lender and the Letter of
Credit Issuer (which consents shall not be unreasonably withheld or delayed, or
with respect to the Borrower, required during the continuance of an Event of
Default), to any other bank, insurance company, pension fund, mutual fund or
other financial institution or fund, which in the normal course of its business,
purchases loans such as the Loans, provided that each such sale, assignment,
transfer or negotiation (other than sales, assignments, transfers or
negotiations (x) to affiliates of such Lender or (y) of a Lender's entire
interest) shall be in a minimum amount of $2,000,000. For each assignment, the
parties to such assignment shall execute and deliver to the Administrative Agent
for its acceptance an Assignment and Acceptance Agreement which the
Administrative Agent shall record in a register (the "Register") maintained by
                                                      --------
the Administrative Agent on behalf of the Borrower, for the recordation of the
names and addresses of the Lenders and the Commitment of, and principal amount
of the Loans owing to, each Lender from time to time and the registered owners
of the Obligation(s) evidenced by the Note(s). The entries in the Register shall
be presumptively correct absent manifest error. No assignment shall be effective
for purposes of this Agreement until it has been recorded in the Register as
provided above. Upon such execution, delivery, acceptance and recording by the
Administrative Agent, from and after the effective date specified in such
Assignment and Acceptance Agreement, the assignee thereunder, if not already a
Lender, shall be a party hereto and, to the extent provided in such Assignment
and Acceptance Agreement, the assignor Lender thereunder shall be released from
its obligations under the Loan Documents. The Borrower agrees upon written
request of the Administrative Agent and at the Borrower's expense to execute and
deliver (i) to such assignee, as applicable, a Revolving Tranche Note or a Term
Tranche Note, dated the date of the assignor's applicable Revolving Credit Note
subject to such Assignment and Acceptance Agreement, in an aggregate principal
amount equal to the applicable Loans assigned to, and Commitments assumed by,
such assignee and (ii) to such assignor Lender, as applicable, a Revolving
Tranche Note or a Term Tranche Note, dated the date of the assignor's applicable
Revolving Credit Note subject to such Assignment and Acceptance Agreement, in an
aggregate principal amount equal to the balance of such assignor Lender's
applicable Loans and Commitments, if any, and each assignor Lender shall cancel
and return to the Borrower its existing applicable Revolving Credit Note. Upon
any such sale, assignment or other transfer, the Commitments and the Commitment
Percentages set forth in Exhibit A shall be adjusted accordingly by the
Administrative Agent.

          (c) Each Lender may grant participations in all or any part of its
Loans, its Note, its Letter of Credit Exposure and its Commitment to one or more
banks, insurance companies, financial institutions, pension funds, mutual funds
or funds which in the normal course of business purchase loans such as the
Loans, provided that (i) such Lender's obligations under the Loan Documents
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties to the Loan Documents for the performance of such obligations,
(iii) the Borrower, the Administrative Agent, the Letter of Credit Issuer and
the other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under the Loan Documents
and (iv) the voting rights of any holder of any participation shall be limited
to decisions that require the consent of all Lenders as set forth in

                                     -110-
<PAGE>

Section 11.1(a). The Borrower acknowledges and agrees that any such participant
shall for purposes of Sections 2.12, 2.14, 2.15, 2.18 and 2.22 be deemed to be a
"Lender"; provided, however, the Borrower shall not, at any time, be obligated
to pay any participant in any interest of any Lender hereunder any sum in excess
of the sum that the Borrower would have been obligated to pay to such Lender in
respect of such interest had such Lender not sold such participation.

          (d) If any (i) assignment is made pursuant to subsection (b) above or
(ii) participation is granted pursuant to subsection (c) above to any Person
that is not a U.S. Person, such Person shall furnish such certificates,
documents or other evidence to the Borrower and the Administrative Agent, in the
case of clause (i), and to the Borrower and the Lender that sold such
participation, in the case of clause (ii), as shall be required by Section
2.12(e).

          (e) No Lender shall, as between and among the Borrower, the
Administrative Agent, the Documentation Agent, the Syndication Agent, the Swing
Line Lender, the Letter of Credit Issuer and such Lender, be relieved of any of
its obligations under the Loan Documents as a result of any sale, assignment,
transfer or negotiation of, or granting of participations in, all or any part of
its Loans, its Letter of Credit Exposure, its Commitment or its Notes, except
that a Lender shall be relieved of its obligations to the extent of any such
sale, assignment, transfer, or negotiation of all or any part of its Loans, its
Letter of Credit Exposure, its Commitment or its Notes pursuant to subsection
(b) above.

          (f) Notwithstanding anything to the contrary contained in this
Section, any Lender may at any time or from time to time assign or pledge all or
any portion of its rights under the Loan Documents to (i) a Federal Reserve Bank
or (ii) if such Lender is a fund which in the normal course of its business
purchases loans such as the Loans, to its lenders or a trustee under an
indenture for the benefit of its creditors, to secure such fund's obligations,
provided that any such assignment or pledge shall not release such assignor from
its obligations thereunder.

          (g) In the event that the Borrower shall request that Lenders enter
into any amendment, modification, consent or waiver with respect to this
Agreement or any other Loan Document, which amendment, modification, consent or
waiver cannot become effective without the consent of each Lender, and any
Lender elects not to enter into such amendment, modification, consent or waiver
(each such Lender 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 its
Revolving Credit Loans, Revolving Credit Notes and Revolving Credit Commitment
at par to any Lender or any other financial institution which satisfies the
requirements of Section 11.7(b) and has been consented to by the Administrative
Agent, the Swing Line Lender and the Letter of Credit Issuer (which consents
shall not be unreasonably withheld or delayed), in each case that agrees, in its
sole discretion, to assume such Revolving Credit Loans, Revolving Credit Notes
and Revolving Credit Commitment. Each such assignment shall be made pursuant to
an Assignment and Acceptance Agreement and shall comply with the other terms of
this Section 11.7. The

                                     -111-
<PAGE>

Borrower shall pay to such Dissenting Lender, concurrently with the
effectiveness of such assignment, any amounts payable under Section 2.15 that
would have been payable if the Borrower had voluntarily prepaid such Revolving
Credit Loans. The Dissenting Lender shall not be required to pay the Assignment
Fee.

    11.8. Counterparts; Effectiveness
          ---------------------------

          Each Loan Document (other than the Notes) may be executed by one or
more of the parties thereto on any number of separate counterparts and all of
said counterparts taken together shall be deemed to constitute one and the same
document.  It shall not be necessary in making proof of any Loan Document to
produce or account for more than one counterpart signed by the party to be
charged.  A counterpart of any Loan Document or of any amendment, modification,
consent or waiver to or of any Loan Document transmitted by fax shall be deemed
to be an originally executed counterpart.  A set of the copies of the Loan
Documents signed by all the parties thereto shall be deposited with each of the
Borrower and the Administrative Agent.  Any party to a Loan Document may rely
upon the signatures of any other party thereto that are transmitted by fax or
other electronic means to the same extent as if originally signed.  On the
Effective Date, at the time of the effectiveness of this Agreement, (i) this
Agreement shall amend and restate the Existing Revolving Credit Agreement, (ii)
all Revolving Credit Loans (as defined in the Existing Revolving Credit
Agreement) outstanding under the Existing Revolving Credit Agreement shall
continue as and constitute Revolving Credit Loans for all purposes under this
Agreement, (iii) all Swing Line Loans (under and as defined in the Existing
Revolving Credit Agreement) shall continue as and constitute Swing Line Loans
for all purposes under this Agreement, (iv) all Letters of Credit (under and as
defined in the Existing Revolving Credit Agreement) shall continue as and
constitute Letters of Credit for all purposes under this Agreement, and (v) all
obligations of the Borrower under the Existing Revolving Credit Agreement that
have not been paid as of the Effective Date shall become Obligations of the
Borrower under this Agreement.

    11.9. Adjustments; Set-off
          --------------------

          (a) If any Lender shall at any time receive any payment of all or any
part of its Loans, or interest thereon, or receive any collateral in respect
thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or
proceedings of the nature referred to in Section 9.1 (h) or (i), or otherwise)
in a greater proportion than any such payment to and collateral received by any
other Lender in respect of such other Lender's Loans, or interest thereon (each
a "Benefited Lender"), such Benefited Lender shall purchase for cash from each
   ----------------
of the other Lenders such portion of each such other Lender's Loans, and shall
provide each of such other Lenders with the benefits of any such collateral, or
the proceeds thereof, as shall be necessary to cause such Benefited Lender to
share the excess payment or benefits of such collateral or proceeds ratably with
each of the Lenders, provided, however, that if all or any portion of such
excess payment or benefits is thereafter recovered from such Benefited Lender,
such purchase shall be rescinded, and the purchase price and benefits returned,
to the extent of such recovery,

                                     -112-
<PAGE>

but without interest. The Borrower agrees that each Lender so purchasing a
portion of another Lender's Loans may exercise all rights of payment (including,
without limitation, rights of set-off, to the extent not prohibited by law) with
respect to such portion as fully as if such Lender were the direct holder of
such portion.

          (b) In addition to any rights and remedies of the Lenders provided by
law, upon the occurrence of an Event of Default and the acceleration of the
obligations owing in connection with the Loan Documents, or at any time upon the
occurrence and during the continuance of an Event of Default, under Section
9.1(a) or (b), each Lender shall have the right, without prior notice to the
Borrower, any such notice being expressly waived by each Credit Party to the
extent not prohibited by applicable law, to set-off and apply against any
indebtedness, whether matured or unmatured, of such Credit Party to such Lender,
any amount owing from such Lender to such Credit Party, at, or at any time
after, the happening of any of the above-mentioned events. To the extent not
prohibited by applicable law, the aforesaid right of set-off may be exercised by
such Lender against such Credit Party or against any trustee in bankruptcy,
custodian, debtor in possession, assignee for the benefit of creditors,
receiver, or execution, judgment or attachment creditor of such Credit Party, or
against anyone else claiming through or against such Credit Party or such
trustee in bankruptcy, custodian, debtor in possession, assignee for the benefit
of creditors, receiver, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of set-off shall not have been
exercised by such Lender prior to the making, filing or issuance, or service
upon such Lender of, or of notice of, any such petition, assignment for the
benefit of creditors, appointment or application for the appointment of a
receiver, or issuance of execution, subpoena, order or warrant. Each Lender
agrees promptly to notify the applicable Credit Party and the Administrative
Agent after any such set-off and application made by such Lender, provided that
the failure to give such notice shall not affect the validity of such set-off
and application.

    11.10. Construction
           ------------

          Each Credit Party represents that it has been represented by counsel
in connection with the Loan Documents and the transactions contemplated thereby
and that the principle that agreements are to be construed against the draftsman
shall be inapplicable.

    11.11. Indemnity
           ---------

          The Borrower agrees to indemnify and hold harmless the Administrative
Agent, the Documentation Agent, the Syndication Agent, the Co-Arrangers, the
Letter of Credit Issuer and each Lender and their respective affiliates,
directors, officers, employees, attorneys and agents (each an "Indemnified
                                                               -----------
Person") from and against any loss, cost, liability, damage or expense
- ------
(including the reasonable fees and disbursements of counsel of such Indemnified
Person, including all local counsel hired by any such counsel) incurred by such
Indemnified Person in investigating, preparing for, defending against, or
providing evidence, producing documents or taking any other action in respect
of, any commenced or threatened litigation, administrative

                                     -113-
<PAGE>

proceeding or investigation under any federal securities law or any other
statute of any jurisdiction, or any regulation, or at common law or otherwise,
that is alleged to arise out of or is based upon (i) any untrue statement or
alleged untrue statement of any material fact by any Credit Party in any
document or schedule executed or filed with any Governmental Authority by or on
behalf of any Credit Party; (ii) any omission or alleged omission to state any
material fact required to be stated in such document or schedule, or necessary
to make the statements made therein, in light of the circumstances under which
made, not misleading; (iii) any acts, practices or omissions or alleged acts,
practices or omissions of any Credit Party or its agents relating to the use of
the proceeds of any or all borrowings made by the Borrower alleged to be in
violation of Section 2.17, or in violation of any federal securities law or of
any other statute, regulation or other law of any jurisdiction applicable
thereto; or (iv) any acquisition or proposed acquisition by any Credit Party of
all or a portion of the Stock, or all or a portion of the assets, of any Person
whether such Indemnified Person is a party thereto, provided that the Borrower
shall have no obligation under this Section to an Indemnified Person with
respect to any of the foregoing to the extent any such loss, cost, liability,
damage or expense resulted from or arose out of the gross negligence or willful
misconduct of such Indemnified Person or arose from claims between one such
Indemnified Person and another such Indemnified Person. The indemnity set forth
herein shall be in addition to any other obligations or liabilities of the
Borrower to each Indemnified Person under the Loan Documents or at common law or
otherwise, and shall survive any termination of the Loan Documents, the
expiration of the Commitments and the payment of all indebtedness of the
Borrower under the Loan Documents.

    11.12. GOVERNING LAW
           -------------

           THE LOAN DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
THEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.

    11.13. Headings Descriptive
           --------------------

           Section headings have been inserted in the Loan Documents for
convenience only and shall not be construed to be a part thereof.

    11.14. Severability
           ------------

           Every provision of the Loan Documents is intended to be severable,
and if any term or provision thereof shall be invalid, illegal or unenforceable
for any reason, the validity, legality and enforceability of the remaining
provisions thereof shall not be affected or impaired thereby, and any
invalidity, illegality or unenforceability in any jurisdiction shall not affect
the validity, legality or enforceability of any such term or provision in any
other jurisdiction.

                                     -114-
<PAGE>

    11.15. Integration
           -----------

           All exhibits to a Loan Document shall be deemed to be a part thereof.
Except for agreements between the Administrative Agent and the Borrower with
respect to certain fees, the Loan Documents embody the entire agreement and
understanding among the Credit Parties, the Administrative Agent and the Lenders
with respect to the subject matter thereof and supersede all prior agreements
and understandings among the Credit Parties, the Administrative Agent and the
Lenders with respect to the subject matter thereof.

    11.16. Consent to Jurisdiction
           -----------------------

           Each Credit Party hereby irrevocably submits to the jurisdiction of
any New York State or Federal court sitting in the City of New York over any
suit, action or proceeding arising out of or relating to the Loan Documents.
Each Credit Party hereby irrevocably waives, to the fullest extent permitted or
not prohibited by law, any objection that it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding brought in such a
court and any claim that any such suit, action or proceeding brought in such a
court has been brought in an inconvenient forum.  Each Credit Party hereby
agrees that a final judgment in any such suit, action or proceeding brought in
such a court, after all appropriate appeals, shall be conclusive and binding
upon it.

    11.17. Service of Process
           ------------------

           Each Credit Party hereby agrees that service of process in any such
suit, action or proceeding brought in the State of New York may be made upon CT
Corporation at its offices at 111 Eighth Avenue, New York, New York 10011 (or
any other location in New York City) (the "Process Administrative Agent") and
                                           ----------------------------
each Credit Party hereby irrevocably appoints the Process Administrative Agent
its authorized agent to accept such service of process, and agrees that the
failure of the Process Administrative Agent to give any notice of any such
service shall not impair or affect the validity of such service or of any
judgment rendered in any action or proceeding based thereon.  Each Credit Party
hereby further irrevocably consents to the service of process in any suit,
action or proceeding by sending the same by first class mail, return receipt
requested or by overnight courier service, to the address of such Credit Party
set forth in or referred to in Section 11.2 or in the applicable Loan Document
executed by such Credit Party.  Each Credit Party hereby agrees that any such
service (i) shall be deemed in every respect effective service of process upon
it in any such suit, action, or proceeding, and (ii) shall to the fullest extent
enforceable by law, be taken and held to be valid personal service upon and
personal delivery to it.

    11.18. No Limitation on Service or Suit
           --------------------------------

           Nothing in the Loan Documents or any modification, waiver, consent or
amendment thereto shall affect the right of the Administrative Agent, the Letter
of Credit Issuer or any Lender to serve process in any manner permitted by law
or limit the right of the

                                     -115-
<PAGE>

Administrative Agent, the Letter of Credit Issuer or any Lender to bring
proceedings against any Credit Party in the courts of any jurisdiction or
jurisdictions in which such Credit Party may be served.

    11.19. [Intentionally Omitted]

    11.20. WAIVER OF TRIAL BY JURY
           -----------------------

           THE ADMINISTRATIVE AGENT, THE DOCUMENTATION AGENT, THE SYNDICATION
AGENT, THE CO-ARRANGERS, THE LENDERS, THE LETTER OF CREDIT ISSUER AND EACH
CREDIT PARTY EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT
OF, UNDER OR IN CONNECTION WITH THE LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREIN.  FURTHER, EACH CREDIT PARTY HEREBY CERTIFIES THAT NO
REPRESENTATIVE OR AGENT OF THE ADMINISTRATIVE AGENT, THE DOCUMENTATION AGENT,
THE SYNDICATION AGENT, THE CO-ARRANGERS, THE LETTER OF CREDIT ISSUER OR THE
LENDERS, OR COUNSEL TO THE ADMINISTRATIVE AGENT, THE DOCUMENTATION AGENT, THE
SYNDICATION AGENT, THE CO-ARRANGERS , THE LETTER OF CREDIT ISSUER OR THE
LENDERS, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE ADMINISTRATIVE AGENT,
THE DOCUMENTATION AGENT, THE SYNDICATION AGENT, THE CO-ARRANGERS, THE LETTER OF
CREDIT ISSUER OR THE LENDERS WOULD NOT, IN THE EVENT OF SUCH LITIGATION, SEEK TO
ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION.  EACH CREDIT PARTY
ACKNOWLEDGES THAT THE ADMINISTRATIVE AGENT, THE DOCUMENTATION AGENT, THE
SYNDICATION AGENT, THE CO-ARRANGERS, THE LETTER OF CREDIT ISSUER AND THE LENDERS
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, INTER ALIA, THE PROVISIONS OF
                                                   ----- ----
THIS SECTION.

    11.21. Treatment of Confidential Information
           -------------------------------------

           Each of the Administrative Agent, the Syndication Agent, the
Documentation Agent and each Lender (each an "Agent/Lender") agrees to use
                                              ------------
reasonable precautions to keep confidential, in accordance with its customary
procedures for handling confidential information of the same nature, all non-
public information supplied by the Borrower or any Subsidiary pursuant to this
Agreement which (i) is clearly identified by such Person as being confidential
at the time the same is delivered to such Agent/Lender or (ii) constitutes any
financial statement, financial projections or forecasts, budget, compliance
certificate, audit report, management letter or accountants' certification
delivered hereunder ("Information"), provided that nothing herein shall limit
                      -----------
the disclosure of any Information (a) on a confidential basis, to its
Affiliates, agents or other advisors, (b) to the extent required by applicable
laws or regulations or by any subpoena or

                                     -116-
<PAGE>

similar legal process, or requested by any regulatory authority, (c) on a
confidential basis, to prospective assignees or participants or their
Affiliates, agents or other advisors, (d) to auditors or accountants, and any
analogous counterpart thereof, (e) to any other Agent/Lender, (f) in connection
with any litigation to which any Agent/Lender is a party, (g) to the extent such
Information (A) becomes publicly available other than as a result of a breach of
this Agreement, (B) becomes available to any Agent/Lender on a non-confidential
basis from a source other than the Borrower or any Subsidiary or (C) was
available to any Agent/Lender on a non-confidential basis prior to its
disclosure to any of them by the Borrower or any Subsidiary; and (h) to the
extent the Borrower shall have consented to such disclosure in writing.

    11.22. Designation as Designated Senior Indebtedness
           ---------------------------------------------

           This Agreement, the Subsidiary Guaranty, and all Loans and all other
monetary obligations hereunder and thereunder, are hereby expressly designated
as "Designated Senior Indebtedness", as that term is defined in the RTC
Convertible Subordinated Indenture and in the RTC Convertible Subordinated
Guaranty.

    11.23. Waiver of Past Defaults and Events of Default
           ---------------------------------------------

           (a) The Administrative Agent and the Required Lenders hereby waive
any Default or Event of Default (under and as defined in the Existing Revolving
Credit Agreement) that may exist immediately prior to the effectiveness of this
Agreement as a result of any of the following:

               (i)   the noncompliance with Sections 7.12, 7.13, 7.15, 8.5(d),
    8.5(f) and 8.7(iv) of the Existing Revolving Credit Agreement;

               (ii)  the failure to have delivered an accountant's letter with
    respect to the Borrower's audited consolidated financial statements for the
    fiscal year ending December 31, 1999 that complied with the requirements of
    Section 7.1(a)(ii) of the Existing Revolving Credit Agreement;

               (iii) the late delivery of an officer's certificate with respect
    to the Borrower's consolidated financial statements for the fiscal quarter
    ending March 31, 2000 as required pursuant to Section 7.1(b) of the Existing
    Revolving Credit Agreement;

               (iv)  the late delivery of the Compliance Certificates relating
    to the fiscal year ending December 31, 1999 and the fiscal quarter ending
    March 31, 2000 as required pursuant to Section 7.1(c) of the Existing
    Revolving Credit Agreement;

               (v)   the failure to deliver certain reports required pursuant to
    Section 7.2(k) of the Existing Revolving Credit Agreement;

                                     -117-
<PAGE>

            (vi) the late delivery of notices of the occurrence and continuance
of any Default or Event of Default (as defined in the Existing Revolving Credit
Agreement) as required by 7.2(a) of the Existing Revolving Credit
Agreement; and

            (vii)  the noncompliance with Section 8.7 of the Existing Revolving
Credit Agreement and Paragraph 1(g)(ii) of Amendment No. 5 and Consent, dated as
of February 18, 2000, to and under the Existing Revolving Credit Agreement, in
each case with respect to the Pharmacy Asset Sale (as defined in such Amendment
No. 5 and Consent).

          (b) The Administrative Agent and the Required Lenders hereby waive any
Default or Event of Default (under and as defined in the Existing Revolving
Credit Agreement) that may exist immediately prior to the effectiveness of this
Agreement under Section 9.1(g)(iii) or 9.1(k)(ii) of the Existing Revolving
Credit Agreement as a result of any defaults that may have arisen under the
Existing Term Loan Agreement (as defined in the Term Loan Facility) that will be
waived pursuant to Section 11.23 of the Term Loan Facility.

          (c) The foregoing waivers do not constitute a waiver of any other
provision of, or operate as a waiver of any right, power or remedy of the
Administrative Agent or any Lender under, any of the Loan Documents.

                                     -118-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
             SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT




          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.

                              TOTAL RENAL CARE HOLDINGS, INC.

                              By:
                                     -------------------------


                              Name:
                                     -------------------------

                              Title:
                                     -------------------------

<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT

                              THE BANK OF NEW YORK,
                              Individually, as the Letter of Credit Issuer, as
                              the Swing Line Lender and as Administrative Agent


                              By:
                                     -----------------------

                              Name:
                                     -----------------------

                              Title:
                                     -----------------------

                                      -2-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT



                              DLJ CAPITAL FUNDING, INC.,
                              Individually and as Syndication Agent

                              By:
                                     --------------------

                              Name:
                                     --------------------

                              Title:
                                     ---------------------

                                      -3-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT

                              FIRST UNION NATIONAL BANK,
                              Individually and as Documentation Agent


                              By:
                                     --------------------

                              Name:
                                     ---------------------

                              Title:
                                     ---------------------

                                      -4-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT

                              ABN AMRO BANK N.V.


                              By:
                                     ----------------------

                              Name:
                                     ----------------------

                              Title:
                                     ----------------------


                              By:
                                     ----------------------

                              Name:
                                     ----------------------

                              Title:
                                     ----------------------

                                      -5-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT

                              ALLIED IRISH BANKS, P.L.C.,
                              NEW YORK  BRANCH


                              By:
                                     ----------------------

                              Name:
                                     -----------------------

                              Title:
                                     -----------------------


                              By:
                                     -----------------------

                              Name:
                                     ------------------------

                              Title:
                                     ------------------------

                                      -6-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT

                              BANCO ESPIRITO SANTO S.A.,
                              NASSAU BRANCH


                              By:
                                     -------------------------

                              Name:
                                     -------------------------

                              Title:
                                     -------------------------


                              By:
                                     -------------------------

                              Name:
                                     -------------------------

                              Title:
                                     -------------------------

                                      -7-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT

                              BANK LEUMI TRUST USA

                              By:
                                     -------------------------

                              Name:
                                     -------------------------

                              Title:
                                     -------------------------


                              By:
                                     -------------------------

                              Name:
                                     -------------------------

                              Title:
                                     -------------------------

                                      -8-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT

                              THE BANK OF NOVA SCOTIA

                              By:
                                     -------------------------

                              Name:
                                     -------------------------

                              Title:
                                     -------------------------

                                      -9-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT



                              BNP PARIBAS,
                              formerly known as Banque Nationale de Paris

                              By:
                                     -------------------------

                              Name:
                                     --------------------------

                              Title:
                                     --------------------------


                              By:
                                     --------------------------

                              Name:
                                     --------------------------

                              Title:
                                     --------------------------

                                     -10-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT



                              BHF (USA) CAPITAL CORPORATION

                              By:
                                     --------------------------

                              Name:
                                     --------------------------


                              Title: --------------------------



                              By:
                                     --------------------------

                              Name:
                                     --------------------------

                              Title:
                                     --------------------------

                                     -11-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT



                              CITY NATIONAL BANK

                              By:
                                     --------------------------

                              Name:
                                     --------------------------

                              Title:
                                     --------------------------

                                     -12-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT



                              CREDIT LYONNAIS NEW YORK BRANCH

                              By:
                                     -------------------------

                              Name:
                                     -------------------------

                              Title:
                                     -------------------------

                                     -13-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT



                              BANK AUSTRIA CREDITANSTALT
                              CORPORATE FINANCE, INC.

                              By:
                                     -------------------------

                              Name:
                                     -------------------------

                              Title:
                                     -------------------------


                              By:
                                     -------------------------

                              Name:
                                     -------------------------

                              Title:
                                     -------------------------

                                     -14-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT



                              DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN ISLANDS
                              BRANCHES

                              By:
                                     --------------------------

                              Name:
                                     --------------------------

                              Title:
                                     ---------------------------


                              By:
                                     ---------------------------

                              Name:
                                     ---------------------------

                              Title:
                                     ---------------------------

                                     -15-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT



                              DRESDNER BANK AG, NEW YORK BRANCH AND GRAND CAYMAN
                              BRANCH


                              By:
                                     ---------------------------

                              Name:
                                     ---------------------------

                              Title:
                                     ----------------------------



                              By:
                                     ---------------------------


                              Name:
                                     ---------------------------

                              Title:
                                     ---------------------------

                                     -16-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT



                              ERSTE BANK DER OESTERREICHISCHEN SPARKASSEN AG--
                              NEW YORK



                              By:
                                      -------------------------

                              Name:
                                     --------------------------

                              Title:
                                     --------------------------




                              By:
                                     ---------------------------

                              Name:
                                     ----------------------------

                              Title:
                                     ----------------------------

                                     -17-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT




                              FLEET NATIONAL BANK


                              By:
                                      -------------------------

                              Name:
                                      -------------------------

                              Title:
                                      -------------------------

                                     -18-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT



                              THE FUJI BANK, LIMITED


                              By:
                                      ------------------------

                              Name:
                                      ------------------------

                              Title:
                                      ------------------------

                                     -19-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT



                              GENERAL ELECTRIC CAPITAL CORPORATION




                              By:
                                     ----------------------------

                              Name:
                                     ----------------------------

                              Title:
                                     ----------------------------

                                     -20-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT




                              HIBERNIA NATIONAL BANK


                              By:
                                     ---------------------------

                              Name:
                                     ---------------------------

                              Title:
                                     ---------------------------

                                     -21-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT




                              THE INDUSTRIAL BANK OF JAPAN, LIMITED



                              By:
                                     ----------------------------

                              Name:
                                     ----------------------------

                              Title:
                                     ----------------------------

                                     -22-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT




                              KBC BANK



                              By:
                                     -----------------------------

                              Name:
                                     -----------------------------

                              Title:
                                     -----------------------------



                              By:
                                     -----------------------------

                              Name:
                                     -----------------------------

                              Title:
                                     -----------------------------

                                     -23-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT



                              MELLON BANK, N.A.



                              By:
                                     ---------------------------

                              Name:
                                     ---------------------------

                              Title:
                                     ---------------------------

                                     -24-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT



                              MICHIGAN NATIONAL BANK


                              By:
                                     ---------------------------

                              Name:
                                     ---------------------------

                              Title:
                                     ---------------------------

                                     -25-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT



                              THE MITSUBISHI TRUST AND BANKING CORPORATION



                              By:
                                     -----------------------------

                              Name:
                                     -----------------------------

                              Title:
                                     -----------------------------

                                     -26-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT



                              NATIONAL CITY BANK OF KENTUCKY

                              By:
                                     -----------------------------

                              Name:
                                     -----------------------------

                              Title:
                                     -----------------------------

                                     -27-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT



                              COOPERATIEVE CENTRALE

                              RAIFFEISEN - BOERENLEENBANK B.A,

                              "RABOBANK NEDERLAND", NEW YORK

                              BRANCH

                              By:
                                     -----------------------------

                              Name:
                                     -----------------------------

                              Title:
                                     -----------------------------

                              By:
                                     -----------------------------

                              Name:
                                     -----------------------------

                              Title:
                                     -----------------------------

                                     -28-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT



                              ROYAL BANK OF CANADA

                              By:
                                     -----------------------------

                              Name:
                                     -----------------------------

                              Title:
                                     -----------------------------

                                     -29-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT



                              THE ROYAL BANK OF SCOTLAND plc

                              By:
                                     -----------------------------

                              Name:
                                     -----------------------------

                              Title:
                                     -----------------------------

                                     -30-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT



                              ROYALTON COMPANY

                              By:  Pacific Investment Management Company,
                                   as its Investment Advisor
                              By:  PIMCO Management Inc., a general partner



                              By:
                                     -----------------------------

                              Name:
                                     -----------------------------

                              Title:
                                     -----------------------------

                                     -31-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT



                              THE SANWA BANK, LIMITED

                              By:
                                     -----------------------------

                              Name:
                                     -----------------------------

                              Title:
                                     -----------------------------

                                     -32-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT



                              SOCIETE GENERALE

                              By:
                                     -----------------------------

                              Name:
                                     -----------------------------

                              Title:
                                     -----------------------------

                                     -33-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT



                              STB DELAWARE FUNDING TRUST I

                              By:
                                     -----------------------------

                              Name:
                                     -----------------------------

                              Title:
                                     -----------------------------

                                     -34-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT



                              SUNTRUST BANKS, INC.

                              By:
                                     -----------------------------

                              Name:
                                     -----------------------------

                              Title:
                                     -----------------------------

                                     -35-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT



                              THE TOKAI BANK, LIMITED

                              By:
                                     -----------------------------

                              Name:
                                     -----------------------------

                              Title:
                                     -----------------------------

                                     -36-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT



                              UNION BANK OF CALIFORNIA, N.A.

                              By:
                                     -----------------------------

                              Name:
                                     -----------------------------

                              Title:
                                     -----------------------------

                                     -37-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT



                              U.S. BANK NATIONAL ASSOCIATION

                              By:
                                     -----------------------------

                              Name:
                                     -----------------------------

                              Title:
                                     -----------------------------

                                     -38-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT



                              WLR RECOVERY FUND L.P. (successor to ROTHSCHILDS
                              RECOVERY FUND, L.P.), by WLR RECOVERY ASSOCIATES
                              LLC as its General Partner


                              By:
                                     -----------------------------

                              Name:
                                     -----------------------------

                              Title:
                                     -----------------------------

                                     -39-
<PAGE>

                        TOTAL RENAL CARE HOLDINGS, INC.
            SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT



                              FRANKLIN FLOATING RATE TRUST


                              By:
                                     -----------------------------

                              Name:
                                     -----------------------------

                              Title:
                                     -----------------------------

                                     -40-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>5
<FILENAME>0005.txt
<DESCRIPTION>SECURITY AGREEMENT
<TEXT>

<PAGE>

                                                                    EXHIBIT 10.4

                               SECURITY AGREEMENT

            This SECURITY AGREEMENT (this "Agreement") is dated as of July 14,
2000 and entered into by and among TOTAL RENAL CARE HOLDINGS, INC., a Delaware
corporation ("Company"), each of THE UNDERSIGNED DIRECT AND INDIRECT
SUBSIDIARIES of Company (each of such undersigned Subsidiaries being a
"Subsidiary Grantor" and collectively "Subsidiary Grantors") and each ADDITIONAL
GRANTOR that may become a party hereto after the date hereof in accordance with
Section 24 hereof (each of the Company, each Subsidiary Grantor, and each
Additional Grantor being a "Grantor" and collectively the "Grantors") and THE
BANK OF NEW YORK, as collateral agent for and representative of (in such
capacity herein called the "Secured Party") the REVOLVING LENDERS (as
hereinafter defined), the REVOLVING AGENT (as hereinafter defined), the TERM
LENDERS (as hereinafter defined), the TERM AGENT (as hereinafter defined) and
the SECURED INTEREST RATE EXCHANGERS (as hereinafter defined).

                             PRELIMINARY STATEMENTS

            A.  Company has entered into that certain Second Amended and
Restated Revolving Credit Agreement dated as of July 14, 2000, with the
financial institutions parties thereto (such institutions, together with their
successors and assigns, collectively being the "Revolving Lenders"), DLJ Capital
Funding Inc., as Syndication Agent, First Union National Bank, as Documentation
Agent, and The Bank of New York, as Administrative Agent (the "Revolving Agent")
(said Revolving Credit Agreement, as it may hereafter be amended, supplemented
or otherwise modified from time to time, being the "Revolving Credit
Agreement"), pursuant to which the Revolving Lenders have made certain
commitments, subject to the terms and conditions set forth in the Revolving
Credit Agreement, to extend certain credit facilities to Company. (Capitalized
terms are used herein with the meanings assigned those terms in these
Preliminary Statements, in various Sections of this Agreement and as specified
in Section 1 below.)

            B.  Company has entered into that certain Second Amended and
Restated Term Loan Agreement dated as of July 14, 2000 with the financial
institutions parties thereto (such institutions, together with their successors
and assigns, collectively being the "Term Lenders"), DLJ Capital Funding Inc.,
as Syndication Agent, and The Bank of New York, as Administrative Agent (the
"Term Agent") (said Term Loan Agreement, as it may hereafter be amended,
supplemented or otherwise modified from time to time, being the "Term Loan
Agreement"), pursuant to which Term Lenders have extended credit, subject to the
terms and conditions set forth in the Term Loan Agreement, to Company.

            C.  Company has heretofore entered into, and it is contemplated that
Company may from time to time hereafter enter into one, or more Interest Rate
Agreements with one or more Persons that is a Lender or an Affiliate of a Lender
at the time such agreement is entered into (collectively, the "Interest Rate
Exchangers") and it is desired that the obligations of Company under such
Interest Rate Agreements, including the obligation to make payments in the event
of early termination thereunder (the "Interest Rate Obligations"), be secured by
the Collateral; provided that any Interest Rate Exchanger desiring the benefit
                --------
of such security shall deliver to the Collateral Agent (as defined below) an
Acknowledgement in the form of Exhibit I to the Intercreditor Agreement (as
defined below) executed by such Interest Rate Exchanger and
<PAGE>

Company, pursuant to which such Interest Rate Exchanger agrees to be bound by
the terms of the Intercreditor Agreement. Each Interest Rate Exchanger that has
executed and delivered to the Collateral Agent an Acknowledgement in such form
that has been executed by Company, together with each Interest Rate Exchanger
that was a party to the Existing Intercreditor Agreement (as defined in the
Intercreditor Agreement) immediately before the effectiveness thereof, is
referred to herein as a "Secured Interest Rate Exchanger", and each Interest
Rate Agreement entered into with a Secured Interest Rate Exchanger is referred
to herein as a "Secured Interest Rate Agreement".

            D.  Subsidiary Grantors have executed and delivered that certain
Amended and Restated Subsidiary Guaranty dated as of July 14, 2000 (said Amended
and Restated Subsidiary Guaranty, as it may be amended, restated, supplemented
or otherwise modified from time to time, being the "Subsidiary Guaranty") in
favor of Secured Party for the benefit of Lenders and any Secured Interest Rate
Exchangers, pursuant to which each Subsidiary Grantor has guarantied the prompt
payment and performance when due of all obligations of Company under the
Financing Documents and all obligations of Company under the Secured Interest
Rate Agreements, including without limitation the obligation of Company to make
payments thereunder in the event of early termination thereof.

            E.  Secured Party has been appointed as collateral agent hereunder
pursuant to the Intercreditor Agreement by the Revolving Agent on behalf of the
Revolving Lenders, the Term Agent on behalf of the Term Lenders, and each
Secured Interest Rate Exchanger.

            F.  Prior to the effectiveness of the Revolving Credit Agreement,
the Term Loan Agreement and the Intercreditor Agreement, the parties thereto are
and have been parties to that certain Amended and Restated Revolving Credit
Agreement dated as of April 30, 1998, as amended (the "Existing Revolving Credit
Agreement"), that certain Amended and Restated Term Loan Agreement dated as of
April 30, 1998, as amended (the "Existing Term Loan Agreement" and, together
with the Existing Revolving Credit Agreement, the "Existing Credit Agreements")
and that certain Intercreditor Agreement dated as of October 24, 1997 (the
"Existing Intercreditor Agreement"), respectively. In accordance with the terms
of such agreements, Company and the Secured Party have entered into that certain
Borrower Pledge Agreement dated as of October 24, 1997 (the "Existing Borrower
Pledge Agreement") pursuant to which Company has granted security interests in
and pledges of shares of the capital stock of certain subsidiaries of Company
(the "Existing Borrower Stock Collateral") to secure the obligations of Company
under the Existing Credit Agreements and related documentation. In addition,
Total Renal Care, Inc. and Secured Party have entered into that certain
Subsidiary Pledge Agreement dated as of October 24, 1997, and Renal Treatment
Centers, Inc. and Secured Party have entered into that certain Subsidiary Pledge
Agreement dated as of February 27, 1998 (as amended, the "Existing Subsidiary
Pledge Agreements" and together with the Existing Borrower Pledge Agreement, the
"Existing Pledge Agreements") pursuant to which such Subsidiaries have granted
security interests in and pledges of shares of capital stock of certain
subsidiaries of such Subsidiaries (the "Existing Subsidiary Stock Collateral"
and together with the Existing Borrower Stock Collateral, the "Existing Stock
Collateral") to secure all obligations of Company under the Existing Credit
Agreements and related documentation.

            G.  It is a condition precedent to the effectiveness of the
Revolving Credit Agreement and the Term Loan Agreement that Grantors shall have
confirmed the prior grant of a

                                       2
<PAGE>

security interest in the Existing Stock Collateral and shall have granted the
security interests and undertaken the obligations contemplated by this
Agreement.

            H.  Upon the effectiveness hereof, this Agreement shall supersede
the Existing Pledge Agreements in their entirety.

            NOW, THEREFORE, in consideration of the premises and in order to
induce Lenders to maintain and make Loans and other extensions of credit under
the Financing Documents and to induce Interest Rate Exchangers to enter into the
Interest Rate Agreements, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, each Grantor hereby
agrees with Secured Party as follows:

SECTION 1.  Definitions.
            -----------
            (a)  Incorporated Defined Terms. Capitalized terms used herein
                 --------------------------
without definition shall have the meanings assigned thereto in the Revolving
Credit Agreement and, if not defined in the Revolving Credit Agreement, the Term
Loan Agreement, in each case as in effect on the date hereof.

            (b)  Defined Terms. In addition to the terms defined in the
                 -------------
Preliminary Statements and in other Sections of this Agreement, as used in this
Agreement, the following terms shall have the following meanings unless the
context otherwise requires:

            "Collateral Agent" means the collateral agent under the
Intercreditor Agreement.

            "Default" means any "Default" as defined in the Term Loan Agreement
or the Revolving Credit Agreement.

            "Event of Default" means (i) any of the events specified in Section
9.1 of the Term Loan Agreement or Section 9.1 of the Revolving Credit Agreement,
provided that any requirement for the giving of notice, the lapse of time, or
- --------
any other condition has been satisfied and (ii) following the payment in full of
all obligations under the Revolving Loan Documents and the Term Loan Documents,
any breach or violation of any Interest Rate Agreement.

            "Financing Documents" means the Revolving Loan Documents, the Term
Loan Documents, the Secured Interest Rate Agreements and all other documents and
agreements executed and issued in connection with the foregoing.

            "Intercreditor Agreement" means the Amended and Restated
Intercreditor and Collateral Agency Agreement, dated as of July 14, 2000, among
the Revolving Agent, the Term Agent and The Bank of New York, acting in its
capacity as Collateral Agent thereunder, each Interest Rate Exchanger and the
Loan Parties (as defined therein), as amended, supplemented or otherwise
modified from time to time.

            "Lender" means the Revolving Lenders and the Term Lenders.

            "Loans" means the "Loans" as defined in the Revolving Credit
Agreement and in the Term Loan Agreement.

                                       3
<PAGE>

            "Requisite Obligees" has the meaning assigned thereto in the
Intercreditor Agreement.

            "Revolving Loan Documents" means the "Loan Documents" as defined in
the Revolving Credit Agreement.

            "SEC" means the Securities and Exchange Commission or any
Governmental Authority succeeding to the functions thereof.

            "Secured Parties" means, collectively, the Secured Party, the
Revolving Agent, the Revolving Lenders, the Letter of Credit Issuer, the Term
Agent, the Term Lenders and the Interest Rate Exchangers.

            "Term Loan Documents" means the "Loan Documents" as defined in the
Term Loan Agreement.

SECTION 2.  Grant of Security.
            -----------------

            Each Grantor hereby grants to Secured Party a security interest in
all of such Grantor's right, title and interest in and to the following, in each
case whether now or hereafter existing, whether tangible or intangible, or in
which such Grantor now has or hereafter acquires an interest and wherever the
same may be located (the "Collateral"):

            (a)  all equipment in all of its forms, all parts thereof and all
accessions thereto (any and all such equipment, parts and accessions being the
"Equipment");

            (b)  all inventory in all of its forms, including but not limited to
(i) all goods held by such Grantor for sale or lease or to be furnished under
contracts of service or so leased or furnished, (ii) all raw materials, work in
process, finished goods, and materials used or consumed in the manufacture,
packing, shipping, advertising, selling, leasing, furnishing or production of
such inventory or otherwise used or consumed in such Grantor's business, (iii)
all goods in which such Grantor has an interest in mass or a joint or other
interest or right of any kind, and (iv) all goods which are returned to or
repossessed by such Grantor and all accessions thereto and products thereof
(collectively the "Inventory") and all negotiable and non-negotiable documents
of title (including without limitation warehouse receipts, dock receipts and
bills of lading) issued by any Person covering any Inventory (any such
negotiable document of title being a "Negotiable Document of Title");

            (c)  all accounts, contract rights, chattel paper, documents,
instruments, letter-of-credit rights, and other rights and obligations of any
kind owned by or owing to such Grantor and all rights in, to and under all
security agreements, leases and other contracts securing or otherwise relating
to any such accounts, contract rights, chattel paper, documents, instruments or
other obligations (any and all such accounts, contract rights, chattel paper,
documents, instruments and other obligations being the "Accounts," and any and
all such security agreements, leases and other contracts being the "Related
Contracts"). "Accounts" 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 operations of health care facilities and/or the provision
of health care services specifically including, but not limited to, all accounts
receivable and rights to payment

                                       4
<PAGE>

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, (w) "Governmental Health Receivable" means a
Medicaid Receivable, a Medicare Receivable or a VA Receivable" and "Governmental
Health Receivables" means all such Accounts, (x) "Medicaid Receivable" means any
Account 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; (y) "Medicare Receivable" means any Account 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 (z) "VA Receivable" means any
Account with respect to which the obligor is the Veterans' Administration or any
successor thereto (or any agent thereof).

            (d)  all deposit accounts and investment accounts (collectively the
"Deposit Accounts"), excluding accounts containing only funds of non-wholly
owned Subsidiaries and managed accounts, but including the restricted deposit
and investment accounts established and maintained by Secured Party pursuant to
Section 13(a) (collectively, the "Collateral Account"), together with (i) all
amounts on deposit from time to time in such Deposit Accounts and (ii) all
interest, cash, instruments, securities and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the foregoing;

            (e)  the "Securities Collateral", which term means:

                 (i)  the shares of stock, partnership interests, interests in
     joint ventures, limited liability company interests and all other equity
     interests in a Person that is, or becomes, a direct Subsidiary of such
     Grantor, including all securities convertible into, and rights, warrants,
     options and other rights to purchase or otherwise acquire, any of the
     foregoing now or hereafter owned by such Grantor, including those owned on
     the date hereof and described on Schedule 2(e)(i), and the certificates or
     other instruments representing any of the foregoing and any interest of
     such Grantor in the entries on the books of any securities intermediary
     pertaining thereto (the "Pledged Shares"), and all dividends,
     distributions, returns of capital, cash, warrants, options, rights,
     instruments, rights to vote or manage the business of such Person pursuant
     to organizational documents governing the rights and obligations of the
     stockholders, partners, members or other owners thereof 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;
     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 66%
     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;

                 (ii) the indebtedness from time to time owed to such Grantor by
     Company or any obligor that is, or becomes, a direct or indirect Subsidiary
     of Company, including the indebtedness described on Schedule 2(e)(ii) and
     issued by the obligors

                                       5
<PAGE>

     named therein, and the instruments evidencing such indebtedness (the
     "Pledged Debt"), and all interest, cash, 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 the Pledged Debt; and

                 (iii)  all other investment property as that term is defined
     in the Uniform Commercial Code of any relevant jurisdiction (the "UCC"), of
     such Grantor;

            (f)  the "Intellectual Property Collateral," which term means:

                 (i)  all rights, title and interest (including rights acquired
     pursuant to a license or otherwise) in and to all trademarks, service
     marks, designs, logos, indicia, tradenames, trade dress, corporate names,
     company names, business names, fictitious business names, trade styles
     and/or other source and/or business identifiers and applications pertaining
     thereto, owned by such Grantor, or hereafter adopted and used, in its
     business (including, without limitation, the trademarks specifically
     identified in Schedule 2(f)(i), as the same may be amended pursuant hereto
     from time to time) (collectively, the "Trademarks"), all registrations that
     have been or may hereafter be issued or applied for thereon in the United
     States and any state thereof and in foreign countries (including, without
     limitation, the registrations and applications specifically identified in
     Schedule 2(f)(i), as the same may be amended pursuant hereto from time to
     time) (the "Trademark Registrations"), all common law and other rights in
     and to the Trademarks in the United States and any state thereof and in
     foreign countries (the "Trademark Rights"), and all goodwill of such
     Grantor's business symbolized by the Trademarks and associated therewith
     (the "Associated Goodwill"):

                 (ii) all rights, title and interest (including rights acquired
     pursuant to a license or otherwise) in and to all patents and patent
     applications and rights and interests in patents and patent applications
     under any domestic or foreign law that are presently, or in the future may
     be, owned or held by such Grantor and all patents and patent applications
     and rights, title and interests in patents and patent applications under
     any domestic or foreign law that are presently, or in the future may be,
     owned by such Grantor in whole or in part (including, without limitation,
     the patents and patent applications listed in Schedule 2(f)(ii), as the
     same may be amended pursuant hereto from time to time), all rights
     corresponding thereto (including, without limitation, the right,
     exercisable only upon the occurrence and during the continuation of an
     Event of Default, to sue for past, present and future infringements in the
     name of such Grantor or in the name of Secured Party or Lenders), and all
     re-issues, divisions, continuations, renewals, extensions and
     continuations-in-part thereof (all of the foregoing being collectively
     referred to as the "Patents"); it being understood that the rights and
     interests included in the Intellectual Property Collateral hereby shall
     include, without limitation, all rights and interests pursuant to licensing
     or other contracts in favor of such Grantor pertaining to patent
     applications and patents presently or in the future owned or used by third
     parties but, in the case of third parties which are not Affiliates of such
     Grantor, only to the extent permitted by such licensing or other contracts
     and, if not so permitted, only with the consent of such third parties; and

                 (iii)  all rights, title and interest (including rights
     acquired pursuant to a license or otherwise) under copyright in various
     published and unpublished works of

                                       6
<PAGE>

     authorship including, without limitation, computer programs, computer data
     bases, other computer software, layouts, trade dress, drawings, designs,
     writings, and formulas owned by such Grantor (including, without
     limitation, the works listed on Schedule 2(f)(iii), as the same may be
     amended pursuant hereto from time to time) (collectively, the
     "Copyrights"), all copyright registrations issued to such Grantor and
     applications for copyright registration that have been or may hereafter be
     issued or applied for thereon by such Grantor in the United States and any
     state thereof and in foreign countries (including, without limitation, the
     registrations listed on Schedule 2(f)(iii), as the same may be amended
     pursuant hereto from time to time) (collectively, the "Copyright
     Registrations"), all common law and other rights in and to the Copyrights
     in the United States and any state thereof and in foreign countries
     including all copyright licenses (but with respect to such copyright
     licenses, only to the extent permitted by such licensing arrangements) (the
     "Copyright Rights"), including, without limitation, each of the Copyrights,
     rights, titles and interests in and to the Copyrights, all derivative works
     and other works protectable by copyright, which are presently, or in the
     future may be, owned, created (as a work for hire for the benefit of such
     Grantor), authored (as a work for hire for the benefit of such Grantor), or
     acquired by such Grantor, in whole or in part, and all Copyright Rights
     with respect thereto and all Copyright Registrations therefor, heretofore
     or hereafter granted or applied for, and all renewals and extensions
     thereof, throughout the world, including all proceeds thereof (such as, by
     way of example and not by limitation, license royalties and proceeds of
     infringement suits), the right to renew and extend such Copyright
     Registrations and Copyright Rights and to register works protectable by
     copyright and the right to sue for past, present and future infringements
     of the Copyrights and Copyright Rights;

            (g)  all information used or useful or arising from the business
including all goodwill, trade secrets, trade secret rights, know-how, customer
lists, processes of production, ideas, confidential business information,
techniques, processes, formulas, and all other proprietary information;

            (h)  the agreements listed in Schedule 2(h), as each such agreement
may be amended, restated, supplemented or otherwise modified from time to time
(said agreements, as so amended, restated, supplemented or otherwise modified,
being referred to herein individually as an "Assigned Agreement" and
collectively as the "Assigned Agreements"), including, without limitation, (i)
all rights of such Grantor to receive moneys due or 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) all claims of such Grantor for damages arising out of
any breach of or default under the Assigned Agreements, and (iv) all rights of
such Grantor to terminate, amend, supplement, modify or exercise rights or
options under the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder;

            (i)  to the extent not included in any other paragraph of this
Section 2, all general intangibles (including, without limitation, tax refunds,
payment intangibles, software, other rights to payment or performance, choses in
action and judgments taken on any rights or claims included in the Collateral);

            (j)  all plant fixtures, business fixtures and other fixtures and
storage and office facilities, and all accessions thereto and products thereof;

                                       7
<PAGE>

            (k)  all books, records, ledger cards, files, correspondence,
computer programs, tapes, disks and related data processing software that at any
time evidence or contain information relating to any of the Collateral or are
otherwise necessary or helpful in the collection thereof or realization
thereupon;

            (l)  all other personal property; and

            (m)  all proceeds, products, rents and profits of or from any and
all of the foregoing Collateral and, to the extent not otherwise included, all
payments under insurance (whether or not Secured Party 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. For
purposes of this Agreement, the term "proceeds" includes whatever is receivable
or received when Collateral or proceeds are sold, exchanged, collected or
otherwise disposed of, whether such disposition is voluntary or involuntary.

            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 (i) the assets subject to existing contracts of sale
specified in Schedule 2(X), (ii) any of such Grantor's rights or interests in
any license, contract, or agreement to which such Grantor is a party or any
Securities Collateral (other than stock issued by wholly owned Subsidiaries of
Company) 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 Securities Collateral (other than stock
issued by wholly owned Subsidiaries of Company) 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, or (iii) any Inventory subject to vendor restrictions on the granting
of liens so long as such restriction is applicable, or (iv) any real property
leasehold, unless a Grantor has executed a leasehold mortgage or leasehold deed
of trust covering such real property leasehold.

            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 Secured Party 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.

            To the extent that the Securities Collateral includes the Existing
Stock Collateral pledged under the Existing Pledge Agreements, the foregoing
grant of security made in this Section 2 confirms and continues the grant of a
security interest in and a pledge of the Existing Stock Collateral to secure the
Secured Obligations (as defined in Section 3 below) and such prior security
interest and pledge remain effective without interruption and the foregoing
grant of security shall be deemed an amendment and restatement of such prior
security interest and pledge and with respect to such prior security interest
and pledge this Agreement shall be deemed an amendment and restatement of the
Existing Pledge Agreements.

                                       8
<PAGE>

SECTION 3.  Security for Obligations.
            ------------------------

            This Agreement secures, and the Collateral assigned by each Grantor
is collateral security for, the prompt payment or performance in full when due,
whether at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise (including without limitation the payment of amounts that
would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code), of all Secured Obligations of such Grantor.
"Secured Obligations" means:

            (a)  with respect to Company, all obligations and liabilities of
every nature of Company now or hereafter existing under or arising out of or in
connection with the Financing Documents, and

            (b)  with respect to each Subsidiary Grantor and Additional Grantor,
all obligations and liabilities of every nature of such Grantors now or
hereafter existing under or arising out of or in connection with the Subsidiary
Guaranty;

in each case together with all extensions or renewals thereof, whether for
principal, interest (including without limitation interest that, but for the
filing of a petition in bankruptcy with respect to Company or any other Grantor,
would accrue on such obligations, whether or not a claim is allowed against
Company or such Grantor for such interest in the related bankruptcy proceeding),
reimbursement of amounts drawn under Letters of Credit, payments for early
termination of Secured Interest Rate Agreements, fees, expenses, indemnities or
otherwise, whether voluntary or involuntary, direct or indirect, absolute or
contingent, liquidated or unliquidated, whether or not jointly owed with others,
and whether or not from time to time decreased or extinguished and later
increased, created or incurred, and all or any portion of such obligations or
liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from Secured Party or any Lender or
Interest Rate Exchanger as a preference, fraudulent transfer or otherwise, and
all obligations of every nature of Grantors now or hereafter existing under this
Agreement.

SECTION 4.  Grantors Remain Liable.
            ----------------------

            Anything contained herein to the contrary notwithstanding, (a) each
Grantor shall remain liable under any contracts and agreements included in the
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 Secured Party of any of its 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) Secured Party shall
not have any obligation or liability under any contracts, licenses, and
agreements included in the Collateral by reason of this Agreement, nor shall
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.

                                       9
<PAGE>

SECTION 5.  Representations and Warranties.
            ------------------------------
    Each Grantor represents and warrants as follows:

            (a)  Ownership of Collateral. Except as expressly permitted by the
Financing Documents and for the security interest created by this Agreement,
such Grantor owns the Collateral owned by such Grantor free and clear of any
Lien. Except as expressly permitted by the Financing Documents and such as may
have been filed in favor of Secured Party relating to this Agreement, no
effective financing statement or other instrument similar in effect covering all
or any part of the Collateral is on file in any filing or recording office
except for (i) "protective filings" by lessors of leases included in the
Collateral and (ii) financing statements that relate only to security interests
that have terminated; provided, that Grantors shall use their best efforts to
                      --------
cause the termination of all such financing statements referred to in the
preceding clause (ii) as soon as reasonable practicable.

            (b)  Locations of Equipment and Inventory. All of the Equipment and
Inventory is, as of the date hereof, or in the case of an Additional Grantor,
the date of the applicable counterpart entered into pursuant to Section 24
(each, a "Counterpart") located at the places specified in Schedule 5(b), except
for Inventory which, in the ordinary course of business, is in transit either
(i) from a supplier to a Grantor, (ii) between the locations specified in
Schedule 5(b), or (ii) to customers of a Grantor.

            (c)  Negotiable Documents of Title. No Negotiable Documents of Title
are outstanding with respect to any of the Inventory.

            (d)  Office Locations; Type and Organization. The chief place of
business, the chief executive office and the office where such Grantor keeps its
records regarding the Accounts and all originals of all chattel paper that
evidence Accounts are, as of the date hereof, and , except as set forth on
Schedule 5(d), have been for the four month period preceding the date hereof,
or, in the case of an Additional Grantor, the date of the applicable
Counterpart, located at the locations set forth on Schedule 5(d); the type (i.e.
corporation, limited partnership, etc.) and jurisdiction of organization of such
Grantor are listed on Schedule 5(d).

            (e)  Names. No Grantor (or predecessor by merger or otherwise of
such Grantor) has, within the four month period preceding the date hereof, or,
in the case of an Additional Grantor, the date of the applicable Counterpart,
had a different name from the name of such Grantor listed or the signature pages
hereof, except the names listed in Schedule 5(e) annexed hereto.

            (f)  Delivery of Certain Collateral. All certificates or instruments
(excluding checks) evidencing, comprising or representing the Existing Stock
Collateral and any additional Securities Collateral existing on the date hereof,
have been delivered to Secured Party duly endorsed or accompanied by duly
executed instruments of transfer or assignment in blank.

            (g)  Securities Collateral. (i) All of the Pledged Shares described
on Schedule 2(e)(i) have been duly authorized and validly issued and are fully
paid and non-assessable; (ii) all of the Pledged Debt described on Schedule
2(e)(ii) has been duly authorized, authenticated or issued, and delivered; (iii)
except as set forth on Schedule 2(e)(i), the Pledged Shares constitute all of
the issued and outstanding shares of stock or other equity interests of

                                       10
<PAGE>

each issuer thereof (subject to the proviso to Section 2(e)(i) with respect to
shares of a foreign controlled corporation), and there are no outstanding
warrants, options or other rights to purchase, or other agreements outstanding
with respect to, or property that is now or hereafter convertible into, or that
requires the issuance or sale of, any Pledged Shares; (iv) the Pledged Debt
constitutes all of the issued and outstanding intercompany indebtedness
evidenced by a promissory note of the respective issuers thereof owing to such
Grantor; (v) Schedule 2(e)(i) sets forth all of the Pledged Shares owned by each
Grantor on the date hereof; and (vi) Schedule 2(e)(ii) sets forth all of the
Pledged Debt in existence on the date hereof.

            (h) Intellectual Property Collateral.

                 (i)    a true and complete list of all Trademark Registrations
     and Trademark applications owned, held (whether pursuant to a license or
     otherwise) or used by such Grantor, in whole or in part, is set forth in
     Schedule 2(f)(i);

                 (ii)   a true and complete list of all Patents owned, held
     (whether pursuant to a license or otherwise) or used by such Grantor, in
     whole or in part, is set forth in Schedule 2(f)(ii);

                 (iii)  a true and complete list of all Copyright Registrations
     and applications for Copyright Registrations held (whether pursuant to a
     license or otherwise) by such Grantor, in whole or in part, is set forth in
     Schedule 2(f)(iii);

                 (iv)   such Grantor is not aware of any pending or threatened
     claim by any third party that any of the Intellectual Property Collateral
     owned, held or used by such Grantor is invalid or unenforceable; and

                 (v)    no effective security interest or other Lien covering
     all or any part of the Intellectual Property Collateral is on file in the
     United States Patent and Trademark Office or the United States Copyright
     Office.

                 (i)    Perfection. The security interests in the Collateral
     granted to Secured Party for the ratable benefit of the Lenders and
     Interest Rate Exchangers hereunder constitute valid security interests in
     the Collateral, securing the payment of the Secured Obligations. Upon (i)
     the filing of UCC financing statements naming each Grantor as "debtor,"
     naming Secured Party as "secured party" and describing the Collateral in
     the filing offices with respect to such Grantor set forth on Schedule 5(i),
     (ii) in the case of the Securities Collateral consisting of certificated
     securities or evidenced by instruments, delivery of the certificates
     representing such certificated securities and delivery of such instruments
     to Secured Party, in each case duly endorsed or accompanied by duly
     executed instruments of assignment or transfer in blank, (iii) in the case
     of the Intellectual Property Collateral, in addition to the filing of such
     UCC financing statements, the filing of a Grant of Trademark Security
     Interest, substantially in the form of Exhibit I, and a Grant of Patent
     Security Interest, substantially in the form of Exhibit II, with the United
     States Patent and Trademark Office and the filing of a Grant of Copyright
     Security Interest, substantially in the form of Exhibit III, with the
     United States Copyright Office (each such Grant of Trademark Security
     Interest, Grant of Patent Security Interest and Grant of Copyright Security
     Interest being referred to herein as a "Grant"), and (iv) in the case of
     Equipment that is covered by a certificate of title, the filing with the
     registrar of motor vehicles or other appropriate authority in the
     applicable jurisdiction of an application requesting the

                                       11
<PAGE>

     notation of the security interest created hereunder on such certificate of
     title, the security interests in the Collateral granted to Secured Party
     for the ratable benefit of the Lenders and Interest Rate Exchangers will
     constitute perfected security interests therein prior to all other Liens
     (except for Permitted Liens), and all filings and other actions necessary
     or desirable to perfect and protect such security interest have been duly
     made or taken.

SECTION 6.  Further Assurances.
            ------------------

            (a)  Generally. Each Grantor agrees that from time to time, at the
request of the Secured Party, and at the expense of Grantors, 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 Secured Party may
request, in order to perfect and protect any security interest granted or
purported to be granted hereby or to enable Secured Party to exercise and
enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, each Grantor will: (i) at the
request of Secured Party, mark conspicuously each item of chattel paper included
in the Accounts, each Related Contract and, at the request of Secured Party,
each of its records pertaining to the Collateral, with a legend, in form and
substance satisfactory to Secured Party, indicating that such Collateral is
subject to the security interest granted hereby, (ii) at the request of Secured
Party, deliver and pledge to Secured Party hereunder all promissory notes and
other instruments (including checks) and all original counterparts of chattel
paper constituting Collateral, duly endorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance satisfactory to
Secured Party, (iii) at the request of the Secured Party, 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 Secured Party
may request, in order to perfect and preserve the security interests granted or
purported to be granted hereby, (iv) furnish to Secured Party from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Secured Party may
reasonably request, all in reasonable detail, (v) at the request of the Secured
Party, execute and deliver one or more control agreements, blocked account
agreements or other agreements, and establish and maintain one or more deposit
accounts and lock-box accounts, that may be necessary or desirable, or that the
Secured Party may reasonably request, to perfect and protect its Lien on the
Deposit Accounts and Restricted Investment Accounts of the Grantors, provided
that Secured Party may not obtain dominion and control over any Governmental
Health Receivable Collection Account maintained with Secured Party or any
Regional Depositary Accounts, Imprest Accounts and Other Deposit Accounts (as
such terms are defined in Section 13(c), (vi) within 30 days after the end of
each calendar quarter, deliver to Secured Party copies of all such applications
or other documents filed during such calendar quarter and copies of all such
certificates of title issued during such calendar quarter indicating the
security interest created hereunder in the items of Equipment covered thereby,
(vii) at any reasonable time, upon request by Secured Party, exhibit the
Collateral to and allow inspection of the Collateral by Secured Party, or
persons designated by Secured Party, (viii) at Secured Party's request, appear
in and defend any action or proceeding that may affect such Grantor's title to
or Secured Party's security interest in all or any part of the Collateral, and
(ix) at Secured Party's request with respect to specific assets use commercially
reasonable efforts to obtain any necessary consents of third parties to the
creation and perfection of a security interest to Secured Party with respect to
any Collateral. To the extent permitted by law, each Grantor hereby authorizes
Secured Party to file one or more financing or continuation statements, and
amendments thereto, relative to all or any part of the Collateral without the

                                       12
<PAGE>

signature of any Grantor. To the extent permitted by law, each Grantor agrees
that a carbon, photographic or other reproduction of this Agreement or of a
financing statement signed by such Grantor shall be sufficient as a financing
statement and may be filed as a financing statement in any and all
jurisdictions.

            (b)  Securities Collateral. Without limiting the generality of the
foregoing Section 6(a), each Grantor agrees that it will, upon obtaining any
additional shares of stock or other securities required to be pledged hereunder,
promptly (and in any event within five Business Days) deliver to Secured Party a
Pledge Supplement, duly executed by such Grantor, in substantially the form of
Exhibit IV (a "Pledge Supplement"), in respect of the additional Pledged Shares
or Pledged Debt to be pledged pursuant to this Agreement. Upon each delivery of
a Pledge Supplement to Secured Party, the representations and warranties
contained in clauses (i)-(iv) of Section 5(g) hereof shall be deemed to have
been made by such Grantor as to the Securities Collateral described in such
Pledge Supplement as of the date thereof. Each Grantor hereby authorizes Secured
Party to attach each Pledge Supplement to this Agreement and agrees that all
Pledged Shares or Pledged Debt of such Grantor listed on any Pledge Supplement
shall for all purposes hereunder be considered Collateral of such Grantor;
provided, the failure of any Grantor to execute a Pledge Supplement with respect
to any additional Pledged Shares or Pledged Debt pledged pursuant to this
Agreement shall not impair the security interest of Secured Party therein or
otherwise adversely affect the rights and remedies of Secured Party hereunder
with respect thereto.

            (c)  Intellectual Property Collateral. Without limiting the
generality of the foregoing Section 6(a), if any Grantor shall hereafter obtain
rights to any new Intellectual Property Collateral or become entitled to the
benefit of (i) any patent application or patent or any reissue, division,
continuation, renewal, extension or continuation-in-part of any Patent or any
improvement of any Patent or (ii) any Copyright Registration, application for
Copyright Registration or renewals or extension of any Copyright, then in any
such case, the provisions of this Agreement shall automatically apply thereto.
Each Grantor shall promptly notify Secured Party in writing of any of the
foregoing rights acquired by such Grantor after the date hereof and of (i) any
Trademark Registrations issued or application for a Trademark Registration or
application for a Patent made, and (ii) any Copyright Registrations issued or
applications for Copyright Registration made, in any such case, after the date
hereof. Promptly after the filing of an application for any (1) Trademark
Registration; (2) Patent; and (3) Copyright Registration, each Grantor shall
execute and deliver to Secured Party and record in all places where a Grant is
recorded an IP Supplement, substantially in the form of Exhibit V (an "IP
Supplement"), pursuant to which such Grantor shall grant to Secured Party a
security interest to the extent of its interest in such Intellectual Property
Collateral; provided, if, in the reasonable judgment of such Grantor, after due
inquiry, granting such interest would result in the grant of a Trademark
Registration or Copyright Registration in the name of Secured Party, such
Grantor shall give written notice to Secured Party as soon as reasonably
practicable and the filing shall instead be undertaken as soon as practicable
but in no case later than immediately following the grant of the applicable
Trademark Registration or Copyright Registration, as the case may be. Upon
delivery to Secured Party of an IP Supplement, Schedules 2(f)(i), 2(f)(ii), and
2(f)(iii) hereto and Schedule A to each Grant, as applicable, shall be deemed
modified to include reference to any right, title or interest in any existing
Intellectual Property Collateral or any Intellectual Property Collateral
included on Schedule A to such IP Supplement. Each Grantor hereby authorizes
Secured Party to modify this Agreement without the signature or consent of any
Grantor by

                                       13
<PAGE>

attaching Schedules 2(f)(i), 2(f)(ii), and 2(f)(iii), as applicable,
that have been modified to include such Intellectual Property Collateral or to
delete any reference to any right, title or interest in any Intellectual
Property Collateral in which any Grantor no longer has or claims any right,
title or interest; provided, the failure of any Grantor to execute an IP
Supplement with respect to any additional Intellectual Property Collateral
pledged pursuant to this Agreement shall not impair the security interest of
Secured Party therein or otherwise adversely affect the rights and remedies of
Secured Party hereunder with respect thereto.

SECTION 7.  Certain Covenants of Grantors.
            -----------------------------

     Each Grantor shall:

            (a)  not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral;

            (b)  notify Secured Party of any change in such Grantor's name,
identity or corporate structure within 15 days of such change;

            (c)  give Secured Party 30 days' prior written notice of any change
in such Grantor's chief place of business, chief executive office or the office
where such Grantor keeps its records regarding the Accounts and all originals of
all chattel paper that evidence Accounts or a reincorporation, reorganization or
other action that results in a change of jurisdiction of organization of such
Grantor;

            (d)  if Secured Party gives value to enable such Grantor to acquire
rights in or the use of any Collateral, use such value for such purposes; and

            (e)  except as expressly permitted by the Credit Agreement, pay
promptly when due all property and other taxes, assessments and governmental
charges or levies imposed upon, and all claims (including claims for labor,
services, materials and supplies) against, the Collateral, except to the extent
the validity thereof is being contested in good faith; provided that such
Grantor shall in any event pay such taxes, assessments, charges, levies or
claims not later than five days prior to the date of any proposed sale under any
judgment, writ or warrant of attachment entered or filed against such Grantor or
any of the Collateral as a result of the failure to make such payment.

SECTION 8.  Special Covenants With Respect to Equipment and Inventory.
            ---------------------------------------------------------

     Each Grantor shall:

            (a)  keep the Equipment and Inventory owned by such Grantor at the
places therefor specified on Schedule 5(b) or, upon 30 days' prior written
notice to Secured Party, at such other places in jurisdictions where all action
that may be necessary or desirable, or that Secured Party may request, in order
to perfect and protect any security interest granted or purported to be granted
hereby, or to enable Secured Party to exercise and enforce its rights and
remedies hereunder, with respect to such Equipment and Inventory shall have been
taken;

                                       14
<PAGE>

            (b)  cause the Equipment owned by such Grantor to be maintained and
preserved in good condition, repair and working order sufficient for the uses
for which the same are being utilized, ordinary wear and tear excepted, and in
accordance with such Grantor's past practices, and shall forthwith make or cause
to be made all repairs, replacements and other improvements in connection
therewith that are necessary or desirable to such end. Each Grantor shall
promptly furnish to Secured Party a statement respecting any material loss or
damage to any of the Equipment owned by such Grantor;

            (c)  keep correct and accurate records of Inventory owned by such
Grantor, itemizing and describing the kind, type and quantity of such Inventory,
such Grantor's cost therefor and (where applicable) the current list prices for
such Inventory;

            (d)  if any Inventory is in possession or control of any of such
Grantor's agents or processors, if the aggregate book value of all such
Inventory exceeds $1,000,000 and in any event upon the occurrence of an Event of
Default, instruct such agent or processor that all such Inventory is the
Collateral of Secured Party and that such agent or processor is directed to
deliver such Inventory to Secured Party upon its request;

            (e)  promptly upon the issuance and delivery to such Grantor of any
Negotiable Document of Title, deliver such Negotiable Document of Title to
Secured Party; and

            (f)  each Grantor shall, at its own expense, maintain insurance with
respect to the Equipment and Inventory in accordance with the terms of the
Financing Documents.

SECTION 9.  Special Covenants with Respect to Accounts and Related Contracts.
            ----------------------------------------------------------------

            (a)  Each Grantor shall keep its chief place of business and chief
executive office and the office where it keeps its records concerning the
Accounts and Related Contracts, and all originals of all chattel paper that
evidence Accounts, at the locations therefor set forth on Schedule 5(d), or upon
30 days' prior written notice to Secured Party, at such other location or
locations in jurisdictions where all action that may be necessary or desirable,
or that Secured Party may request, in order to perfect and protect any security
interest granted or purported to be granted hereby, or to enable Secured Party
to exercise and enforce its rights and remedies hereunder, with respect to such
Accounts and Related Contracts shall have been taken. Each Grantor will hold and
preserve such records and chattel paper and will permit representatives of
Secured Party upon reasonable advance notice to such Grantor and at reasonable
dates and times and as often as may be reasonably requested to inspect and make
abstracts from such records and chattel paper, and each Grantor agrees to render
to Secured Party, at Grantor's cost and expense, such clerical and other
assistance as may be reasonably requested with regard thereto. Promptly upon the
request of Secured Party, each Grantor shall deliver to Secured Party complete
and correct copies of each Related Contract.

            (b)  Each Grantor shall, for not less than three (3) years from the
date on which each Account of such Grantor arose, maintain (i) complete records
of such Account, including records of all payments received, credits granted and
merchandise returned, and (ii) all documentation relating thereto.

            (c)  Except as otherwise provided in this subsection (c), each
Grantor shall continue to collect, at its own expense, all amounts due or to
become due to such Grantor under

                                       15
<PAGE>

the Accounts and Related Contracts. Subject to this subsection (c), in
connection with such collections, each Grantor may take (and, upon the
occurrence and during the continuance of an Event of Default at Secured Party's
direction, shall take) such action as such Grantor or Secured Party may deem
necessary or advisable to enforce collection of amounts due or to become due
under the Accounts; provided, however, that Secured Party shall have the right
at any time, upon the occurrence and during the continuation of an Event of
Default and upon written notice to such Grantor of its intention to do so, to
notify the account debtors or obligors under any Accounts of the assignment of
such Accounts to Secured Party and to direct such account debtors or obligors to
make payment of all amounts due or to become due to such Grantor thereunder
directly to Secured Party, to notify each Person maintaining a lockbox or
similar arrangement to which account debtors or obligors under any Accounts have
been directed to make payment to remit all amounts representing collections on
checks and other payment items from time to time sent to or deposited in such
lockbox or other arrangement directly to Secured Party and, upon such
notification and at the expense of Grantors, to enforce collection of any such
Accounts 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
receipt by such Grantor of the notice from Secured Party referred to in the
proviso to the preceding sentence, (i) all amounts and proceeds (including
checks and other instruments) received by such Grantor in respect of the
Accounts and the Related Contracts shall be received in trust for the benefit of
Secured Party hereunder, shall be segregated from other funds of such Grantor
and shall be forthwith paid over or delivered to Secured Party in the same form
as so received (with any necessary endorsement) to be held as cash Collateral
and applied as provided by Section 19, and (ii) such Grantor shall not adjust,
settle or compromise the amount or payment of any Account, or release wholly or
partly any account debtor or obligor thereof, or allow any credit or discount
thereon. Notwithstanding anything in the foregoing provisions of this subsection
(c) to the contrary, all Accounts constituting Governmental Health Receivables
shall be collected by Grantors and collections thereof deposited into the
Existing Concentration Accounts as provided in Section 13(b)(ii) and the
proceeds treated in the manner therein provided.

SECTION 10.  Special Covenants With Respect to the Securities Collateral.
             -----------------------------------------------------------

            (a)  Delivery. Each Grantor agrees that all certificates or
instruments representing or evidencing the Securities Collateral shall be
delivered to and held by or on behalf of Secured Party pursuant hereto and shall
be in suitable form for transfer by delivery or, as applicable, shall be
accompanied by such Grantor's endorsement, where necessary, or duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to Secured Party. Secured Party shall have the right at any time to
exchange certificates or instruments representing or evidencing Securities
Collateral for certificates or instruments of smaller or larger denominations.

           (b)   Covenants. Each Grantor shall (i) not, except as expressly
permitted by the Financing Documents, permit any issuer of Pledged Shares to
merge or consolidate unless either the surviving entity in such merger or
consolidation is Company or all the outstanding capital stock or other equity
interests of the surviving or resulting Person is, upon such merger or
consolidation, pledged hereunder and no cash, securities or other property is
distributed in respect of the outstanding shares of any other constituent
corporation; provided, if the surviving or resulting Person upon any such merger
or consolidation involving an issuer of Pledged Shares which is a controlled
foreign corporation is a controlled foreign corporation, then such Grantor


                                       16
<PAGE>

shall only be required to pledge outstanding capital stock of such surviving or
resulting Person possessing up to but not exceeding 66% of the voting power of
all classes of capital stock of such issuer entitled to vote; (ii) cause each
issuer of Pledged Shares not to issue any stock, other equity interests or other
securities in addition to or in substitution for the Pledged Shares issued by
such issuer, except to such Grantor; (iii) pledge hereunder, immediately upon
its acquisition (directly or indirectly) thereof, any and all additional shares
of stock, other equity interests or other securities of each issuer of Pledged
Shares; (iv) pledge hereunder, immediately upon its acquisition (directly or
indirectly) thereof, any and all certificated shares of stock or other equity
interests of any Person that, after the date of this Agreement, becomes, as a
result of any occurrence, a direct Subsidiary of such Grantor; provided,
notwithstanding anything contained in this clause (iv) to the contrary, such
Grantor shall only be required to pledge the outstanding capital stock of a
controlled foreign corporation possessing up to but not exceeding 66% of the
voting power of all classes of capital stock of such controlled foreign
corporation entitled to vote; (v) pledge hereunder, immediately upon their
issuance, any and all instruments or other evidences of additional indebtedness
from time to time owed to such Grantor by any obligor on the Pledged Debt; (vi)
pledge hereunder, immediately upon their issuance, any and all instruments or
other evidences of indebtedness from time to time owed to such Grantor by any
Person that after the date of this Agreement becomes, as a result of any
occurrence, a direct or indirect Subsidiary of such Grantor; (vii) promptly
deliver to Secured Party all written notices received by it with respect to the
Securities Collateral; and (viii), at the request of Secured Party, promptly
execute and deliver to Secured Party an agreement providing for the control, as
that term is defined in the UCC, by Secured Party of all securities entitlements
and securities accounts of such Grantor.


            (c)  Voting and Distributions. So long as no Event of 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 Securities
Collateral or any part thereof for any purpose not inconsistent with the terms
of this Agreement or the Financing Documents; provided, no Grantor shall
exercise or refrain from exercising any such right if Secured Party shall have
notified such Grantor that, in Secured Party's judgment, such action would have
a material adverse effect on the value of the Securities Collateral or any part
thereof; and provided further, such Grantor shall give Secured Party at least
five Business Days' prior written notice of the manner in which it intends to
exercise, or the reasons for refraining from exercising, any such right (it
being understood, however, that neither (A) the voting by such Grantor of any
Pledged Shares for or such Grantor's consent to the election of directors or
other members of a governing body of an issuer of Pledged Shares at a regularly
scheduled annual or other meeting of stockholders or holders of equity interests
or with respect to incidental matters at any such meeting, nor (B) such
Grantor's consent to or approval of any action otherwise permitted under this
Agreement and the Financing Documents shall be deemed inconsistent with the
terms of this Agreement or the Financing Documents within the meaning of this
Section, and no notice of any such voting or consent need be given to Secured
Party); (ii) each Grantor shall be entitled to receive and retain, any and all
dividends, other distributions and interest paid in respect of the Securities
Collateral, and all payments of principal on indebtedness owed to such Grantor
by Company or any of its Subsidiaries; provided, any and all (A) dividends,
                                       --------
distributions and interest 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 Securities Collateral, and (B) dividends and
other distributions paid or payable in cash in respect of any Securities
Collateral in connection with a partial or total liquidation or dissolution or
in

                                       17
<PAGE>

connection with a reduction of capital, capital surplus or paid-in-surplus,
and (C) cash paid, payable or otherwise distributed in respect of principal or
in redemption of or in exchange for any Securities Collateral, (other than
payments of principal on indebtedness owed to such Grantor by Company or any of
its Subsidiaries) shall be, and shall forthwith be delivered to Secured Party to
hold as, Securities Collateral and shall, if received by such Grantor, be
received in trust for the benefit of Secured Party, be segregated from the other
property or funds of such Grantor and be forthwith delivered to Secured Party as
Securities Collateral in the same form as so received (with all necessary
endorsements); and (iii) Secured Party shall promptly execute and deliver (or
cause to be executed and delivered) to such Grantor all such proxies, dividend
payment orders and other instruments as such Grantor may from time to time
reasonably request for the purpose of enabling such Grantor to exercise the
voting and other consensual rights which it is entitled to exercise pursuant to
clause (i) above and to receive the dividends, distributions, principal or
interest payments which it is authorized to receive and retain pursuant to
clause (ii) above.

            Upon the occurrence and during the continuation of an Event of
Default, (x) upon written notice from Secured Party to any Grantor, all rights
of such Grantor to exercise the voting and other consensual rights which it
would otherwise be entitled to exercise pursuant hereto shall cease, and all
such rights shall thereupon become vested in Secured Party who shall thereupon
have the sole right to exercise such voting and other consensual rights; (y) all
rights of such Grantor to receive the dividends, other distributions and
interest payments which it would otherwise be authorized to receive and retain
pursuant hereto shall cease, and all such rights shall thereupon become vested
in Secured Party who shall thereupon have the sole right to receive and hold as
Securities Collateral such dividends, other distributions and interest payments;
and (z) all dividends, principal, interest payments and other distributions
which are received by such Grantor contrary to the provisions of clause (ii) of
the immediately preceding paragraph or clause (y) above shall be received in
trust for the benefit of Secured Party, shall be segregated from other funds of
such Grantor and shall forthwith be paid over to Secured Party as Securities
Collateral in the same form as so received (with any necessary endorsements).

            In order to permit Secured Party to exercise the voting and other
consensual rights which it may be entitled to exercise pursuant hereto and to
receive all dividends and other distributions which it may be entitled to
receive hereunder, (I) each Grantor shall promptly execute and deliver (or cause
to be executed and delivered) to Secured Party all such proxies, dividend
payment orders and other instruments as Secured Party may from time to time
reasonably request, and (II) without limiting the effect of clause (I) above,
each Grantor hereby grants to Secured Party an irrevocable proxy to vote the
Pledged Shares and to exercise all other rights, powers, privileges and remedies
to which a holder of the Pledged Shares would be entitled (including giving or
withholding written consents of shareholders or other holders of equity
interests, calling special meetings of shareholders or other holders of equity
interests and voting at such meetings), which proxy shall be effective,
automatically and without the necessity of any action (including any transfer of
any Pledged Shares on the record books of the issuer thereof) by any other
Person (including the issuer of the Pledged Shares or any officer or agent
thereof), upon the occurrence of an Event of Default and which proxy shall only
terminate upon the payment in full of the Secured Obligations.

                                       18
<PAGE>

SECTION 11.  Special Covenants With Respect to the Intellectual Property
             -----------------------------------------------------------
Collateral.
- ----------

            (a)  Each Grantor shall:

                 (i)  diligently keep reasonable records respecting the
     Intellectual Property Collateral and at all times keep at least one
     complete set of its records concerning such Collateral at its chief
     executive office or principal place of business;

                 (ii) use best efforts so as not to permit the inclusion in any
     contract to which it hereafter becomes a party of any provision that could
     or might in any way impair or prevent the creation of a security interest
     in, or the assignment of, such Grantor's rights and interests in any
     property included within the definitions of any Intellectual Property
     Collateral acquired under such contracts;

                 (iii)  take any and all reasonable steps to protect the secrecy
     of all trade secrets relating to the products and services sold or
     delivered under or in connection with the Intellectual Property Collateral,
     including, without limitation, where appropriate entering into
     confidentiality agreements with employees and labeling and restricting
     access to secret information and documents;

                 (iv) use proper statutory notice in connection with its use of
     any of the Intellectual Property Collateral;

                 (v)  use a commercially appropriate standard of quality (which
     may be consistent with such Grantor's past practices) in the manufacture,
     sale and delivery of products and services sold or delivered under or in
     connection with the Trademarks; and

                 (vi) furnish to Secured Party from time to time at Secured
     Party's reasonable request statements and schedules further identifying and
     describing any Intellectual Property Collateral and such other reports in
     connection with such Collateral, all in reasonable detail.

            (b)  Except as otherwise provided in this Section 11, each Grantor
shall continue to collect, at its own expense, all amounts due or to become due
to such Grantor in respect of the Intellectual Property Collateral or any
portion thereof. In connection with such collections, each Grantor may take
(and, after the occurrence and during the continuance of any Event of Default at
Secured Party's reasonable direction, shall take) such action as such Grantor or
Secured Party may deem reasonably necessary or advisable to enforce collection
of such amounts; provided, Secured Party shall have the right at any time, upon
the occurrence and during the continuation of an Event of Default and upon
written notice to such Grantor of its intention to do so, to notify the obligors
with respect to any such amounts of the existence of the security interest
created hereby and to direct such obligors to make payment of all such amounts
directly to Secured Party, and, upon such notification and at the expense of
such Grantor, to enforce collection of any such amounts 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 receipt by any Grantor of the
notice from Secured Party referred to in the proviso to the preceding sentence
and during the continuation of any Event of Default, (i) all amounts and
proceeds (including checks and other instruments) received by each Grantor in
respect of

                                       19
<PAGE>

amounts due to such Grantor in respect of the Intellectual Property Collateral
or any portion thereof shall be received in trust for the benefit of Secured
Party hereunder, shall be segregated from other funds of such Grantor and shall
be forthwith paid over or delivered to Secured Party in the same form as so
received (with any necessary endorsement) to be held as cash Collateral and
applied as provided by Section 19, and (ii) such Grantor shall not adjust,
settle or compromise the amount or payment of any such amount or release wholly
or partly any obligor with respect thereto or allow any credit or discount
thereon.

            (c)  Each Grantor shall have the duty to prosecute, file and/or
make, unless and until each Grantor, in its commercially reasonable judgment,
decides otherwise, (i) any application relating to any of the Intellectual
Property Collateral owned, held or used by such Grantor and identified on
Schedules 2(f)(i), 2(f)(ii) or 2(f)(iii), as applicable, that is pending as of
the date of this Agreement, (ii) any Copyright Registration on any existing or
future unregistered but copyrightable works (except for works of nominal
commercial value or with respect to which such Grantor has determined in the
exercise of its commercially reasonable judgment that it shall not seek
registration), (iii) any application on any future patentable but unpatented
innovation or invention comprising Intellectual Property Collateral, (iv) any
Trademark opposition and cancellation proceedings, and (v) any renewals of
Trademark Registrations and Copyright Registrations. Unless and until each
Grantor, in its commercially reasonable judgment, decides otherwise, such
Grantor shall have the duty to perform any and all acts which are necessary or
desirable to preserve and maintain all rights in all Intellectual Property
Collateral. Any expenses incurred in connection therewith shall be borne solely
by Grantors. Subject to the foregoing, each Grantor shall give Secured Party
prior written notice of any abandonment of any material Intellectual Property
Collateral or any pending patent application or any Patent.

            (d)  Except as provided herein, each Grantor shall have the right to
commence and prosecute in its own name, as real party in interest, for its own
benefit and at its own expense, such suits, proceedings or other actions for
infringement, unfair competition, dilution, misappropriation or other damage, or
reexamination or reissue proceedings as are necessary to protect the
Intellectual Property Collateral. Secured Party shall provide, at such Grantor's
expense, all reasonable and necessary cooperation in connection with any such
suit, proceeding or action including, without limitation, joining as a necessary
party. Each Grantor shall promptly, following its becoming aware thereof, notify
Secured Party of the institution of, or of any adverse determination in, any
proceeding (whether in the United States Patent and Trademark Office, the United
States Copyright Office or any federal, state, local or foreign court) or
regarding such Grantor's ownership, right to use, or interest in any
Intellectual Property Collateral. Each Grantor shall provide to Secured Party
any information with respect thereto requested by Secured Party.

            (e)  In addition to, and not by way of limitation of, the granting
of a security interest in the Collateral pursuant hereto, each Grantor,
effective upon the occurrence and during the continuation of an Event of
Default, hereby assigns, transfers and conveys to Secured Party the nonexclusive
right and license to use all trademarks, tradenames, copyrights, patents or
technical processes (including, without limitation, the Intellectual Property
Collateral) owned or used by such Grantor that relate to the Collateral and any
other collateral granted by such Grantor as security for the Secured
Obligations, together with any goodwill associated therewith, all to the extent
necessary to enable Secured Party to realize on the Collateral in accordance
with this Agreement and to enable any transferee or assignee of the Collateral
to enjoy the benefits of

                                       20
<PAGE>

the Collateral. This right shall inure to the benefit of all successors, assigns
and transferees of Secured Party and its successors, assigns and transferees,
whether by voluntary conveyance, operation of law, assignment, transfer,
foreclosure, deed in lieu of foreclosure or otherwise. Such right and license
shall be granted free of charge, without requirement that any monetary payment
whatsoever be made to such Grantor. In addition, each Grantor hereby grants to
Secured Party and its employees, representatives and agents the right to visit
such Grantor's and any of its Affiliate's or subcontractor's plants, facilities
and other places of business that are utilized in connection with the
manufacture, production, inspection, storage or sale of products and services
sold or delivered under any of the Intellectual Property Collateral (or which
were so utilized during the prior six month period), and to inspect the quality
control and all other records relating thereto upon reasonable advance written
notice to such Grantor and at reasonable dates and times and as often as may be
reasonably requested. If and to the extent that any Grantor is permitted to
license the Intellectual Property Collateral, Secured Party shall promptly enter
into a non-disturbance agreement or other similar arrangement, at such Grantor's
request and expense, with such Grantor and any licensee of any Intellectual
Property Collateral permitted hereunder in form and substance reasonably
satisfactory to Secured Party pursuant to which (i) Secured Party shall agree
not to disturb or interfere with such licensee's rights under its license
agreement with such Grantor so long as such licensee is not in default
thereunder, and (ii) such licensee shall acknowledge and agree that the
Intellectual Property Collateral licensed to it is subject to the security
interest created in favor of Secured Party and the other terms of this
Agreement.

SECTION 12.      Special Provisions With Respect to the Assigned Agreements.
                 ----------------------------------------------------------

            (a)  Each Grantor shall at its expense:

                 (i)  if consistent with sound business practices, perform and
     observe all terms and provisions of the Assigned Agreements to be performed
     or observed by it, maintain the Assigned Agreements in full force and
     effect, enforce the Assigned Agreements in accordance with their terms, and
     take all such action to such end as may be from time to time requested by
     Secured Party; and

                (ii)  upon the reasonable request of Secured Party, furnish to
     Secured Party, promptly upon receipt thereof, copies of all notices,
     requests and other documents received by such Grantor under or pursuant to
     the Assigned Agreements, and from time to time (A) furnish to Secured Party
     such information and reports regarding the Assigned Agreements as Secured
     Party may reasonably request and (B) upon request of Secured Party make to
     the parties to such Assigned Agreements such demands and requests for
     information and reports or for action as such Grantor is entitled to make
     under the Assigned Agreements.

            (b)  Upon the occurrence and during the continuance of an Event of
Default, no Grantor shall:

                 (i)  cancel or terminate any of the Assigned Agreements or
     consent to or accept any cancellation or termination thereof;

                (ii)  amend or otherwise modify the Assigned Agreements or give
     any consent; waiver or approval thereunder;

                                       21
<PAGE>

                 (iii)  waive any default under or breach of the Assigned
     Agreements;

                  (iv)  consent to or permit or accept any prepayment of amounts
     to become due under or in connection with the Assigned Agreements, except
     as expressly provided therein; or

                  (v)   take any other action in connection with the Assigned
     Agreements that could reasonably be expected to materially impair the value
     of the interest or rights of such Grantor thereunder or that could
     reasonably be expected to materially impair the interest or rights of
     Secured Party.

SECTION 13.      Collateral Account; Cash Management System.
                 ------------------------------------------

            (a)  Collateral Account.

                 (i)  Secured Party is hereby authorized to establish and
     maintain at its office at One Wall Street, New York New York as a blocked
     account in the name of Company and under the sole dominion and control of
     Secured Party, a restricted deposit account and a related restricted
     investment account initially designated as "Total Renal Care Holdings, Inc.
     Collateral Account"; provided that the name of such account shall be
                          --------
     changed following any change of name of Total Renal Care Holdings, Inc. All
     amounts at any time held in the Collateral Account shall be beneficially
     owned by Grantors but shall be held in the name of Secured Party hereunder,
     for the benefit of Lenders, as collateral security for the Secured
     Obligations upon the terms and conditions set forth herein. Grantors shall
     have no right to withdraw, transfer or, except as expressly set forth
     herein, otherwise receive any funds deposited into the Collateral Account.
     Anything contained herein to the contrary notwithstanding, the Collateral
     Account shall be subject to such applicable laws, and such applicable
     regulations of the Board of Governors of the Federal Reserve System and of
     any other appropriate banking or governmental authority, as may now or
     hereafter be in effect. All deposits of funds in the Collateral Account
     shall be made by wire transfer (or, if applicable, by intra-bank transfer
     from another account of a Grantor) of immediately available funds, in each
     case addressed in accordance with instructions of Secured Party. Each
     Grantor shall, promptly after initiating a transfer of funds to the
     Collateral Account, give notice to Secured Party by telefacsimile of the
     date, amount and method of delivery of such deposit. Funds held by Secured
     Party in the Collateral Account shall be invested by Secured Party in Cash
     Equivalents, as directed by Company, in accordance with the terms of an
     investment account agreement to be entered into between Company and Secured
     Party on or before the date that any funds shall be deposited into the
     Collateral Account; provided that, upon the occurrence and during the
                         --------
     continuance of any Event of Default, the Secured Party shall be entitled,
     in its discretion, to direct the investments in the Collateral Account
     (which shall consist of cash and Cash Equivalents). In the event of any
     conflict between the terms of such investment account agreement and this
     Agreement, this Agreement shall control. If no such investment account
     agreement shall then be in effect, the funds held by Secured Party in the
     Collateral Account shall not be invested by Secured Party but instead shall
     be maintained as a cash deposit in the Collateral Account pending
     application thereof as elsewhere provided in this Agreement. Subject to
     Secured Party's rights hereunder, any interest, dividends or other amounts
     earned on funds in the Collateral Account shall be deposited directly in,
     and held in the Collateral Account.

                                       22
<PAGE>

                 (ii)  Company shall be required to deposit funds into the
     Collateral Account in accordance with Section 17(c) hereof. In addition,
     Company and its Subsidiaries may from time to time deposit into the
     Collateral Account cash proceeds received by Company or any of its
     Subsidiaries in connection with any Asset Sale constituting the first
     transaction of an Asset Swap Transaction pursuant to Section 7.16(b) of the
     Revolving Credit Agreement and Section7.16(b) of the Term Loan Agreement.
     If Company elects to prepay a portion of the Revolving Loans with an amount
     equal to the Revolver Prepayment Fraction of all or any portion of the cash
     proceeds received in connection with such Asset Sale pursuant to Section
     7.16(b) of the Revolving Credit Agreement (or any comparable provision
     thereof), Secured Party shall transfer the Term Prepayment Fraction of such
     portion of the cash proceeds into a sub-account of the Collateral Account
     maintained for the benefit of the Term Lenders (or, at the Secured Party's
     option, a separate deposit account that will be subject to substantially
     the same terms and conditions as the Collateral Account) (in either case,
     the "Term Lenders' Sub-Account"). Unless the funds in the Term Lenders'
     Sub-Account are released in accordance with Section 22(c), such funds shall
     be held solely as Collateral for the benefit of the Term Lenders.

            (b)  Cash Management System. As promptly as possible after the
Effective Date, but in no event later than 30 days after the Effective Date,
each Grantor shall establish and at all times thereafter maintain, and shall
cause its Subsidiaries to establish and at all times thereafter maintain, the
cash management system as described in this Section 13(b) and Section 13(c);
provided, that Company may request extensions of the period to establish and
maintain such cash management system by delivering to Secured Party an officer's
certificate signed by an Authorized Signatory of Company certifying that Company
and Grantors have used their best efforts to establish and maintain such cash
management system within the time period permitted hereunder but were unable to
do so. Secured Party may, in its sole discretion, elect to grant such extensions
to a date not later than 180 days after the Effective Date, or such later date
as Requisite Obligees may in their sole discretion approve.

                 (i)  General Restrictions. No Grantor shall maintain, or permit
     any of its wholly owned Subsidiaries to maintain, funds in any Deposit
     Account other than (t) New Concentration Accounts and other Deposit
     Accounts maintained with Secured Party, (u) Governmental Health Receivable
     Collection Accounts, (v) Non-Governmental Health Receivable Collection
     Accounts, (w) accounts containing only funds of non-wholly owned
     Subsidiaries and managed accounts, (x) Imprest Accounts, (y) Regional
     Depositary Accounts, and (z) Other Deposit Accounts.

                (ii)  New Concentration Accounts and other Deposit Accounts with
     Secured Party. Each Grantor shall establish and maintain one or more New
     Concentration Accounts with Secured Party and may establish one or more
     other Deposit Accounts with Secured Party. Grantors shall cause to be
     deposited directly into a New Concentration Account all payments,
     collections, proceeds and transfers received by such Grantor other than (x)
     Governmental Health Receivable Proceeds, (y) funds of non-wholly owned
     Subsidiaries and managed accounts, and (z) funds that are permitted to be
     deposited into and retained in the Non-Governmental Health Receivable
     Collection Accounts, Regional Depositary Accounts, Imprest Accounts, and
     Other Deposit Accounts. Grantors shall not be required to cause any
     Governmental Health Receivable
                                       23
<PAGE>

     Proceeds to be directly deposited into any Deposit Account maintained with
     Secured Party; provided, however, that Grantors shall instruct each
                    --------
     financial institution at which a Governmental Health Receivable Collection
     Account is maintained to transfer the funds in such accounts to a New
     Concentration Account as set forth in clause (iii) below.

                 (iii)  Governmental Health Receivable Collection Accounts.
     Grantors shall cause all Governmental Health Receivable Proceeds to be
     deposited directly in the Governmental Health Receivable Collection
     Accounts, and shall not permit any funds other than Governmental Health
     Receivable Proceeds to be deposited in or transferred to the Governmental
     Receivable Collection Accounts. Grantors shall instruct the depositary
     institutions at which the Governmental Receivable Collection Accounts are
     maintained to transfer the funds in such accounts to a New Concentration
     Account no less frequently than daily. Grantors shall either transfer the
     Governmental Health Receivable Collection Account maintained by Total Renal
     Care at Seafirst Bank to Bank of America, N.A., and cause such account to
     be domiciled in California, or close such account. Grantors shall retain
     the power to revoke their instructions to the depositary institutions
     referred to in this clause regarding transfer of funds in the Governmental
     Health Receivable Collection Accounts; provided that Grantors shall give
                                            --------
     notice to the Revolving Agent and Term Agent simultaneously with any such
     revocation, and any such revocation shall constitute an Event of Default
     under both the Revolving Credit Agreement and the Term Loan Agreement.
     Grantors may continue to maintain any Governmental Health Receivable
     Collection Account in existence on the Effective Date that is maintained
     with the Secured Party. Notwithstanding anything in this Agreement to the
     contrary, if Grantors maintain any Governmental Health Receivable
     Collection Accounts with the Secured Party, Grantors shall have sole
     dominion and control over such accounts; provided, that Grantors shall
                                              --------
     instruct Secured Party to transfer the funds in any Governmental Receivable
     Collection Accounts maintained with Secured Party to transfer the funds in
     such accounts to a New Concentration Account no less frequently than daily
     (subject to Grantors' rights to revoke such instructions as set forth in
     this clause (iii)).

                 (iv)  Non-Governmental Health Receivable Collection Accounts.
     Renal Treatment Centers may establish and maintain a Non-Governmental
     Health Receivable Collection Account with First Union National Bank, and
     Total Renal Care Inc. may establish and maintain a Non-Governmental Health
     Receivable Collection Account with Seafirst Seattle Bank. TRC Nations-
     Florida Regional may establish and maintain a Non-Governmental Health
     Receivable Collection Account with Bank of America and TRC Minnesota
     Regional may establish and maintain a Non-Governmental Health Receivable
     Collection Account with Wells Fargo Bank. Grantors shall not permit any
     Governmental Health Receivable Proceeds to be directly deposited into any
     Non-Governmental Health Receivable Collection Account. Grantors will cause
     each depositary institution at which any Non-Governmental Health Receivable
     Collection Account is maintained to enter into a blocked account agreement,
     in form and substance reasonably satisfactory to Secured Party, which shall
     provide that all funds in such accounts constitute Collateral, that the
     depositary bank at which such account is maintained shall waive its rights
     of setoff other than for payment of fees and expenses for such account,
     shall grant dominion and control of such account to Secured Party, and

                                       24
<PAGE>

     shall provide that all funds therein shall be transferred to a New
     Concentration Account no less frequently than daily.

                 (v)  Regional Depositary Accounts, Imprest Accounts and Other
     Deposit Accounts. Grantors will not permit any Governmental Health
     Receivable Proceeds to be deposited directly into any Regional Depositary
     Accounts. Grantors shall not permit any funds to be deposited in or
     transferred to any Imprest Account other than funds received from other
     Grantors. Grantors shall not use any Imprest Account for purposes other
     than funding local operating expenses of Grantors and their Subsidiaries.
     Grantors will not permit the aggregate amount of cash in the Regional
     Depositary Accounts, Imprest Accounts and Other Deposit Accounts to exceed
     $750,000 at any time.

                (vi)  Reports. Not later than 40 days after the end of each
     month Grantors shall deliver to each Lender a report showing the aggregate
     amount of Governmental Health Receivable Proceeds received during such
     month and the aggregate amount of transfers and deposits to and from the
     Governmental Health Receivable Collection Accounts and the New
     Concentration Accounts. Such report shall contain a certification by an
     Authorized Signatory of Grantors that the Governmental Health Receivable
     Collection Accounts contains only proceeds of Governmental Health
     Receivables and no other funds.

               (vii)  Control over Deposit Accounts. Except as set forth in
     the last sentence of Section 13(b)(iii), all Deposit Accounts of the
     Grantors that are maintained at Secured Party (including, without
     limitation, the New Concentration Accounts but excluding any Governmental
     Health Receivable Collection Accounts) shall be under the sole dominion and
     control of Secured Party, and Grantors shall have no access to or any right
     to draw upon or withdraw any funds from any such Deposit Accounts without
     the prior consent of Secured Party in each instance. In the event of any
     conflict between the terms of any agreement between a Grantor and Secured
     Party establishing a Deposit Account and the terms of this Agreement, this
     Agreement shall govern. The consent of the Secured Party given in one or
     more instances shall not be deemed a waiver of any of the provisions
     hereof. Notwithstanding the foregoing, Secured Party and Lenders hereby
     consent to withdrawals or transfers from the New Concentration Accounts of
     any Grantor to fund due and payable costs payable in the ordinary course of
     business or other uses permitted by the Financing Documents; provided that
                                                                  --------
     Secured Party may at any time, without notice, revoke the consent of the
     Secured Party and Lenders to withdrawals or transfers from such Deposit
     Accounts if any Event of Default shall have occurred and be continuing or
     would result from the withdrawal or transfer from such account or the
     application of the funds so withdrawn or transferred. All funds in the
     Deposit Accounts in name of any Grantor are the property of such Grantor.
     All Deposit Accounts and all funds therein constitute Collateral hereunder
     and are subject to the security interest created herein in favor of the
     Secured Party for the benefit of the Secured Parties.

              (viii)  Restricted Investment Accounts. Each Grantor may
     establish one or more restricted investment accounts (each, a "Restricted
     Investment Account") with Secured Party or any of its Subsidiaries in the
     name of such Grantor. The terms of any Restricted Investment Accounts shall
     be set forth in the applicable investment account agreement between such
     Grantor and Secured Party or its Subsidiary, as the case may be, provided,
                                                                      --------
     that in the event of any conflict between the terms of such investment

                                       25
<PAGE>

     account agreement and this Agreement, this Agreement shall control. The
     Restricted Investment Accounts shall be under the sole dominion and control
     of Secured Party and Grantors shall have no access to or any right to draw
     upon or withdraw any funds from any such Restricted Investment Accounts
     without the prior consent of Secured Party in each instance. Consent of the
     Secured Party given in one or more instances shall not be deemed a waiver
     of any of the provisions hereof. Notwithstanding the foregoing, Secured
     Party and Lenders hereby consent to transfers from the Restricted
     Investment Accounts to any Deposit Account maintained with Secured Party
     (other than a Governmental Health Receivable Collection Account). All funds
     in the Restricted Investment Accounts in name of any Grantor are the
     property of such Grantor. All Restricted Investment Accounts and all
     financial assets therein constitute Collateral hereunder and are subject to
     the security interest created herein in favor of the Secured Party for the
     benefit of the Secured Parties.

          (c)  Definitions.   In addition to the terms defined in the
Preliminary Statements and in other Sections of this Agreement, as used in this
Agreement, the following terms shall have the following meanings unless the
context otherwise requires:

          "Governmental Health Receivable Collection Account" means any Deposit
     Account into which account debtors on Governmental Health Receivables make
     payments in respect thereof (such payments being "Governmental Health
     Receivable Proceeds"), which account is in existence on the date hereof and
     identified on Schedule 13(c) as such or established after the date hereof
     with the consent of  Secured Party.

          "Imprest Accounts" means the deposit accounts listed as such on
     Schedule 13(c) hereof and any additional accounts established by any
     Grantor after the date hereof with the prior written consent of Secured
     Party.

          "New Concentration Account" means any deposit account established
     after the date hereof by any Grantor with the Secured Party  to receive all
     payments, collections, proceeds and transfers received by such Grantor,
     other than Governmental Health Receivable Proceeds.

          "Non-Governmental Health Receivable Collection Accounts" means a
     Deposit Account into which amounts other than Governmental Health
     Receivable Proceeds are deposited.

          "Other Deposit Accounts" means the deposit accounts listed as such on
     Schedule 13(c) hereof and any additional accounts established by any
     Grantor after the date hereof with the prior written consent of Secured
     Party.

          "Regional Deposit Accounts" means the deposit accounts listed as such
     on Schedule 13(c) hereof and any additional accounts established by any
     Grantor after the date hereof  with the prior written consent of Secured
     Party.

SECTION 14.  Secured Party Appointed Attorney-in-Fact.
             ----------------------------------------

          Each Grantor hereby irrevocably appoints Secured Party as such
Grantor's attorney-in-fact, with full authority in the place and stead of such
Grantor and in the name of

                                       26
<PAGE>

such Grantor, Secured Party or otherwise, from time to time in Secured Party's
discretion to take any action and to execute any instrument that Secured Party
may deem necessary or advisable to accomplish the purposes of this Agreement,
including without limitation:

          (a)  upon the occurrence and during the continuance of an Event of
Default, to obtain and adjust insurance required to be maintained by such
Grantor or paid to Secured Party pursuant to Section 8;

          (b)  upon the occurrence and during the continuance of an Event of
Default, to ask for, demand, collect, sue for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;

          (c)  upon the occurrence and during the continuance of an Event of
Default, to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clauses (a) and (b) above;

          (d)  upon the occurrence and during the continuance of an Event of
Default, to file any claims or take any action or institute any proceedings that
Secured Party may deem necessary or desirable for the collection of any of the
Collateral or otherwise to enforce the rights of Secured Party with respect to
any of the Collateral;

          (e)  to pay or discharge taxes or Liens (other than Liens permitted
under this Agreement or the Financing Documents or taxes that are not yet due
and payable or that are being contested by Grantors in good faith by appropriate
proceedings) levied or placed upon or threatened against the Collateral, the
legality or validity thereof and the amounts necessary to discharge the same to
be determined by Secured Party in its sole discretion, any such payments made by
Secured Party to become obligations of such Grantor to Secured Party, due and
payable immediately without demand;

          (f)  upon the occurrence and during the continuance of an Event of
Default, to sign and endorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with Accounts and other documents
relating to the Collateral; and

          (g)  upon the occurrence and during the continuance of an Event of
Default, generally to sell, transfer, pledge, make any agreement with respect to
or otherwise deal with any of the Collateral as fully and completely as though
Secured Party were the absolute owner thereof for all purposes, and to do, at
Secured Party's option and Grantors' expense, at any time or from time to time,
all acts and things that Secured Party deems necessary to protect, preserve or
realize upon the Collateral and Secured Party's security interest therein in
order to effect the intent of this Agreement, all as fully and effectively as
such Grantor might do.

SECTION 15.  Secured Party May Perform.
             -------------------------

          If any Grantor fails to perform any agreement contained herein,
Secured Party may itself perform, or cause performance of, such agreement, and
the expenses of Secured Party incurred in connection therewith shall be payable
by Grantors under Section 20(b).

                                       27
<PAGE>

SECTION 16.  Standard of Care.
             ----------------

          The powers conferred on Secured Party hereunder are solely to protect
its interest in the Collateral and shall not impose any duty upon it to exercise
any such powers.  Except for the exercise of reasonable care in the custody of
any Collateral in its possession, or as required by Section 9-207 of the UCC,
Secured Party shall have no duty as to any Collateral or as to the taking of any
necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral.  Secured Party shall be deemed to have exercised
reasonable care in the custody and preservation of Collateral in its possession
if such Collateral is accorded treatment substantially equal to that which
Secured Party accords its own property.

SECTION 17.   Remedies.
              --------
         (a)  Generally.  If any Event of Default shall have occurred and be
continuing, Secured Party may exercise in respect of the Collateral, in addition
to all other rights and remedies provided for herein or otherwise available to
it, all the rights and remedies of a secured party on default under the UCC
(whether or not the UCC 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 Secured Party forthwith, assemble all or part of the
Collateral as directed by Secured Party and make it available to Secured Party
at a place to be designated by Secured Party that is reasonably convenient to
both parties, (ii) enter onto the property where any Collateral is located and
take possession thereof with or without judicial process, (iii) prior to the
disposition of the Collateral, store, process, repair or recondition the
Collateral or otherwise prepare the Collateral for disposition in any manner to
the extent Secured Party deems appropriate, (iv) take possession of any
Grantor's premises or place custodians in exclusive control thereof, remain on
such premises and use the same and any of such Grantor's equipment for the
purpose of completing any work in process, taking any actions described in the
preceding clause (iii) and collecting any Secured Obligation, (v) 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 Secured Party's offices or
elsewhere, for cash, on credit or for future delivery, at such time or times and
at such price or prices and upon such other terms as Secured Party may deem
commercially reasonable, (vi) exercise dominion and control over and refuse to
permit further withdrawals from any Deposit Account maintained with Secured
Party or any Lender constituting a part of the Collateral and (vii) without
notice to any Grantor, transfer to or to register in the name of Secured Party
or any of its nominees any or all of the Securities Collateral. Secured Party or
any Lender or Interest Rate Exchanger may be the purchaser of any or all of the
Collateral at any such public sale and, to the extent permitted by law, private
sale and Secured Party, as agent for and representative of Lenders and Interest
Rate Exchangers (but not any Lender or Interest Rate Exchanger in its individual
capacity unless Requisite Obligees shall otherwise agree in writing), shall be
entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Collateral sold at any such public
sale, to use and apply any of the Secured Obligations as a credit on account of
the purchase price for any Collateral payable by Secured Party at such sale.
Each purchaser at any such sale shall hold the property sold absolutely free
from any claim or right on the part of any Grantor, and each Grantor hereby
waives (to the extent permitted by applicable law) all rights of redemption,
stay and/or appraisal which it now has or may at any time in the future have
under any rule of law or statute now existing or hereafter enacted. 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

                                       28
<PAGE>

and place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. Secured Party shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. Secured Party 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. If the proceeds of any sale of the Collateral are insufficient to pay
all the Secured Obligations, Grantors shall be jointly and severally liable for
the deficiency and the fees of any attorneys employed by Secured Party to
collect such deficiency. Each Grantor further agrees that a breach of any of the
covenants contained in this Section will cause irreparable injury to Secured
Party, that Secured Party has no adequate remedy at law in respect of such
breach and, as a consequence, that each and every covenant contained in this
Section shall be specifically enforceable against such Grantor, and each Grantor
hereby waives and agrees not to assert any defenses against an action for
specific performance of such covenants except for a defense that no default has
occurred giving rise to the Secured Obligations becoming due and payable prior
to their stated maturities.

          (b)  Securities Collateral.

               (i)    Each Grantor recognizes that, by reason of certain
prohibitions contained in the Securities Act and applicable state securities
laws, Secured Party may be compelled, with respect to any sale of all or any
part of the Securities Collateral conducted without prior registration or
qualification of such Securities Collateral under the Securities Act and/or such
state securities laws, to limit purchasers to those who will agree, among other
things, to acquire the Securities Collateral for their own account, for
investment and not with a view to the distribution or resale thereof. Each
Grantor acknowledges that any such private sales may be at prices and on terms
less favorable than those obtainable through a public sale without such
restrictions (including a public offering made pursuant to a registration
statement under the Securities Act) and, notwithstanding such circumstances and
the registration rights granted to Secured Party by such Grantor pursuant
hereto, each Grantor agrees that Secured Party may sell Securities Collateral by
private sale and any such private sale shall not, by virtue of being private, be
deemed to be commercially unreasonable. Each Grantor agrees that Secured Party
shall have no obligation to engage in public sales and no obligation to delay
the sale of any Securities Collateral for the period of time necessary to permit
the issuer thereof to register it for a form of public sale requiring
registration under the Securities Act or under applicable state securities laws,
even if such issuer would, or should, agree to so register it. If Secured Party
determines to exercise its right to sell any or all of the Securities
Collateral, upon written request, each Grantor shall and shall cause each issuer
of any Pledged Shares to be sold hereunder from time to time to furnish to
Secured Party all such information as Secured Party may request in order to
determine the number of shares and other instruments included in the Securities
Collateral which may be sold by Secured Party in exempt transactions under the
Securities Act and the rules and regulations of the Securities and Exchange
Commission thereunder, as the same are from time to time in effect.

              (ii)   If Secured Party shall determine to exercise its right to
sell all or any of the Securities Collateral pursuant to this Section, each
Grantor agrees that, upon request of Secured Party (which request may be made by
Secured Party in its sole discretion), such Grantor will, at its own expense (A)
execute and deliver, and use its best

                                       29
<PAGE>

efforts to cause each issuer of the Securities Collateral contemplated to be
sold and the directors and officers thereof to execute and deliver, all such
instruments and documents, and do or cause to be done all such other acts and
things, as may be necessary or, in the opinion of Secured Party, advisable to
register such Securities Collateral under the provisions of the Securities Act
and to use its best efforts to cause the registration statement relating thereto
to become effective and to remain effective for such period as prospectuses are
required by law to be furnished, and to make all amendments and supplements
thereto and to the related prospectus which, in the opinion of Secured Party,
are necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto; (B) use its best efforts to qualify the
Securities Collateral under all applicable state securities or "Blue Sky" laws
and to obtain all necessary governmental approvals for the sale of the
Securities Collateral, as requested by Secured Party; (C) cause each such issuer
to make available to its security holders, as soon as practicable, an earnings
statement which will satisfy the provisions of Section 11(a) of the Securities
Act; (D) use its best efforts to do or cause to be done all such other acts and
things as may be necessary to make such sale of the Securities Collateral or any
part thereof valid and binding and in compliance with applicable law; and (E)
bear all costs and expenses, including reasonable attorneys' fees, of carrying
out its obligations under this Section.

               (iii)  Without limiting the generality of subsections 11.5 and
11.11 of the Financing Documents, in the event of any public sale described
herein, each Grantor agrees to indemnify and hold harmless Secured Party, and
each Lender and each Interest Rate Exchanger and each of their respective
directors, officers, employees and agents from and against any loss, fee, cost,
expense, damage, liability or claim, joint or several, to which any such Persons
may become subject or for which any of them may be liable, under the Securities
Act or otherwise, insofar as such losses, fees, costs, expenses, damages,
liabilities or claims (or any litigation commenced or threatened in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus,
registration statement, prospectus or other such document published or filed in
connection with such public sale, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse Secured Party and such
other Persons for any legal or other expenses reasonably incurred by Secured
Party and such other Persons in connection with any litigation, of any nature
whatsoever, commenced or threatened in respect thereof (including any and all
fees, costs and expenses whatsoever reasonably incurred by Secured Party and
such other Persons and counsel for Secured Party and such other Persons in
investigating, preparing for, defending against or providing evidence, producing
documents or taking any other action in respect of, any such commenced or
threatened litigation or any claims asserted). This indemnity shall be in
addition to any liability which any Grantor may otherwise have and shall extend
upon the same terms and conditions to each Person, if any, that controls Secured
Party or such Persons within the meaning of the Securities Act.

          (c)  Collateral Account.  If an Event of Default has occurred and is
continuing and, in accordance with Section 9.1 of the Revolving Credit
Agreement, Company is required to pay to Secured Party an amount (the "Aggregate
Available Amount") equal to the

                                       30
<PAGE>

maximum amount that may at any time be drawn under all Letters of Credit then
outstanding under the Revolving Credit Agreement, Company shall deliver funds in
such an amount for deposit in the Collateral Account. If for any reason the
aggregate amount delivered by Company for deposit in the Collateral Account as
aforesaid is less than the Aggregate Available Amount, the aggregate amount so
delivered by Company shall be apportioned among all outstanding Letters of
Credit for purposes of this Section in accordance with the ratio of the maximum
amount available for drawing under each such Letter of Credit (as to such Letter
of Credit, the "Maximum Available Amount") to the Aggregate Available Amount.
Upon any drawing under any outstanding Letter of Credit in respect of which
Company has deposited in the Collateral Account any amounts described above,
Secured Party shall apply such amounts to reimburse the Letter of Credit Issuer
for the amount of such drawing. In the event of cancellation or expiration of
any Letter of Credit in respect of which Company has deposited in the Collateral
Account any amounts described above, or in the event of any reduction in the
Maximum Available Amount under such Letter of Credit, Secured Party shall apply
the amount then on deposit in the Collateral Account in respect of such Letter
of Credit (less, in the case of such a reduction, the Maximum Available Amount
under such Letter of Credit immediately after such reduction) first, to the
payment of any amounts payable to Secured Party pursuant to Section 19 hereof,
second, to the extent of any excess, to the cash collateralization pursuant to
the terms of this Agreement of any outstanding Letters of Credit in respect of
which Company has failed to pay all or a portion of the amounts described above
(such cash collateralization to be apportioned among all such Letters of Credit
in the manner described above), third, to the extent of any further excess, to
the payment of any other outstanding Secured Obligations in such order as
Secured Party shall elect, and fourth, to the extent of any further excess, to
the payment to whomsoever shall be lawfully entitled to receive such funds.

SECTION 18.  Additional Remedies for Intellectual Property Collateral.
             --------------------------------------------------------
          (a)  Anything contained herein to the contrary notwithstanding, upon
the occurrence and during the continuation of an Event of Default, (i) Secured
Party shall have the right (but not the obligation) to bring suit, in the name
of any Grantor, Secured Party or otherwise, to enforce any Intellectual Property
Collateral, in which event each Grantor shall, at the request of Secured Party,
do any and all lawful acts and execute any and all documents required by Secured
Party in aid of such enforcement and each Grantor shall promptly, upon demand,
reimburse and indemnify Secured Party as provided in Sections 11.5 and 11.11 of
the Revolving Credit Agreement and the Term Loan Agreement and Section 20
hereof, as applicable, in connection with the exercise of its rights under this
Section, and, to the extent that Secured Party shall elect not to bring suit to
enforce any Intellectual Property Collateral as provided in this Section, each
Grantor agrees to use all reasonable measures, whether by action, suit,
proceeding or otherwise, to prevent the infringement of any of the Intellectual
Property Collateral by others and for that purpose agrees to use its
commercially reasonable judgment in maintaining any action, suit or proceeding
against any Person so infringing reasonably necessary to prevent such
infringement; (ii) upon written demand from Secured Party, each Grantor shall
execute and deliver to Secured Party an assignment or assignments of the
Intellectual Property Collateral and such other documents as are necessary or
appropriate to carry out the intent and purposes of this Agreement; (iii) each
Grantor agrees that such an assignment and/or recording shall be applied to
reduce the Secured Obligations outstanding only to the extent that Secured Party
(or any Lender) receives cash proceeds in respect of the sale of, or other
realization upon, the Intellectual Property Collateral; and (iv) within five
Business Days after written notice from

                                       31
<PAGE>

Secured Party, each Grantor shall make available to Secured Party, to the extent
within such Grantor's power and authority, such personnel in such Grantor's
employ on the date of such Event of Default as Secured Party may reasonably
designate, by name, title or job responsibility, to permit such Grantor to
continue, directly or indirectly, to produce, advertise and sell the products
and services sold or delivered by such Grantor under or in connection with the
Trademarks, Trademark Registrations and Trademark Rights, such persons to be
available to perform their prior functions on Secured Party's behalf and to be
compensated by Secured Party at such Grantor's expense on a per diem, pro-rata
basis consistent with the salary and benefit structure applicable to each as of
the date of such Event of Default.

          (b)  If (i) an Event of Default shall have occurred and, by reason of
cure, waiver, modification, amendment or otherwise, no longer be continuing,
(ii) no other Event of Default shall have occurred and be continuing, (iii) an
assignment to Secured Party of any rights, title and interests in and to the
Intellectual Property Collateral shall have been previously made, and (iv) the
Secured Obligations shall not have become immediately due and payable, upon the
written request of any Grantor, Secured Party shall promptly execute and deliver
to such Grantor such assignments as may be necessary to reassign to such Grantor
any such rights, title and interests as may have been assigned to Secured Party
as aforesaid, subject to any disposition thereof that may have been made by
Secured Party; provided, after giving effect to such reassignment, Secured
Party's security interest granted pursuant hereto, as well as all other rights
and remedies of Secured Party granted hereunder, shall continue to be in full
force and effect; and provided further, the rights, title and interests so
reassigned shall be free and clear of all Liens other than Liens (if any)
encumbering such rights, title and interest at the time of their assignment to
Secured Party and Permitted Liens.

SECTION 19.  Application of Proceeds.
             -----------------------

          Except as expressly provided elsewhere in this Agreement, all proceeds
received by Secured Party in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral shall be applied in the
following order of priority:

          FIRST:  To the payment of all costs and expenses of such sale,
     collection or other realization, including reasonable compensation to
     Secured Party and its agents and counsel, and all other expenses,
     liabilities and advances made or incurred by Secured Party in connection
     therewith, and all amounts for which Secured Party is entitled to
     indemnification hereunder and all advances made by Secured Party hereunder
     for the account of Grantors, and to the payment of all costs and expenses
     paid or incurred by Secured Party in connection with the exercise of any
     right or remedy hereunder;

          SECOND:  To the payment of all other Secured Obligations in the order
     described in Section 3 of the Intercreditor Agreement; provided, however,
                                                            --------
     that any Collateral in the Term Lenders' Sub-Account shall be distributed
     to the Term Agent for distribution to the Term Lenders and applied to the
     payment of Secured Obligations under the Term Loan Documents, pro rata in
     proportion to the amounts thereof held by the Term Lenders; and

          THIRD:  To the payment to or upon the order of Company, or to
     whosoever may be lawfully entitled to receive the same or as a court of
     competent jurisdiction may direct, of any surplus then remaining from such
     proceeds.

                                       32
<PAGE>

SECTION 20.  Indemnity and Expenses.

          (a)  Grantors jointly and severally agree to indemnify Secured Party,
each Lender and each Interest Rate Exchanger from and against any and all
claims, losses and liabilities in any way relating to, growing out of or
resulting from this Agreement and the transactions contemplated hereby
(including without limitation enforcement of this Agreement), except to the
extent such claims, losses or liabilities result solely from Secured Party's or
such Lender's or Interest Rate Exchanger's gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction.

          (b)  Grantors jointly and severally agree to pay to Secured Party upon
demand the amount of any and all costs and expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents, that Secured
Party 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, (iii) the exercise or
enforcement of any of the rights of Secured Party hereunder, or (iv) the failure
by any Grantor to perform or observe any of the provisions hereof.

          (c)  The obligations of Grantors in this Section 20 shall (i) survive
the termination of this Agreement and the discharge of Grantors' other
obligations under this Agreement and the Financing Documents and (ii), as to any
Grantor that is a party to a Subsidiary Guaranty, be subject to the provisions
of Section 2.1(b) thereof.

SECTION 21.  Continuing Security Interest; Transfer of Loans; Termination and
             ----------------------------------------------------------------
Release.
- -------

          (a)  This Agreement shall create a continuing security interest in the
Collateral and shall (i) remain in full force and effect until the payment in
full of the Secured Obligations (other than inchoate indemnification and
reimbursement obligations under the Financing Documents that are not then due
and payable), the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, (ii) be binding
upon Grantors and their respective successors and assigns, and (iii) inure,
together with the rights and remedies of Secured Party hereunder, to the benefit
of Secured Party and its successors, transferees and assigns. Without limiting
the generality of the foregoing clause (iii), (A) but subject to the provisions
of subsection 11.7 of the Financing Documents, any Lender may assign or
otherwise transfer any Loans held by it to any other Person, and such other
Person shall thereupon become vested with all the benefits in respect thereof
granted to Lenders herein or otherwise and (B) any Interest Rate Exchanger may
assign or otherwise transfer any Interest Rate Agreement to which it is a party
to any other Person in accordance with the terms of such Interest Rate
Agreement, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to Interest Rate Exchangers herein or
otherwise.

          (b)  Upon the payment in full of all Secured Obligations (other than
inchoate indemnification and reimbursement obligations under the Financing
Documents that are not then due and payable), the cancellation or termination of
the Commitments and the cancellation or expiration of all outstanding Letters of
Credit, the security interest granted hereby shall terminate and all rights to
the Collateral shall revert to the applicable Grantors. Upon any such
termination Secured Party will, at Grantors' expense, execute and deliver to
Grantors such documents as Grantors shall reasonably request to evidence such
termination. In addition, upon the proposed

                                       33
<PAGE>

sale, transfer or other disposition of any Collateral by a Grantor in accordance
with the Financing Documents for which such Grantor desires to obtain a security
interest release from Secured Party, such Grantor shall deliver an Officer's
Certificate (x) stating that the Collateral subject to such disposition is being
sold, transferred or otherwise disposed of in compliance with the terms of the
Financing Documents and (y) specifying the Collateral being sold, transferred or
otherwise disposed of in the proposed transaction. Upon the receipt of such
Officer's Certificate, Secured Party shall, at Grantor's expense, so long as
Secured Party has no reason to believe that the Officer's Certificate delivered
by such Grantor with respect to such sale is not true and correct, execute and
deliver such releases of its security interest in such Collateral which is to be
so sold, transferred or disposed of, as may be reasonably requested by such
Grantor.

SECTION 22.  Releases of Collateral; Reinstatement of Security Interest
             ----------------------------------------------------------
          (a)  Release of Collateral upon meeting of Leverage Ratio Test.
Company may at any time before September 30, 2002, request the release of the
Collateral and the termination of Secured Party's security interest therein by
delivering an officers' certificate from Company (i) certifying that (x) the
Leverage Ratio (as such term is defined in the Revolving Credit Agreement and
the Term Loan Agreement) is less than 3.50:1.00 as calculated at the time of
such release and at all times during the four consecutive fiscal quarters period
most recently ended on or before such release for which financial statements of
Company have been delivered to the Revolving Agent and the Term Agent pursuant
to the Revolving Credit Agreement and the Term Loan Agreement, (y) no Default or
Event of Default exists or would exist immediately before or after giving effect
to such release, and (z) all representations and warranties made by the Loan
Parties in the Revolving Loan Documents and the Term Loan Documents are true and
correct on the date of such certificate immediately before or after giving
effect thereto as though made on that date, except to the extent such
representations and warranties specifically related to an earlier date, in which
case they were true and correct on such earlier date, and (ii) setting forth
calculations, in the same level of detail as required by the Compliance
Certificate, of the Leverage Ratio as of the time of such release. Upon receipt
by Secured Party of such officer's certificate before September 30, 2002,
Secured Party will, at the Loan Parties' expense, execute and deliver to the
applicable Loan Parties such documents as such Loan Parties shall reasonably
request to evidence the termination of the security interest granted by this
Agreement and the other Collateral Documents in the Collateral and the Loan
Parties shall be entitled to the return, upon their request and at their
expense, against receipt and without recourse to Secured Party, of such of the
Collateral as shall not have been sold or otherwise applied pursuant to the
terms hereof, the Collateral Documents, or the Intercreditor Agreement. Upon
such receipt by the Loan Parties of such remaining Collateral, the security
interest granted by the Collateral Documents in the Collateral shall terminate
and all rights to the Collateral shall revert to the Loan Parties.

          (b)  Release of Collateral Upon Asset Sale. Upon receipt by Secured
Party from time to time of a request from Company for the release of Collateral
from the Liens created by the Collateral Documents in connection with a sale
permitted under the Revolving Credit Agreement and the Term Loan Agreement,
Secured Party shall, satisfaction of the conditions for release set forth in the
applicable Financing Documents (including, without limitation, evidence
satisfactory to Secured Party that the proceeds of the sale of such Collateral
will be applied to the payment of the obligations of the Revolving Credit
Agreement and the Term Loan Agreement to the extent required thereby), execute
such instruments and take such other actions as are

                                       34
<PAGE>

reasonably necessary or desirable to terminate and release the Lien of the
Collateral Documents on the specified portions of the Collateral. If a release
of Collateral pursuant to this Section 22(c) constitutes the release of all of
the shares of stock of a Guarantor in connection with the sale or other
disposition of such shares as permitted under the Revolving Credit Agreement and
the Term Loan Agreement, and the conditions for a release of the Liens of the
Revolving Credit Agreement and Term Loan Agreement are otherwise satisfied,
Secured Party shall also release the Guarantor being sold or otherwise disposed
of from all liability under the Subsidiary Guaranty.

          (c)  Release of Net Cash Proceeds in connection with Asset Swaps.
Company and its Subsidiaries may from time to time deposit into the Collateral
Account Net Cash Proceeds received by Company or any of its Subsidiaries in
connection with any Asset Sale constituting the first transaction of an Asset
Swap Transaction. Upon receipt by Secured Party from time to time of a request
from Company for the release of such Collateral from the Liens created by the
this Agreement in connection with the consummation of the second transaction in
such Asset Swap Transaction, Secured Party shall, satisfaction of the conditions
for release set forth in the applicable Financing Documents (including, without
limitation, evidence satisfactory to Secured Party that such Collateral will be
applied to the payment of the obligations in connection with the second
transaction in such Asset Swap Transaction, and that the remainder, if any, of
such Collateral will applied to the payment of the obligations of the Revolving
Credit Agreement and the Term Loan Agreement to the extent required thereby),
release such Collateral from the Collateral Account.

          (d) Effect of Certain Releases of Collateral. Upon the release of the
Collateral pursuant to Section 22(a), Sections 2, 6, 7, 8, 9, 10, 11, 12, 14,
17, 18, and 19 shall cease to be operative. All other provisions hereof
including, without limitation, Sections 13(b) and 22(e), shall survive release
of all Collateral pursuant to Section 22(a).

          (e)  Reinstatement of Security Interest.   If at any time after the
release of any Collateral under Section 22(a), either the Leverage Ratio shall
exceed 3.50:1.00, or any Event of Default shall occur, (x) the security interest
created by this Agreement and the other Collateral Documents shall automatically
and without action by any party be reinstated, (y) all provisions contained
herein the operation of which was suspended pursuant to Section 22(d) shall
immediately become and thereafter remain operative, and (z) Company and each of
its wholly owned Domestic Subsidiaries shall promptly take all actions required
by Section 6 hereof or otherwise in order to perfect the security interest
created hereby in the Collateral.

SECTION 23.    Secured Party as Agent.
               ----------------------
          (a)  Secured Party has been appointed to act as Secured Party
hereunder pursuant to the Intercreditor Agreement by the Revolving Agent on
behalf of the Revolving Lenders, the Term Agent on behalf of the Term Lenders
and each Interest Rate Exchanger and shall be entitled to the benefits of the
Intercreditor Agreement. Secured Party shall be obligated, and shall have the
right hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action (including
without limitation the release or substitution of Collateral), solely in
accordance with this Agreement, the Intercreditor Agreement and the Financing
Documents.

                                       35
<PAGE>

          (b)  Secured Party shall at all times be the same Person that is
Collateral Agent under the Intercreditor Agreement. Resignation by the
Collateral Agent pursuant to subsection 6(g) of the Intercreditor Agreement
shall also constitute notice of resignation as Secured Party under this
Agreement; removal of the Collateral Agent pursuant to subsection 6(g) of the
Intercreditor Agreement shall also constitute removal as Secured Party under
this Agreement; and appointment of a successor Collateral Agent pursuant to
subsection 6(g) of the Intercreditor Agreement shall also constitute appointment
of a successor Secured Party under this Agreement. Upon the acceptance of any
appointment as Collateral Agent under the Intercreditor Agreement, that
successor Collateral Agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring or removed Secured
Party under this Agreement, and the retiring or removed Secured Party under this
Agreement shall promptly (i) transfer to such successor Secured Party all sums,
securities and other items of Collateral held hereunder, together with all
records and other documents necessary or appropriate in connection with the
performance of the duties of the successor Secured Party under this Agreement,
and (ii) execute and deliver to such successor Secured Party such amendments to
financing statements, and take such other actions, as may be necessary or
appropriate in connection with the assignment to such successor Secured Party of
the security interests created hereunder, whereupon such retiring or removed
Secured Party shall be discharged from its duties and obligations under this
Agreement. After any retiring or removed Secured Party's resignation or removal
hereunder as Secured Party, the provisions of this Agreement shall inure to its
benefit as to any actions taken or omitted to be taken by it under this
Agreement while it was Secured Party hereunder.

SECTION 24.  Additional Grantors.
             -------------------

          The initial Subsidiary Grantors hereunder shall be such of the
Subsidiaries of Company as are signatories hereto on the date hereof.  From time
to time subsequent to the date hereof, additional Subsidiaries of Company may
become parties hereto as additional Grantors (each an "Additional Grantor"), by
executing a Counterpart substantially in the form of Exhibit VI annexed hereto.
                                                     ----------
Upon delivery of any such Counterpart to Secured Party, notice of which is
hereby waived by Grantors, each such Additional Grantor shall be a Grantor and
shall be as fully a party hereto as if such Additional Grantor were an original
signatory hereto.  Each Grantor expressly agrees that its obligations arising
hereunder shall not be affected or diminished by the addition or release of any
other Grantor hereunder, nor by any election of Administrative Agent not to
cause any Subsidiary of Company to become an Additional Grantor hereunder.  This
Agreement shall be fully effective as to any Grantor that is or becomes a party
hereto regardless of whether any other Person becomes or fails to become or
ceases to be a Grantor hereunder.

SECTION 25.  Amendments; Etc.
             ----------------

          No amendment, modification, termination or waiver of any provision of
this Agreement, and no consent to any departure by any Grantor therefrom, shall
in any event be effective unless the same shall be in writing and signed by
Secured Party and, in the case of any such amendment or modification, by
Grantors; provided this Agreement may be modified by the execution of a
          --------
Counterpart by an Additional Grantor in accordance with Section 24 and Grantors
hereby waive any requirement of notice of or consent to any such amendment.  Any
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it was given.

                                       36
<PAGE>

SECTION 26.  Notices.
             -------

          Any notice or other communication herein required or permitted to be
given shall be in writing and may be personally served, telexed or sent by
telefacsimile or United States mail or courier service and shall be deemed to
have been given when delivered in person or by courier service, upon receipt of
telefacsimile, or three Business Days after depositing it in the United States
mail with postage prepaid and properly addressed; provided that notices to
                                                  --------
Secured Party shall not be effective until received.  For the purposes hereof,
the address of each party hereto shall be as set forth under such party's name
on the signature pages hereof or such other address as shall be designated by
such party in a written notice delivered to the other parties hereto.

SECTION 27.  Failure or Indulgence Not Waiver; Remedies Cumulative.
             -----------------------------------------------------

          No failure or delay on the part of Secured Party in the exercise of
any power, right or privilege hereunder shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude any other or further exercise thereof or of any other power, right or
privilege.  All rights and remedies existing under this Agreement are cumulative
to, and not exclusive of, any rights or remedies otherwise available.

SECTION 28.  Severability.
             ------------

          In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.

SECTION 29.  Headings.
             --------

          Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.

SECTION 30.  Governing Law; Terms; Rules of Construction.
             -------------------------------------------

          THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE UCC OR FEDERAL
LAW PROVIDES THAT THE PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK.  Unless otherwise defined herein
or in the Revolving Credit Agreement or Term Loan Agreement, terms used in
Articles 8 and 9 of the Uniform Commercial Code in the State of New York are
used herein as therein defined.  The rules of construction set forth in Section
1.2 of the Revolving Credit Agreement shall be applicable to this Agreement
mutatis mutandis.

                                       37
<PAGE>

SECTION 31.  Consent to Jurisdiction and Service of Process.
             ----------------------------------------------

          ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GRANTOR ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY
STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE , COUNTY AND CITY
OF NEW YORK.  BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH GRANTOR, FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY
AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II)
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (III) AGREES THAT SERVICE OF ALL
PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO SUCH GRANTOR AT ITS ADDRESS
PROVIDED IN ACCORDANCE WITH SECTION 26; (IV) AGREES THAT SERVICE AS PROVIDED IN
CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH
GRANTOR IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES
EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; (V) AGREES THAT SECURED PARTY
RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
BRING PROCEEDINGS AGAINST SUCH GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION;
AND (VI) AGREES THAT THE PROVISIONS OF THIS SECTION 31 RELATING TO JURISDICTION
AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE
UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE.

SECTION 32.  Waiver of Jury Trial.
             --------------------

          GRANTORS AND SECURED PARTY HEREBY AGREE TO WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT.  The scope of this waiver is intended to be all-encompassing
of any and all disputes that may be filed in any court and that relate to the
subject matter of this transaction, including without limitation contract
claims, tort claims, breach of duty claims, and all other common law and
statutory claims.  Each Grantor and Secured Party acknowledge that this waiver
is a material inducement for Grantors and Secured Party to enter into a business
relationship, that Grantors and Secured Party have already relied on this waiver
in entering into this Agreement and that each will continue to rely on this
waiver in their related future dealings.  Each Grantor and Secured Party further
warrant and represent that each has reviewed this waiver with its legal counsel,
and that each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel.  THIS WAIVER IS IRREVOCABLE, MEANING THAT IT
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN
WAIVER SPECIFICALLY REFERRING TO THIS SECTION 32 AND EXECUTED BY EACH OF THE
PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.  In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.

                                       38
<PAGE>

SECTION 33.  Counterparts.
             ------------

          This Agreement may be executed in one or more counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.


                 [Remainder of page intentionally left blank]

                                       39
<PAGE>

          IN WITNESS WHEREOF, Grantors and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.


                            TOTAL RENAL CARE HOLDINGS, INC.

                             By: ________________________________
                                 Name:  __________________________
                                 Title:  __________________________

                             Notice Address:
                             21250 Hawthorne Blvd., Suite 800,
                             Torrance, CA  90503
                             Attention: Richard Whitney
                             Telephone: (310) 750-2135
                             Fax:       (310) 792-9281



                              By:_________________________
                                 Marshal Salomon
                                 Vice President
                                  on behalf of each of the entities listed on
                                  Appendix A annexed hereto
                                  ----------


                              TOTAL RENAL CARE, INC.,
                                  on behalf of each of the entities listed on
                                  Appendix B annexed hereto
                                  ----------


                              By:_________________________
                                 Marshal Salomon
                                 Vice President


                              Notice Address for each of the Subsidiary Grantors
                              set forth on Appendix A and Appendix B annexed
                                           ----------     ----------
                              hereto:

                              Total Renal Care Holdings, Inc.
                              21250 Hawthorne Boulevard
                              Suite 800
                              Torrance, California 90503

                                      S-1
<PAGE>

                              Attention: Marshal Salomon
                              Telephone:  (310) 750-2135
                              Fax:        (310) 792-9281


                              TRC WEST, INC.,


                              By:__________________________


                                    Name:___________________________
                                    Title:__________________________


                              Notice Address:
                              21250 Hawthorne Blvd., Suite 800,
                              Torrance, CA  90503
                              Attention: Richard Whitney
                              Telephone: (310) 750-2135
                              Fax:       (310) 792-9281

                                      S-2
<PAGE>

                              THE BANK OF NEW YORK,
                              as Secured Party

                              By: __________________________________
                                  Name:  ___________________________
                                  Title:  __________________________


                             Notice Address:
                             The Bank of New York
                             One Wall Street
                             Agency Function Administration
                             18 Floor
                             New York, New York 10286
                             Attention:  Kalyani Bose
                             Telephone:  (212) 635-4693
                             Fax:        (212) 635-6365 or 6366 or 6367

                             with a copy to:

                             The Bank of New York
                             10990 Wilshire Blvd., Suite 1125
                             Los Angeles, California 90024
                             Attention:  Rebecca K. Levine
                                         Vice President
                             Telephone:  (310) 996-8659
                             Fax:        (310) 996-8667

                                      S-3
<PAGE>

                                  APPENDIX A


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 Diagnostic Laboratories, Inc.

Renal Treatment Centers, Inc.

Renal Treatment Centers - California, Inc.

Renal Treatment Centers - Hawaii, Inc.

Renal Treatment Centers - Illinois, Inc.

Renal Treatment Centers - Management Acquisition, 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 Supply, Inc.

RTC - Texas Acquisition, Inc.

RTC TN, Inc.

Total Acute Kidney Care, Inc.
<PAGE>

Total Renal Care Acquisition Corp.

Total Renal Care, Inc.

Total Renal Care of Colorado, Inc.

Total Renal Care International, Ltd.

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.
<PAGE>

                                  APPENDIX B


Beverly Hills Dialysis Partnership

Crescent City Dialysis Partnership

Houston Kidney Center/Total Renal Care Integrated
Service Network Limited Partnership

Kenner Regional Dialysis 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
<PAGE>

                                                                    EXHIBIT I TO
                                                              SECURITY AGREEMENT
                                                              ------------------

                [FORM OF GRANT OF TRADEMARK SECURITY INTEREST]

                     GRANT OF TRADEMARK SECURITY INTEREST

          WHEREAS, [NAME OF GRANTOR], a                corporation ("Grantor"),
                                       ----------------
owns and uses in its business, and will in the future adopt and so use, various
intangible assets, including the Trademark Collateral (as defined below); and

          WHEREAS, Total Renal Care Holdings, Inc. ("Company") has entered into
that certain Second Amended and Restated Revolving Credit Agreement dated as of
July 14, 2000, with the financial institutions parties thereto (such
institutions, together with their successors and assigns, collectively being the
"Revolving Lenders"), DLJ Capital Funding Inc., as Syndication Agent, First
Union National Bank, as Documentation Agent, and The Bank of New York, as
administrative agent (the "Revolving Agent") (said Revolving Credit Agreement,
as it may hereafter be amended, supplemented or otherwise modified from time to
time, being the "Revolving Credit Agreement"), pursuant to which the Revolving
Lenders have made certain commitments, subject to the terms and conditions set
forth in the Revolving Credit Agreement, to extend certain credit facilities to
Company; and

          WHEREAS, Company has entered into that certain Second Amended and
Restated Term Loan Agreement dated as of July 14, 2000, with the financial
institutions parties thereto (such institutions, together with their successors
and assigns, collectively being the "Term Lenders"), DLJ Capital Funding, Inc.,
as Syndication Agent, and The Bank of New York, as administrative agent (the
"Term Agent") (said Term Loan Agreement, as it may hereafter be amended,
supplemented or otherwise modified from time to time, being the "Term Loan
Agreement"), pursuant to which Term Lenders have extended credit, subject to the
terms and conditions set forth in the Term Loan Agreement, to Company;

          WHEREAS, Company has heretofore entered into, and it is contemplated
that Company may from time to time hereafter enter into one, or more Interest
Rate Agreements with one or more Persons that is a Lender or an Affiliate of a
Lender at the time such agreement is entered into (collectively, the "Interest
Rate Exchangers") and it is desired that the obligations of Company under such
Interest Rate Agreements, including the obligation to make payments in the event
of early termination thereunder (the "Interest Rate Obligations"), be secured by
the Collateral; provided that any Interest Rate Exchanger desiring the benefit
                --------
of such security shall deliver to the Collateral Agent an Acknowledgement in the
form of Exhibit I to the Intercreditor Agreement (as defined in the Security
Agreement referred to below) executed by such Interest Rate Exchanger and
Company, pursuant to which such Interest Rate Exchanger agrees to be bound by
the terms of the Intercreditor Agreement.  Each Interest Rate Exchanger that has
executed and delivered to the Collateral Agent an Acknowledgement in such form
that has been executed by Company is referred to herein as a "Secured Interest
Rate Exchanger", and each Interest Rate Agreement entered into with a Secured
Interest Rate Exchanger is referred to herein as a "Secured Interest Rate
Agreement".

                                      I-1
<PAGE>

          WHEREAS, certain Grantors that are Subsidiaries of Company have
executed and delivered that certain Amended and Restated Subsidiary Guaranty
dated as of July 14, 2000 (said Amended and Restated Subsidiary Guaranty, as
amended, to the date hereof, and as it may hereafter be further amended,
restated, supplemented or otherwise modified from time to time, being the
"Subsidiary Guaranty") in favor of Secured Party for the benefit of Lenders and
any Secured Interest Rate Exchangers, pursuant to which each such Grantor has
guarantied the prompt payment and performance when due of all obligations of
Company under the Financing Documents and all obligations of Company under the
Secured Interest Rate Agreements, including without limitation the obligation of
Company to make payments thereunder in the event of early termination thereof;

          WHEREAS, pursuant to the terms of a Security Agreement dated as of
July 14, 2000 (as amended, supplemented or otherwise modified from time to time,
the "Security Agreement"), among Grantor, Secured Party and the other grantors
named therein, Grantor has agreed to create in favor of Secured Party a secured
and protected interest in, and Secured Party has agreed to become a secured
creditor with respect to, the Trademark Collateral;

          NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, subject to the terms and conditions
of the Security Agreement, Grantor hereby grants to Secured Party a security
interest in all of Grantor's right, title and interest in and to the following,
in each case whether now or hereafter existing or in which Grantor now has or
hereafter acquires an interest and wherever the same may be located (the
"Trademark Collateral"):

              (i)  all rights, title and interest (including rights acquired
     pursuant to a license or otherwise but only to the extent permitted by
     agreements governing such license or other use) in and to all trademarks,
     service marks, designs, logos, indicia, tradenames, trade dress, corporate
     names, company names, business names, fictitious business names, trade
     styles and/or other source and/or business identifiers and applications
     pertaining thereto, owned by such Grantor, or hereafter adopted and used,
     in its business (including, without limitation, the trademarks specifically
     identified in Schedule A) (collectively, the "Trademarks"), all
     registrations that have been or may hereafter be issued or applied for
     thereon in the United States and any state thereof and in foreign countries
     (including, without limitation, the registrations and applications
     specifically identified in Schedule A) (the "Trademark Registrations"), all
     common law and other rights (but in no event any of the obligations) in and
     to the Trademarks in the United States and any state thereof and in foreign
     countries (the "Trademark Rights"), and all goodwill of such Grantor's
     business symbolized by the Trademarks and associated therewith (the
     "Associated Goodwill"); and
             (ii)  all proceeds, products, rents and profits of or from any and
     all of the foregoing Trademark Collateral and, to the extent not otherwise
     included, all payments under insurance (whether or not Secured Party 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 Trademark Collateral. For purposes of this Grant of Trademark
     Security Interest, the term "proceeds" includes whatever is receivable or

                                      I-2
<PAGE>

     received when Trademark Collateral or proceeds are sold, exchanged,
     collected or otherwise disposed of, whether such disposition is voluntary
     or involuntary.

          Notwithstanding anything herein to the contrary, in no event shall the
Trademark Collateral include, and Grantor shall be not deemed to have granted a
security interest in, any of Grantor's rights or interests in any license,
contract or agreement to which Grantor is a party 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 Grantor is a party; provided, that immediately
                                                   --------
upon the ineffectiveness, lapse or termination of any such provision, the
Trademark Collateral shall include, and 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.

          Grantor does hereby further acknowledge and affirm that the rights and
remedies of Secured Party with respect to the security interest in the Trademark
Collateral granted hereby are more fully set forth in the Security Agreement,
the terms and provisions of which are incorporated by reference herein as if
fully set forth herein.


           [The remainder of this page is intentionally left blank.]

                                      I-3
<PAGE>

          IN WITNESS WHEREOF, Grantor has caused this Grant of Trademark
Security Interest to be duly executed and delivered by its officer thereunto
duly authorized as of the    day of        ,      .
                          --       -------- ------

                                           [NAME OF GRANTOR]

                                           By:
                                               ---------------------------------

                                               Name:
                                                    ----------------------------

                                               Title:
                                                     ---------------------------



                                      I-4
<PAGE>

                                  SCHEDULE A
                                      TO
                     GRANT OF TRADEMARK SECURITY INTEREST


                          United States
                            Trademark         Registration          Registration
Registered Owner           Description           Number                 Date
- ----------------           -----------           ------                 ----


                                     I-A-1
<PAGE>

                                                                   EXHIBIT II TO
                                                              SECURITY AGREEMENT
                                                              ------------------

                  [FORM OF GRANT OF PATENT SECURITY INTEREST]

                       GRANT OF PATENT SECURITY INTEREST



          WHEREAS, [NAME OF GRANTOR], a ___________ corporation ("Grantor"),
owns and uses in its business, and will in the future adopt and so use, various
intangible assets, including the Patent Collateral (as defined below); and

          WHEREAS, Total Renal Care Holdings, Inc. ("Company") has entered into
that certain Second Amended and Restated Revolving Credit Agreement dated as of
July 14, 2000, with the financial institutions parties thereto (such
institutions, together with their successors and assigns, collectively being the
"Revolving Lenders"), DLJ Capital Funding Inc., as Syndication Agent, First
Union National Bank, as Documentation Agent, and The Bank of New York, as
administrative agent (the "Revolving Agent") (said Revolving Credit Agreement,
as it may hereafter be amended, supplemented or otherwise modified from time to
time, being the "Revolving Credit Agreement"), pursuant to which the Revolving
Lenders have made certain commitments, subject to the terms and conditions set
forth in the Revolving Credit Agreement, to extend certain credit facilities to
Company; and

          WHEREAS, Company has entered into that certain Second Amended and
Restated Term Loan Agreement dated as of July 14, 2000, with the financial
institutions parties thereto (such institutions, together with their successors
and assigns, collectively being the "Term Lenders"), DLJ Capital Funding, Inc.,
as Syndication Agent, and The Bank of New York, as administrative agent (the
"Term Agent") (said Term Loan Agreement, as it may hereafter be amended,
supplemented or otherwise modified from time to time, being the "Term Loan
Agreement"), pursuant to which Term Lenders have extended credit, subject to the
terms and conditions set forth in the Term Loan Agreement, to Company;

          WHEREAS, Company has heretofore entered into, and it is contemplated
that Company may from time to time hereafter enter into one, or more Interest
Rate Agreements with one or more Persons that is a Lender or an Affiliate of a
Lender at the time such agreement is entered into (collectively, the "Interest
Rate Exchangers") and it is desired that the obligations of Company under such
Interest Rate Agreements, including the obligation to make payments in the event
of early termination thereunder (the "Interest Rate Obligations"), be secured by
the Collateral; provided that any Interest Rate Exchanger desiring the benefit
                --------
of such security shall deliver to the Collateral Agent an Acknowledgement in the
form of Exhibit I to the Intercreditor Agreement (as defined in the Security
Agreement referred to below) executed by such Interest Rate Exchanger and
Company, pursuant to which such Interest Rate Exchanger agrees to be bound by
the terms of the Intercreditor Agreement.  Each Interest Rate Exchanger that has
executed and delivered to the Collateral Agent an Acknowledgement in such form
that has been executed by Company is referred to herein as a "Secured Interest
Rate Exchanger", and each Interest Rate Agreement entered into with a Secured
Interest Rate Exchanger is referred to herein as a "Secured Interest Rate
Agreement".


                                     II-1
<PAGE>

          WHEREAS, certain Grantors that are Subsidiaries of Company have
executed and delivered that certain Amended and Restated Subsidiary Guaranty
dated as of July 14, 2000 (said Amended and Restated Subsidiary Guaranty, as
amended, to the date hereof, and as it may hereafter be further amended,
restated, supplemented or otherwise modified from time to time, being the
"Subsidiary Guaranty") in favor of Secured Party for the benefit of Lenders and
any Secured Interest Rate Exchangers, pursuant to which each such Grantor has
guarantied the prompt payment and performance when due of all obligations of
Company under the Financing Documents and all obligations of Company under the
Secured Interest Rate Agreements, including without limitation the obligation of
Company to make payments thereunder in the event of early termination thereof;

          WHEREAS, pursuant to the terms of a Security Agreement dated as of
July 14, 2000 (as amended, supplemented or otherwise modified from time to time,
the "Security Agreement"), among Grantor, Secured Party and the other grantors
named therein, Grantor has agreed to create in favor of Secured Party a secured
and protected interest in, and Secured Party has agreed to become a secured
creditor with respect to, the Patent Collateral;

          NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, subject to the terms and conditions
of the Security Agreement, Grantor hereby grants to Secured Party a security
interest in all of Grantor's right, title and interest in and to the following,
in each case whether now or hereafter existing or in which Grantor now has or
hereafter acquires an interest and wherever the same may be located (the "Patent
Collateral"):

              (iii)  all rights, title and interest (including rights acquired
       pursuant to a license or otherwise but only to the extent permitted by
       agreements governing such license or other use) in and to all patents and
       patent applications and rights and interests in patents and patent
       applications under any domestic or foreign law that are presently, or in
       the future may be, owned or held by such Grantor and all patents and
       patent applications and rights, title and interests in patents and patent
       applications under any domestic or foreign law that are presently, or in
       the future may be, owned by such Grantor in whole or in part (including,
       without limitation, the patents and patent applications listed in

       Schedule A), all rights (but not obligations) corresponding thereto to
       ----------
       sue for past, present and future infringements and all re-issues,
       divisions, continuations, renewals, extensions and continuations-in-part
       thereof (all of the foregoing being collectively referred to as the
       "Patents"); and

               (iv)  all proceeds, products, rents and profits of or from
       any and all of the foregoing Patent Collateral and, to the extent not
       otherwise included, all payments under insurance (whether or not Secured
       Party 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 Patent Collateral. For purposes of this Grant of Patent
       Security Interest, the term "proceeds" includes whatever is receivable or
       received when Patent Collateral or proceeds are sold, exchanged,
       collected or otherwise disposed of, whether such disposition is voluntary
       or involuntary.

                                     II-2
<PAGE>

          Notwithstanding anything herein to the contrary, in no event shall the
Patent Collateral include, and Grantor shall be not deemed to have granted a
security interest in, any of Grantor's rights or interests in any license,
contract or agreement to which Grantor is a party 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 Grantor is a party; provided, that immediately
                                                   --------
upon the ineffectiveness, lapse or termination of any such provision, the Patent
Collateral shall include, and 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.

          Grantor does hereby further acknowledge and affirm that the rights and
remedies of Secured Party with respect to the security interest in the Patent
Collateral granted hereby are more fully set forth in the Security Agreement,
the terms and provisions of which are incorporated by reference herein as if
fully set forth herein.

            [The remainder of this page intentionally left blank.]

                                     II-3

<PAGE>

          IN WITNESS WHEREOF, Grantor has caused this Grant of Patent Security
Interest to be duly executed and delivered by its officer thereunto duly
authorized as of the    day of             ,      .
                     ---       ------------  -----

                                               [NAME OF GRANTOR]

                                               By:
                                                   -----------------------------

                                                   Name:
                                                        ------------------------

                                                  Title:
                                                        ------------------------



                                     II-4

<PAGE>


                                  SCHEDULE A
                                      TO
                       GRANT OF PATENT SECURITY INTEREST

Patents Issued:
- --------------

          Patent No.              Issue Date   Invention   Inventor
          ----------              ----------   ---------   --------



Patents Pending:
- ---------------

       Applicant's          Date    Application
          Name              Filed     Number      Invention   Inventor
          ----              -----   -----------   ---------   --------


                                    II-A-1



<PAGE>

                                                                  EXHIBIT III TO
                                                              SECURITY AGREEMENT
                                                              ------------------

                [FORM OF GRANT OF COPYRIGHT SECURITY INTEREST]

                     GRANT OF COPYRIGHT SECURITY INTEREST



          WHEREAS, [NAME OF GRANTOR], a ___________ corporation ("Grantor"),
owns and uses in its business, and will in the future adopt and so use, various
intangible assets, including the Copyright Collateral (as defined below); and

          WHEREAS, Total Renal Care Holdings, Inc. ("Company") has entered into
that certain Second Amended and Restated Revolving Credit Agreement dated as of
July 14, 2000, with the financial institutions parties thereto (such
institutions, together with their successors and assigns, collectively being the
"Revolving Lenders"), DLJ Capital Funding Inc., as Syndication Agent, First
Union National Bank, as Documentation Agent, and The Bank of New York, as
administrative agent (the "Revolving Agent") (said Revolving Credit Agreement,
as it may hereafter be amended, supplemented or otherwise modified from time to
time, being the "Revolving Credit Agreement"), pursuant to which the Revolving
Lenders have made certain commitments, subject to the terms and conditions set
forth in the Revolving Credit Agreement, to extend certain credit facilities to
Company; and

          WHEREAS, Company has entered into that certain Second Amended and
Restated Term Loan Agreement dated as of July 14, 2000, with the financial
institutions parties thereto (such institutions, together with their successors
and assigns, collectively being the "Term Lenders"), DLJ Capital Funding, Inc.,
as Syndication Agent, and The Bank of New York, as administrative agent (the
"Term Agent") (said Term Loan Agreement, as it may hereafter be amended,
supplemented or otherwise modified from time to time, being the "Term Loan
Agreement"), pursuant to which Term Lenders have extended credit, subject to the
terms and conditions set forth in the Term Loan Agreement, to Company;

          WHEREAS, Company has heretofore entered into, and it is contemplated
that Company may from time to time hereafter enter into one, or more Interest
Rate Agreements with one or more Persons that is a Lender or an Affiliate of a
Lender at the time such agreement is entered into (collectively, the "Interest
Rate Exchangers") and it is desired that the obligations of Company under such
Interest Rate Agreements, including the obligation to make payments in the event
of early termination thereunder (the "Interest Rate Obligations"), be secured by
the Collateral; provided that any Interest Rate Exchanger desiring the benefit
                --------
of such security shall deliver to the Collateral Agent an Acknowledgement in the
form of Exhibit I to the Intercreditor Agreement (as defined in the Security
Agreement referred to below) executed by such Interest Rate Exchanger and
Company, pursuant to which such Interest Rate Exchanger agrees to be bound by
the terms of the Intercreditor Agreement.  Each Interest Rate Exchanger that has
executed and delivered to the Collateral Agent an Acknowledgement in such form
that has been executed by Company is referred to herein as a "Secured Interest
Rate Exchanger", and each Interest Rate Agreement entered into with a Secured
Interest Rate Exchanger is referred to herein as a "Secured Interest Rate
Agreement".

                                     III-1

<PAGE>

          WHEREAS, certain Grantors that are Subsidiaries of Company have
executed and delivered that certain Amended and Restated Subsidiary Guaranty
dated as of July 14, 2000 (said Amended and Restated Subsidiary Guaranty, as
amended, to the date hereof, and as it may hereafter be further amended,
restated, supplemented or otherwise modified from time to time, being the
"Subsidiary Guaranty") in favor of Secured Party for the benefit of Lenders and
any Secured Interest Rate Exchangers, pursuant to which each Subsidiary Grantor
has guarantied the prompt payment and performance when due of all obligations of
Company under the Financing Documents and all obligations of Company under the
Secured Interest Rate Agreements, including without limitation the obligation of
Company to make payments thereunder in the event of early termination thereof;

          WHEREAS, pursuant to the terms of a Security Agreement dated as of
July 14, 2000 (as amended, supplemented or otherwise modified from time to time,
the "Security Agreement"), among Grantor, Secured Party and the other grantors
named therein, Grantor has agreed to create in favor of Secured Party a secured
and protected interest in, and Secured Party has agreed to become a secured
creditor with respect to, the Copyright Collateral;

          NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, subject to the terms and conditions
of the Security Agreement, Grantor hereby grants to Secured Party a security
interest in all of Grantor's right, title and interest in and to the following,
in each case whether now or hereafter existing or in which Grantor now has or
hereafter acquires an interest and wherever the same may be located (the
"Copyright Collateral"):

                (i)  all rights, title and interest (including rights acquired
     pursuant to a license or otherwise but only to the extent permitted by
     agreements governing such license or other use) under copyright in various
     published and unpublished works of authorship including, without
     limitation, computer programs, computer data bases, other computer software
     layouts, trade dress, drawings, designs, writings, and formulas (including,
     without limitation, the works listed on Schedule A, as the same may be
                                             ----------
     amended pursuant hereto from time to time) (collectively, the
     "Copyrights"), all copyright registrations issued to Grantor and
     applications for copyright registration that have been or may hereafter be
     issued or applied for thereon in the United States and any state thereof
     and in foreign countries (including, without limitation, the registrations
     listed on Schedule A, as the same may be amended pursuant hereto from time
               ----------
     to time) (collectively, the "Copyright Registrations"), all common law and
     other rights in and to the Copyrights in the United States and any state
     thereof and in foreign countries including all copyright licenses (but with
     respect to such copyright licenses, only to the extent permitted by such
     licensing arrangements) (the "Copyright Rights"), including, without
     limitation, each of the Copyrights, rights, titles and interests in and to
     the Copyrights, all derivative works and other works protectable by
     copyright, which are presently, or in the future may be, owned, created (as
     a work for hire for the benefit of Grantor), authored (as a work for hire
     for the benefit of Grantor), or acquired by Grantor, in whole or in part,
     and all Copyright Rights with respect thereto and all Copyright
     Registrations therefor, heretofore or hereafter granted or applied for, and
     all renewals and extensions thereof, throughout the world, including all
     proceeds thereof (such as, by way of example and not by limitation, license
     royalties and proceeds of infringement suits),

                                     III-2

<PAGE>

     the right (but not the obligation) to renew and extend such Copyright
     Registrations and Copyright Rights and to register works protectable by
     copyright and the right (but not the obligation) to sue in the name of such
     Grantor or in the name of Secured Party or Lenders for past, present and
     future infringements of the Copyrights and Copyright Rights; and

               (ii)  all proceeds, products, rents and profits of or from any
     and all of the foregoing Copyright Collateral and, to the extent not
     otherwise included, all payments under insurance (whether or not Secured
     Party 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 Copyright Collateral. For purposes of this Grant of Copyright
     Security Interest, the term "proceeds" includes whatever is receivable or
     received when Copyright Collateral or proceeds are sold, exchanged,
     collected or otherwise disposed of, whether such disposition is voluntary
     or involuntary.

          Notwithstanding anything herein to the contrary, in no event shall the
Copyright Collateral include, and Grantor shall be not deemed to have granted a
security interest in, any of Grantor's rights or interests in any license,
contract or agreement to which Grantor is a party 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 Grantor is a party; provided, that immediately
                                                   --------
upon the ineffectiveness, lapse or termination of any such provision, the
Copyright Collateral shall include, and 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.

          Grantor does hereby further acknowledge and affirm that the rights and
remedies of Secured Party with respect to the security interest in the Copyright
Collateral granted hereby are more fully set forth in the Security Agreement,
the terms and provisions of which are incorporated by reference herein as if
fully set forth herein.

            [The remainder of this page intentionally left blank.]

                                     III-3
<PAGE>

          IN WITNESS WHEREOF, Grantor has caused this Grant of Copyright
Security Interest to be duly executed and delivered by its officer thereunto
duly authorized as of the     day of            ,      .
                          ---        -----------  -----

                                             [NAME OF GRANTOR]

                                             By:
                                                --------------------------------

                                                 Name:
                                                      --------------------------

                                                 Title:
                                                       -------------------------


                                     III-4


<PAGE>

                                  SCHEDULE A
                                      TO
                     GRANT OF COPYRIGHT SECURITY INTEREST

U.S. Copyrights:
- ----------------

Title               Registration No.      Date of Issue       Registered Owner
- -----               ----------------      -------------       ----------------



Pending U.S. Copyright Registrations & Applications:
- ----------------------------------------------------

Title               Reference No.      Date of Application   Copyright Claimant
- -----               -------------      -------------------   ------------------


                                    III-A-1


<PAGE>

                                                                   EXHIBIT IV TO
                                                              SECURITY AGREEMENT
                                                              ------------------

                               PLEDGE SUPPLEMENT

          This Pledge Supplement, dated                   , is delivered
                                        ------------------
pursuant to the Security Agreement, dated as of July 14, 2000 between
                                 , a Delaware corporation ("Grantor"), the other
- ---------------------------------
Grantors named therein, and THE BANK OF NEW YORK, as Collateral Agent (as it may
be from time to time amended, modified or supplemented, the "Security
Agreement").  Capitalized terms used herein not otherwise defined herein shall
have the meanings ascribed thereto in the Security Agreement.

          Grantor hereby agrees that the [Pledged Shares] [Pledged Debt] listed
on the schedule attached hereto shall be deemed to be part of the [Pledged
Shares] [Pledged Debt] and shall become part of the Securities Collateral and
shall secure all Secured Obligations.

          IN WITNESS WHEREOF, Grantor has caused this Amendment to be duly
executed and delivered by its duly authorized officer as of                .
                                                            ---------------

                                              [NAME OF GRANTOR]

                                              By:
                                                 -------------------------------

                                                 Name:
                                                      --------------------------

                                                  Title:
                                                        ------------------------

                                     IV-1


<PAGE>

                                                                    EXHIBIT V TO
                                                              SECURITY AGREEMENT
                                                              ------------------

                                 IP SUPPLEMENT

          This IP SUPPLEMENT, dated        , is delivered pursuant to and
                                   --------
supplements (i) the Security Agreement, dated as of  July 14, 2000 (as it may be
from time to time amended, modified or supplemented, the "Security Agreement"),
among                  , ("Grantor") the other Grantors named therein, and THE
     ------------------
BANK OF NEW YORK, as Collateral Agent, and (ii) the [Grant of Trademark Security
Interest] [Grant of Patent Security Interest] [Grant of Copyright Security
Interest] dated as of            ,      (the "Grant") executed by Grantor.
                     ------------  -----
Capitalized terms used herein not otherwise defined herein shall have the
meanings ascribed thereto in the Grant.

          ["Grantor"] grants to Secured Party a security interest in all of
Grantor's right, title and interest in and to the [Trademark Collateral] [Patent
Collateral] [Copyright Collateral] listed on Schedule A attached hereto.  All
such [Trademark Collateral] [Patent Collateral] [Copyright Collateral] shall be
deemed to be part of the [Trademark Collateral] [Patent Collateral] [Copyright
Collateral] and shall be hereafter subject to each of the terms and conditions
of the Security Agreement and the Grant.

          IN WITNESS WHEREOF, Grantor has caused this Supplement to be duly
executed and delivered by its duly authorized officer as of
                                                           ---------------.

                                              [NAME OF GRANTOR]

                                              By:
                                                 -------------------------------

                                                  Name:
                                                       -------------------------

                                                  Title:
                                                        ------------------------


                                      V-1


<PAGE>

                                                                   EXHIBIT VI TO
                                                              SECURITY AGREEMENT
                                                              ------------------

                             [FORM OF COUNTERPART]

          COUNTERPART (this "Counterpart"), dated        , is delivered pursuant
                                                 --------
to Section 24 of the Security Agreement referred to below.  The undersigned
hereby agrees that this Counterpart may be attached to the Security Agreement,
dated as of  July 14, 2000 (as it may be from time to time amended, modified or
supplemented, the "Security Agreement"; capitalized terms used herein not
otherwise defined herein shall have the meanings ascribed therein), among TOTAL
RENAL CARE HOLDINGS, INC., the other Grantors named therein, and THE BANK OF NEW
YORK, as Collateral Agent, as Secured Party.  The undersigned by executing and
delivering this Counterpart hereby becomes a Grantor under the Security
Agreement in accordance with Section 24 thereof and agrees to be bound by all of
the terms thereof.  [Without limiting the generality of the foregoing, the
undersigned hereby:

                (i)  authorizes the Secured Party to add the information set
     forth on the Schedules to this Agreement to the correlative Schedules
     attached to the Security Agreement/1/;

               (ii)  agrees that all Collateral of the undersigned, including
     the items of property described on the Schedules hereto, shall become part
     of the Collateral and shall secure all Secured Obligations; and

              (iii)  makes the representations and warranties set forth in the
     Security Agreement, as amended hereby, to the extent relating to the
     undersigned.]

                                               [NAME OF GRANTOR]

                                               By:
                                                  ------------------------------
                                                   Name:
                                                        ------------------------
                                                   Title:
                                                         -----------------------




- --------------------------------
1    The Schedules to the Counterpart should include copies of all Schedules
that identify collateral to be granted by the Additional Grantor.

                                     VI-1

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>6
<FILENAME>0006.txt
<DESCRIPTION>SUBSIDIARY AGREEMENT
<TEXT>

<PAGE>

                                                                 Exhibit 10.5

                   AMENDED AND RESTATED SUBSIDIARY GUARANTY

         This AMENDED AND RESTATED SUBSIDIARY GUARANTY is entered into as of
July 14, 2000 by THE UNDERSIGNED (together with any future Domestic Subsidiaries
executing this Guaranty, being collectively referred to herein as the
"Guarantors") in favor of and for the benefit of THE BANK OF NEW YORK, as agent
for and representative of (in such capacity herein called "Collateral Agent")
the REVOLVING LENDERS (as hereinafter defined), the TERM LENDERS (as hereinafter
defined), the REVOLVING AGENT (as hereinafter defined), the TERM AGENT (as
hereinafter defined), and the ACKNOWLEDGING INTEREST RATE EXCHANGERS (as
hereinafter defined) (as hereinafter defined).

                                    RECITALS

    A. Total Renal Care Holdings, Inc., a Delaware corporation ("Borrower"), has
entered into that certain Revolving Credit Agreement dated as of October 24,
1997, with the financial institutions parties thereto, DLJ Capital Funding Inc.,
as Syndication Agent, First Union National Bank, as Documentation Agent, and The
Bank of New York, as administrative agent (said Revolving Credit Agreement, as
amended, being the "First Revolving Credit Agreement").

    B. The Borrower has entered into that certain Term Loan Agreement dated as
of October 24, 1997, with the financial institutions parties thereto, DLJ
Capital Funding Inc., as Syndication Agent, and The Bank of New York, as
administrative agent (said Term Loan Agreement, as amended, being the "First
Term Loan Agreement").

    C.  Pursuant to the First Revolving Credit Agreement and the First Term Loan
Agreement, Borrower caused its First-Tier wholly owned Domestic Subsidiaries and
certain other Subsidiaries to execute and deliver to the Collateral Agent that
certain Subsidiary Guaranty dated as of October 24, 1997 (said Subsidiary
Guaranty, as amended to the date hereof, being the "Existing Subsidiary
Guaranty") pursuant to which the Subsidiary Guarantors named therein guarantied
the obligations of the Borrower under the First Revolving Credit Agreement, the
First Term Loan Agreement, and certain other agreements executed by the
Borrower.

    D.  The First Revolving Credit Agreement was amended and restated by that
certain Amended and Restated Revolving Credit Agreement, dated as of April 30,
1998, by and among the Borrower, the lenders parties thereto, DLJ Capital
Funding Inc., as Syndication Agent, First Union National Bank, as Documentation
Agent, and The Bank of New York, as administrative agent, which agreement was
amended by that certain Amendment No. 1 and Consent No. 1, dated as of August 5,
1998, that certain Amendment No. 2, dated as of November 12, 1998, that certain
Amendment No. 3 and Waiver, dated as of August 9, 1999, that certain Amendment
No. 4 and Waiver, dated as of November 8, 1999, and that certain Amendment No. 5
and Consent, dated as of February 18, 2000 (said Amended and Restated Revolving
Credit Agreement, as so amended, being the "Existing Revolving Credit
Agreement").

    E.  The First Term Loan Agreement was amended and restated by that certain
Amended and Restated Term Loan Agreement, dated as of April 30, 1998, by and
among the Borrower, the lenders parties thereto, DLJ Capital Funding Inc., as
Syndication Agent, and The Bank of New York, as administrative agent, which
agreement was amended by that certain First

                                       1
<PAGE>

Amendment to Amended and Restated Term Loan Agreement dated as of August 5,
1998, that certain Limited Waiver and Second Amendment to Amended and Restated
Term Loan Agreement dated as of August 9, 1999, and that certain Limited Waiver
and Third Amendment to Amended and Restated Term Loan Agreement dated as of
November 8, 1999 (said Amended and Restated Term Loan Agreement, as so amended,
being the "Existing Term Loan Agreement").

    F.  The Borrower, the several lenders from time to time parties thereto (the
"Revolving Lenders"), DLJ Capital Funding Inc., as Syndication Agent, First
Union National Bank, as Documentation Agent, and The Bank of New York, as
Revolving Agent (the "Revolving Agent"), have entered into that certain Second
Amended and Restated Revolving Credit Agreement dated as of the date hereof
(such agreement, as it may be amended, restated, supplemented or otherwise
modified from time to time, being the "Revolving Credit Agreement"), which
amends and restates the Existing Revolving Credit Agreement in its entirety,
pursuant to which the Revolving Lenders have made certain commitments, subject
to the terms and conditions set forth in the Revolving Credit Agreement, to
continue certain credit facilities extended to the Borrower under the Existing
Revolving Credit Agreement and to extend certain other credit facilities to the
Borrower.

    G.  The Borrower, the several lenders from time to time parties thereto (the
"Term Lenders"), DLJ Capital Funding Inc., as Syndication Agent, and The Bank of
New York, as Term Agent (the "Term Agent"), have entered into that certain
Second Amended and Restated Term Loan Agreement dated as of the date hereof
(such agreement, as it may be amended, restated, supplemented or otherwise
modified from time to time, being the "Term Loan Agreement"), which amends and
restates the Existing Term Loan Agreement in its entirety, pursuant to which the
Term Lenders have made certain commitments, subject to the terms and conditions
set forth in the Term Loan Agreement, to continue certain credit facilities
previously extended to the Borrower under the Existing Term Loan Agreement

    H. The Borrower has heretofore entered into, and it is contemplated that the
Borrower may from time to time hereafter enter into, one or more Interest Rate
Agreements with one or more persons that are Revolving Lenders or Term Lenders
or their respective Affiliates at the time such agreements are entered into
(collectively, the "Interest Rate Exchangers") and it is desired that the
obligations of the Borrower under such Interest Rate Agreements, including the
obligation to make payments in the event of early termination thereunder, be
guarantied by this Guaranty; provided that any Interest Rate Exchanger desiring
                             --------
the benefit of such guaranty shall deliver to the Collateral Agent an
acknowledgement to the Intercreditor Agreement executed by such Interest Rate
Exchanger and the Borrower, pursuant to which such Interest Rate Exchanger
agrees to be bound by the terms thereof.  Each Interest Rate Exchanger that has
executed and delivered to the Collateral Agent an acknowledgement to the
Intercreditor Agreement, together with each Interest Rate Exchanger that was a
party to the Existing Intercreditor Agreement (as defined in the Intercreditor
Agreement) immediately before the effectiveness of the Intercreditor Agreement,
is referred to herein as an "Acknowledging Interest Rate Exchanger," and each
Interest Rate Agreement with an Acknowledging Interest Rate Exchanger is
referred to herein as a "Guarantied Interest Rate Agreement".

    I. A portion of the proceeds of the Revolving Credit Loans and Term Loans
were advanced to Guarantors under the First Revolving Credit Agreement, the
First Term Loan

                                       2
<PAGE>

Agreement, the Existing Revolving Credit Agreement, and the Existing Term Loan
Agreement, and thus the Guarantied Obligations (as hereinafter defined) were
being incurred for and inured to the benefit of Guarantors (which benefits are
hereby acknowledged).

    J.  In addition to the Guarantors as of the date hereof, the terms of the
Revolving Credit Agreement and the Term Loan Agreement require that each
Domestic Subsidiary formed or acquired by the Borrower after the date hereof
guaranty the Guarantied Obligations.

    K.  Collateral Agent has been appointed as agent for the other Beneficiaries
pursuant to the Intercreditor Agreement by the Revolving Agent on behalf of the
Revolving Lenders, the Term Agent on behalf of the Term Lenders, and each
Acknowledging Interest Rate Exchanger.

    L.  Guarantors are willing irrevocably and unconditionally to guaranty such
obligations of the Borrower.

    M.  It is a condition precedent to the effectiveness of the Revolving Credit
Agreement and the Term Loan Agreement that the Subsidiary Guarantors listed on
the signature pages hereof shall have executed and delivered this Guaranty to
the Collateral Agent.

    NOW, THEREFORE, based upon the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
each Guarantor hereby agrees for the benefit of the Collateral Agent and the
other Beneficiaries as follows:


SECTION I.  DEFINITIONS

     1.1  Certain Defined Terms.  Capitalized terms used herein without
          ---------------------
definition shall have the meanings assigned thereto in the Revolving Credit
Agreement and, if not defined in the Revolving Credit Agreement, the Term Loan
Agreement, in each case as in effect on the date hereof.  In addition, as used
in this Guaranty, the following terms shall have the following meanings unless
the context otherwise requires:

          "Beneficiaries" means Collateral Agent, Revolving Agent, Term Agent,
          Letter of Credit Issuer, Revolving Lenders, Term Lenders, and
          Acknowledging Interest Rate Exchangers.

          "Default" means any "Default" as defined in the Term Loan Agreement or
          the Revolving Credit Agreement.

          "Event of Default" means (i) any event defined as an Event of Default
          in either the Term Loan Agreement or the Revolving Credit Agreement,

          provided that any requirement set forth therein for the giving of
          --------
          notice, the lapse of time, or any other condition has been satisfied
          and (ii) following the payment in full of all obligations under the
          Revolving Loan Documents and the Term Loan Documents, any breach or
          violation of any Secured Interest Rate Agreement.

                                       3
<PAGE>

          "Financing Documents" means the Revolving Loan Documents, the Term
          Loan Documents, the Guarantied Interest Rate Agreements, and all other
          documents and agreements executed and issued in connection with the
          foregoing.

          "Guarantied Obligations" has the meaning assigned to that term in
          subsection 2.1.

          "Guaranty" means this Amended and Restated Subsidiary Guaranty dated
          as of July 14, 2000, as it may be amended, supplemented or otherwise
          modified from time to time.

          "payment in full", "paid in full" or any similar term means payment in
          full of the Guarantied Obligations, including without limitation all
          principal, interest, costs, fees and expenses (including, without
          limitation, reasonable legal fees and expenses) of Beneficiaries as
          required under the Financing Documents.

          "Revolving Loan Documents" means the Loan Documents, as such term is
          defined in the Revolving Credit Agreement.

          "Term Loan Documents" means the Loan Documents, as such term is
          defined in the Term Loan Agreement.

     1.2  Interpretation.
          --------------

               (a) References to "Sections" and "subsections" shall be to
          Sections and subsections, respectively, of this Guaranty unless
          otherwise specifically provided.

               (b) In the event of any conflict or inconsistency between the
          terms, conditions and provisions of this Guaranty and the terms,
          conditions and provisions of the Revolving Credit Agreement or the
          Term Loan Agreement, the terms, conditions and provisions of this
          Guaranty shall prevail.

SECTION 2.  THE GUARANTY

    2.1  Guaranty of the Guarantied Obligations.  Subject to the provisions of
         --------------------------------------
subsection 2.2(a), Guarantors jointly and severally hereby irrevocably and
unconditionally guaranty, as primary obligors and not merely as sureties, the
due and punctual payment in full of all Guarantied Obligations when the same
shall become due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. (S) 362(a)).  The term "Guarantied Obligations"
is used herein in its most comprehensive sense and includes:

               (a) any and all obligations of Borrower in respect of notes,
          advances, borrowings, loans, debts, letters of credit, bankers'
          acceptances, interest, fees, costs, expenses (including, without
          limitation, legal fees and expenses of counsel and allocated costs of
          internal counsel), indemnities and liabilities of whatsoever nature
          now or hereafter made, incurred or created, whether now existing or
          hereafter arising, absolute or contingent, liquidated or unliquidated,
          whether due or not due,

                                       4
<PAGE>

          and however arising under or in connection with the Financing
          Documents, including those arising under successive borrowing
          transactions under the Revolving Credit Agreement which shall either
          continue such obligations of Borrower or from time to time renew them
          after they have been satisfied and including interest which, but for
          the filing of a petition in bankruptcy with respect to Borrower, would
          have accrued on any Guarantied Obligations, whether or not a claim is
          allowed against Borrower for such interest in the related bankruptcy
          proceeding; and

               (b) those expenses set forth in subsection 2.9 hereof.

    2.2  Limitation on Amount Guarantied; Contribution by Guarantors.  (a)
         -----------------------------------------------------------
Anything contained in this Guaranty to the contrary notwithstanding, if any
Fraudulent Transfer Law (as hereinafter defined) is determined by a court of
competent jurisdiction to be applicable to the obligations of any Guarantor
under this Guaranty, such obligations of such Guarantor hereunder shall be
limited to a maximum aggregate amount equal to the largest amount that would not
render its obligations hereunder subject to avoidance as a fraudulent transfer
or conveyance under Section 548 of Title 11 of the United States Code or any
applicable provisions of comparable state law (collectively, the "Fraudulent
Transfer Laws"), in each case after giving effect to all other liabilities of
such Guarantor, contingent or otherwise, that are relevant under the Fraudulent
Transfer Laws (specifically excluding, however, any liabilities of such
Guarantor (x) in respect of intercompany indebtedness to Borrower or other
affiliates of Borrower to the extent that such indebtedness would be discharged
in an amount equal to the amount paid by such Guarantor hereunder and (y) under
any guaranty of Subordinated Indebtedness which guaranty contains a limitation
as to maximum amount similar to that set forth in this subsection 2.2(a),
pursuant to which the liability of such Guarantor hereunder is included in the
liabilities taken into account in determining such maximum amount) and after
giving effect as assets to the value (as determined under the applicable
provisions of the Fraudulent Transfer Laws) of any rights to subrogation,
reimbursement, indemnification or contribution of such Guarantor pursuant to
applicable law or pursuant to the terms of any agreement (including without
limitation any such right of contribution under subsection 2.2(b).

    (b) Guarantors under this Guaranty together desire to allocate among
themselves (collectively, the "Contributing Guarantors"), in a fair and
equitable manner, their obligations arising under this Guaranty.  Accordingly,
in the event any payment or distribution is made on any date by any Guarantor
under this Guaranty (a "Funding Guarantor") that exceeds its Fair Share (as
defined below) as of such date, that Funding Guarantor shall be entitled to a
contribution from each of the other Contributing Guarantors in the amount of
such other Contributing Guarantor's Fair Share Shortfall (as defined below) as
of such date, with the result that all such contributions will cause each
Contributing Guarantor's Aggregate Payments (as defined below) to equal its Fair
Share as of such date.  "Fair Share" means, with respect to a Contributing
Guarantor as of any date of determination, an amount equal to (i) the ratio of
(x) the Adjusted Maximum Amount (as defined below) with respect to such
Contributing Guarantor to (y) the aggregate of the Adjusted Maximum Amounts with
respect to all Contributing Guarantors, multiplied by (ii) the aggregate amount
                                        ---------- --
paid or distributed on or before such date by all Funding Guarantors under this
Guaranty in respect of the obligations guarantied.  "Fair Share Shortfall"
means, with respect to a Contributing Guarantor as of any date of determination,
the excess, if any, of the Fair Share of such

                                       5
<PAGE>

Contributing Guarantor over the Aggregate Payments of such Contributing
Guarantor. "Adjusted Maximum Amount" means, with respect to a Contributing
Guarantor as of any date of determination, the maximum aggregate amount of the
obligations of such Contributing Guarantor under this Guaranty, determined as of
such date in accordance with subsection 2.2(a); provided that, solely for
                                                --------
purposes of calculating the "Adjusted Maximum--------Amount" with respect to any
Contributing Guarantor for purposes of this subsection 2.2(b), any assets or
liabilities of such Contributing Guarantor arising by virtue of any rights to
subrogation, reimbursement or indemnification or any rights to or obligations of
contribution hereunder shall not be considered as assets or liabilities of such
Contributing Guarantor. "Aggregate Payments" means, with respect to a
Contributing Guarantor as of any date of determination, an amount equal to (i)
the aggregate amount of all payments and distributions made on or before such
date by such Contributing Guarantor in respect of this Guaranty (including,
without limitation, in respect of this subsection 2.2(b) minus (ii) the
                                                         -----
aggregate amount of all payments received on or before such date by such
Contributing Guarantor from the other Contributing Guarantors as contributions
under this subsection 2.2(b). The amounts payable as contributions hereunder
shall be determined as of the date on which the related payment or distribution
is made by the applicable Funding Guarantor. The allocation among Contributing
Guarantors of their obligations as set forth in this subsection 2.2(b) shall not
be construed in any way to limit the liability of any Contributing Guarantor
hereunder.

    2.3  Payment by Guarantors; Application of Payments.  Subject to the
         ----------------------------------------------
provisions of subsection 2.2(a), Guarantors hereby jointly and severally agree,
in furtherance of the foregoing and not in limitation of any other right which
any Beneficiary may have at law or in equity against any Guarantor by virtue
hereof, that upon the failure of Borrower to pay any of the Guarantied
Obligations when and as the same shall become due, whether at stated maturity,
by required prepayment, declaration, acceleration, demand or otherwise
(including amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. (S) 362(a)),
Guarantors will upon demand pay, or cause to be paid, in cash, to Collateral
Agent for the benefit of Beneficiaries, an amount equal to the sum of the unpaid
principal amount of all Guarantied Obligations then due as aforesaid, accrued
and unpaid interest on such Guarantied Obligations (including, without
limitation, interest which, but for the filing of a petition in bankruptcy with
respect to Borrower, would have accrued on such Guarantied Obligations, whether
or not a claim is allowed against Borrower for such interest in the related
bankruptcy proceeding) and all other Guarantied Obligations then owed to
Beneficiaries as aforesaid.  All such payments shall be applied promptly from
time to time by Collateral Agent:

          First, to the payment of the costs and expenses of any collection or
          -----
     other realization under this Guaranty, including reasonable compensation to
     Collateral Agent and its agents and counsel, and all expenses, liabilities
     and advances made or incurred by Collateral Agent in connection therewith;

          Second, to the payment of all other Guarantied Obligations in the
          ------
     order described in Section 3 of the Intercreditor Agreement; and

          Third, after payment in full of all Guarantied Obligations, to the
          -----
     payment to Guarantors, or their respective successors or assigns, or to
     whomsoever may be lawfully

                                       6
<PAGE>

     entitled to receive the same or as a court of competent jurisdiction may
     direct, of any surplus then remaining from such payments.

    2.4  Liability of Guarantors Absolute.  Each Guarantor agrees that its
         --------------------------------
obligations hereunder are irrevocable, absolute, independent and unconditional
and shall not be affected by any circumstance which constitutes a legal or
equitable discharge of a guarantor or surety other than payment in full of the
Guarantied Obligations.  In furtherance of the foregoing and without limiting
the generality thereof, each Guarantor agrees as follows:

          (a) This Guaranty is a guaranty of payment when due and not of
     collectibility.

          (b) Collateral Agent may enforce this Guaranty upon the occurrence of
     an Event of Default, notwithstanding the existence of any dispute between
     Borrower and any Beneficiary with respect to the existence of such Event of
     Default.

          (c) The obligations of each Guarantor hereunder are independent of the
     obligations of Borrower under the Financing Documents and the obligations
     of any other guarantor (including any other Guarantor) of the obligations
     of Borrower under the Financing Documents, and a separate action or actions
     may be brought and prosecuted against such Guarantor whether or not any
     action is brought against Borrower or any of such other guarantors and
     whether or not Borrower is joined in any such action or actions.

          (d) Payment by any Guarantor of a portion, but not all, of the
     Guarantied Obligations shall in no way limit, affect, modify or abridge any
     Guarantor's liability for any portion of the Guarantied Obligations which
     has not been paid.  Without limiting the generality of the foregoing, if
     Collateral Agent is awarded a judgment in any suit brought to enforce any
     Guarantor's covenant to pay a portion of the Guarantied Obligations, such
     judgment shall not be deemed to release such Guarantor from its covenant to
     pay the portion of the Guarantied Obligations that is not the subject of
     such suit, and such judgment shall not, except to the extent satisfied by
     such Guarantor, limit, affect, modify or abridge any other Guarantor's
     liability hereunder in respect of the Guarantied Obligations.

          (e) Any Beneficiary, upon such terms as it deems appropriate, without
     notice or demand and without affecting the validity or enforceability of
     this Guaranty or giving rise to any reduction, limitation, impairment,
     discharge or termination of any Guarantor's liability hereunder, from time
     to time may (i) renew, extend, accelerate, increase the rate of interest
     on, or otherwise change the time, place, manner or terms of payment of the
     Guarantied Obligations, (ii) settle, compromise, release or discharge, or
     accept or refuse any offer of performance with respect to, or substitutions
     for, the Guarantied Obligations or any agreement relating thereto and/or
     subordinate the payment of the same to the payment of any other
     obligations; (iii) request and accept other guaranties of the Guarantied
     Obligations and take and hold security for the payment of this Guaranty or
     the Guarantied Obligations; (iv) release, surrender, exchange, substitute,
     compromise, settle, rescind, waive, alter, subordinate or modify, with or
     without consideration, any security for payment of the Guarantied
     Obligations, any other guaranties of the Guarantied Obligations, or any
     other obligation of any Person (including any other Guarantor) with respect
     to the Guarantied Obligations; (v) enforce and apply any security now or
     hereafter held by or for

                                       7
<PAGE>

     the benefit of such Beneficiary in respect of this Guaranty or the
     Guarantied Obligations and direct the order or manner of sale thereof, or
     exercise any other right or remedy that such Beneficiary may have against
     any such security, in each case as such Beneficiary in its discretion may
     determine consistent with the applicable Financing Document, the
     Intercreditor Agreement and any applicable security agreement, including
     foreclosure on any such security pursuant to one or more judicial or
     nonjudicial sales, whether or not every aspect of any such sale is
     commercially reasonable, and even though such action operates to impair or
     extinguish any right of reimbursement or subrogation or other right or
     remedy of any Guarantor against Borrower or any security for the Guarantied
     Obligations; and (vi) exercise any other rights available to it under the
     Financing Documents.

          (f) This Guaranty and the obligations of Guarantors hereunder shall be
     valid and enforceable and shall not be subject to any reduction,
     limitation, impairment, discharge or termination for any reason (other than
     payment in full of the Guarantied Obligations), and the termination of the
     Revolving Credit Commitments, the Swing Line Commitment, the Term Loan
     Commitments and the cancellation or expiration of all Letters of Credit,
     including without limitation the occurrence of any of the following,
     whether or not any Guarantor shall have had notice or knowledge of any of
     them: (i) any failure or omission to assert or enforce or agreement or
     election not to assert or enforce, or the stay or enjoining, by order of
     court, by operation of law or otherwise, of the exercise or enforcement of,
     any claim or demand or any right, power or remedy (whether arising under
     the Financing Documents, at law, in equity or otherwise) with respect to
     the Guarantied Obligations or any agreement relating thereto, or with
     respect to any other guaranty of or security for the payment of the
     Guarantied Obligations; (ii) any rescission, waiver, amendment or
     modification of, or any consent to departure from, any of the terms or
     provisions (including without limitation provisions relating to events of
     default) of any Financing Document, or any agreement or instrument executed
     pursuant thereto, or of any other guaranty or security for the Guarantied
     Obligations, in each case whether or not in accordance with the terms of
     any Financing Document or any agreement relating to such other guaranty or
     security; (iii) the Guarantied Obligations, or any agreement relating
     thereto, at any time being found to be illegal, invalid or unenforceable in
     any respect; (iv) the application of payments received from any source
     (other than payments received pursuant to the other Financing Documents or
     from the proceeds of any security for the Guarantied Obligations, except to
     the extent such security also serves as collateral for indebtedness other
     than the Guarantied Obligations) to the payment of indebtedness other than
     the Guarantied Obligations, even though any Beneficiary might have elected
     to apply such payment to any part or all of the Guarantied Obligations; (v)
     any Beneficiary's consent to the change, reorganization or termination of
     the corporate or other structure or existence of Borrower or any of its
     Subsidiaries and to any corresponding restructuring of the Guarantied
     Obligations; (vi) any failure to perfect or continue perfection of a
     security interest in any collateral which secures any of the Guarantied
     Obligations; (vii) any defenses, set-offs or counterclaims which Borrower
     may allege or assert against any Beneficiary in respect of the Guarantied
     Obligations, including but not limited to failure of consideration, breach
     of warranty, payment, statute of frauds, statute of limitations, accord and
     satisfaction and usury; and (viii) any other act or thing or omission, or
     delay to do any other act or thing, which may or might in any manner or to
     any extent vary the risk of any Guarantor as an obligor in respect of the
     Guarantied Obligations.

                                       8
<PAGE>

    2.5  Waivers by Guarantors.  Each Guarantor hereby waives, for the benefit
         ---------------------
of Beneficiaries:

          (a) any right to require any Beneficiary, as a condition of payment or
     performance by such Guarantor, to (i) proceed against Borrower, any other
     guarantor (including any other Guarantor) of the Guarantied Obligations or
     any other Person, (ii) proceed against or exhaust any security held from
     Borrower, any such other guarantor (including any other Guarantor) or any
     other Person, (iii) proceed against or have resort to any balance of any
     deposit account or credit on the books of any Beneficiary in favor of
     Borrower or any other Person, or (iv) pursue any other remedy in the power
     of any Beneficiary whatsoever;

          (b) any defense arising by reason of the incapacity, lack of authority
     or any disability or other defense of Borrower including, without
     limitation, any defense based on or arising out of the lack of validity or
     the unenforceability of the Guarantied Obligations or any agreement or
     instrument relating thereto or by reason of the cessation of the liability
     of Borrower from any cause other than payment in full of the Guarantied
     Obligations;

          (c) any defense based upon any statute or rule of law which provides
     that the obligation of a surety must be neither larger in amount nor in
     other respects more burdensome than that of the principal;

          (d) any defense based upon any Beneficiary's errors or omissions in
     the administration of the Guarantied Obligations, except behavior which
     amounts to bad faith;

          (e) (i) any principles or provisions of law, statutory or otherwise,
     which are or might be in conflict with the terms of this Guaranty and any
     legal or equitable discharge of such Guarantor's obligations hereunder,
     (ii) the benefit of any statute of limitations affecting such Guarantor's
     liability hereunder or the enforcement hereof, (iii) any rights to set-
     offs, recoupments and counterclaims, and (iv) promptness, diligence and any
     requirement that any Beneficiary protect, secure, perfect or insure any
     security interest or lien or any property subject thereto;

          (f) notices, demands, presentments, protests, notices of protest,
     notices of dishonor and notices of any action or inaction, including
     acceptance of this Guaranty, notices of default under any Financing
     Document or any agreement or instrument related thereto, notices of any
     renewal, extension or modification of the Guarantied Obligations or any
     agreement related thereto, notices of any extension of credit to Borrower
     and notices of any of the matters referred to in subsection 2.4 and any
     right to consent to any thereof; and

          (g) any defenses or benefits that may be derived from or afforded by
     law which limit the liability of or exonerate guarantors or sureties, or
     which may conflict with the terms of this Guaranty.

    2.6  Certain California Law Waivers.  As used in this subsection 2.6, any
         ------------------------------
reference to "the principal" includes Borrower, and any reference to "the
creditor" includes each Beneficiary.  In accordance with Section 2856 of the
California Civil Code:

                                       9
<PAGE>

          (a) each Guarantor agrees (i) to waive any and all rights of
     subrogation and reimbursement against Borrower or against any collateral or
     security granted by Borrower for any of the Guarantied Obligations and (ii)
     to withhold the exercise of any and all rights of subrogation,
     reimbursement and contribution against Borrower, against any other
     guarantor of any of the Guarantied Obligations and against any collateral
     or security granted by any such other guarantor for any of the Guarantied
     Obligations until the Guarantied Obligations shall have been paid in full
     and the Revolving Credit Commitments, the Swing Line Commitment and the
     Term Loan Commitments shall have terminated and all Letters of Credit shall
     have expired or been cancelled, all as more fully set forth in subsection
     2.7;

          (b) each Guarantor waives any and all other rights and defenses
     available to such Guarantor by reason of Sections 2787 to 2855, inclusive,
     2899 and 3433 of the California Civil Code, including without limitation
     any and all rights or defenses such Guarantor may have by reason of
     protection afforded to the principal with respect to any of the Guarantied
     Obligations, or to any other guarantor (including any other Guarantor) of
     any of the Guarantied Obligations with respect to any of such guarantor's
     obligations under its guaranty, in either case pursuant to the
     antideficiency or other laws of the State of California limiting or
     discharging the principal's indebtedness or such guarantor's obligations,
     including without limitation Section 580a, 580b, 580d, or 726 of the
     California Code of Civil Procedure; and

          (c) each Guarantor waives all rights and defenses arising out of an
     election of remedies by the creditor, even though that election of
     remedies, such as a nonjudicial foreclosure with respect to security for
     any Guarantied Obligation, has destroyed such Guarantor's rights of
     subrogation and reimbursement against the principal by the operation of
     Section 580d of the California Code of Civil Procedure or otherwise; and
     even though that election of remedies by the creditor, such as nonjudicial
     foreclosure with respect to security for an obligation of any other
     guarantor (including any other Guarantor) of any of the Guarantied
     Obligations, has destroyed such Guarantor's rights of contribution against
     such other guarantor.

No other provision of this Guaranty shall be construed as limiting the
generality of any of the covenants and waivers set forth in this subsection 2.6.
In accordance with subsection 4.6 below, this Guaranty shall be governed by, and
shall be construed and enforced in accordance with, the internal laws of the
State of New York, without regard to conflicts of laws principles.  This
subsection 2.6 is included solely out of an abundance of caution, and shall not
be construed to mean that any of the above-referenced provisions of California
law are in any way applicable to this Guaranty or to any of the Guarantied
Obligations.

    2.7  Guarantors' Rights of Subrogation, Contribution, Etc.  Each Guarantor
         ----------------------------------------------------
hereby waives any claim, right or remedy, direct or indirect, that such
Guarantor now has or may hereafter have against Borrower or any of its assets in
connection with this Guaranty or the performance by such Guarantor of its
obligations hereunder, in each case whether such claim, right or remedy arises
in equity, under contract, by statute (including without limitation under
California Civil Code Section 2847, 2848 or 2849), under common law or otherwise
and including without limitation (a) any right of subrogation, reimbursement or
indemnification that such Guarantor now has or may

                                       10
<PAGE>

hereafter have against Borrower, (b) any right to enforce, or to participate in,
any claim, right or remedy that any Beneficiary now has or may hereafter have
against Borrower, and (c) any benefit of, and any right to participate in, any
collateral or security now or hereafter held by any Beneficiary. In addition,
until the Guarantied Obligations shall have been indefeasibly paid in full and
the Revolving Credit Commitments, the Swing Line Commitment and the Term Loan
Commitments shall have terminated and all Letters of Credit shall have expired
or been cancelled, each Guarantor shall withhold exercise of any right of
contribution such Guarantor may have against any other guarantor (including any
other Guarantor) of the Guarantied Obligations (including without limitation any
such right of contribution under California Civil Code Section 2848 or under
subsection 2.2(b)). Each Guarantor further agrees that, to the extent the waiver
or agreement to withhold the exercise of its rights of subrogation,
reimbursement, indemnification and contribution as set forth herein is found by
a court of competent jurisdiction to be void or voidable for any reason, any
rights of subrogation, reimbursement or indemnification such Guarantor may have
against Borrower or against any collateral or security, and any rights of
contribution such Guarantor may have against any such other guarantor, shall be
junior and subordinate to any rights any Beneficiary may have against Borrower,
to all right, title and interest any Beneficiary may have in any such collateral
or security, and to any right any Beneficiary may have against such other
guarantor. If any amount shall be paid to any Guarantor on account of any such
subrogation, reimbursement, indemnification or contribution rights at any time
when all Guarantied Obligations shall not have been paid in full, such amount
shall be held in trust for Collateral Agent on behalf of Beneficiaries and shall
forthwith be paid over to Collateral Agent for the benefit of Beneficiaries to
be credited and applied against the Guarantied Obligations, whether matured or
unmatured, in accordance with the terms hereof.

    2.8   Subordination of Other Obligations.  Any indebtedness of Borrower now
          ----------------------------------
or hereafter held by any Guarantor is hereby subordinated in right of payment to
the Guarantied Obligations, and any such indebtedness of Borrower to such
Guarantor collected or received by such Guarantor after an Event of Default has
occurred and is continuing shall be held in trust for Collateral Agent on behalf
of Beneficiaries and shall forthwith be paid over to Collateral Agent for the
benefit of Beneficiaries to be credited and applied against the Guarantied
Obligations but without affecting, impairing or limiting in any manner the
liability of such Guarantor under any other provision of this Guaranty.

    2.9   Expenses.  Guarantors jointly and severally agree to pay, or cause to
          --------
be paid, on demand, and to save Beneficiaries harmless against liability for,
any and all costs and expenses (including fees and disbursements of counsel and
allocated costs of internal counsel) incurred or expended by any Beneficiary in
connection with the enforcement of or preservation of any rights under this
Guaranty.

    2.10  Continuing Guaranty.  This Guaranty is a continuing guaranty and shall
          -------------------
remain in effect until all of the Guarantied Obligations shall have been paid in
full and the Revolving Credit Commitments, the Swing Line Commitment and the
Term Loan Commitments shall have terminated and all Letters of Credit shall have
expired or been cancelled.  Each Guarantor hereby irrevocably waives any right
(including without limitation any such right arising under California Civil Code
Section 2815) to revoke this Guaranty as to future transactions giving rise to
any Guarantied Obligations.

                                       11
<PAGE>

    2.11  Authority of Guarantors or Borrower.  It is not necessary for any
          -----------------------------------
Beneficiary to inquire into the capacity or powers of any Guarantor or Borrower
or the officers, directors or any agents acting or purporting to act on behalf
of any of them.

    2.12  Financial Condition of Borrower.  Any credit may be extended to
          -------------------------------
Borrower or continued from time to time without notice to or authorization from
any Guarantor regardless of the financial or other condition of Borrower at the
time of any such grant or continuation.  No Beneficiary shall have any
obligation to disclose or discuss with any Guarantor its assessment, or any
Guarantor's assessment, of the financial condition of Borrower.  Each Guarantor
has adequate means to obtain information from Borrower on a continuing basis
concerning the financial condition of Borrower and its ability to perform its
obligations under the Financing Documents, and each Guarantor assumes the
responsibility for being and keeping informed of the financial condition of
Borrower and of all circumstances bearing upon the risk of nonpayment of the
Guarantied Obligations.  Each Guarantor hereby waives and relinquishes any duty
on the part of any Beneficiary to disclose any matter, fact or thing relating to
the business, operations or conditions of Borrower now known or hereafter known
by any Beneficiary.

    2.13  Rights Cumulative.  The rights, powers and remedies given to
          -----------------
Beneficiaries by this Guaranty are cumulative and shall be in addition to and
independent of all rights, powers and remedies given to Beneficiaries by virtue
of any statute or rule of law or in any of the other Financing Documents or any
agreement between any Guarantor and any Beneficiary or Beneficiaries or between
Borrower and any Beneficiary or Beneficiaries.  Any forbearance or failure to
exercise, and any delay by any Beneficiary in exercising, any right, power or
remedy hereunder shall not impair any such right, power or remedy or be
construed to be a waiver thereof, nor shall it preclude the further exercise of
any such right, power or remedy.

    2.14  Bankruptcy; Post-Petition Interest; Reinstatement of Guaranty.  (a)
          -------------------------------------------------------------
So long as any Guarantied Obligations remain outstanding, no Guarantor shall,
without the prior written consent of Collateral Agent and Requisite Obligees (as
such term is defined in the Intercreditor Agreement), commence or join with any
other Person in commencing any bankruptcy, reorganization or insolvency
proceedings of or against Borrower.  The obligations of Guarantors under this
Guaranty shall not be reduced, limited, impaired, discharged, deferred,
suspended or terminated by any proceeding, voluntary or involuntary, involving
the bankruptcy, insolvency, receivership, reorganization, liquidation or
arrangement of Borrower or by any defense which Borrower may have by reason of
the order, decree or decision of any court or administrative body resulting from
any such proceeding.

         (b) Each Guarantor acknowledges and agrees that any interest on any
portion of the Guarantied Obligations which accrues after the commencement of
any proceeding referred to in clause (a) above (or, if interest on any portion
of the Guarantied Obligations ceases to accrue by operation of law by reason of
the commencement of said proceeding, such interest as would have accrued on such
portion of the Guarantied Obligations if said proceedings had not been
commenced) shall be included in the Guarantied Obligations because it is the
intention of Guarantors and Beneficiaries that the Guarantied Obligations which
are guarantied by Guarantors pursuant to this Guaranty should be determined
without regard to any rule of law or order which may relieve Borrower of any
portion of such Guarantied Obligations.  Guarantors will permit any trustee in
bankruptcy, receiver, debtor in possession, assignee for the benefit of
creditors or similar

                                       12
<PAGE>

person to pay Collateral Agent, or allow the claim of Collateral Agent in
respect of, any such interest accruing after the date on which such proceeding
is commenced.

         (c) In the event that all or any portion of the Guarantied Obligations
are paid by Borrower, the obligations of Guarantors hereunder shall continue and
remain in full force and effect or be reinstated, as the case may be, in the
event that all or any part of such payment(s) are rescinded or recovered
directly or indirectly from any Beneficiary as a preference, fraudulent transfer
or otherwise, and any such payments which are so rescinded or recovered shall
constitute Guarantied Obligations for all purposes under this Guaranty.

    2.15  Notice of Events.  As soon as any Guarantor obtains knowledge thereof,
          ----------------
such Guarantor shall give Collateral Agent written notice of any condition or
event which has resulted in (a) a material adverse change in the financial
condition of any Guarantor or Borrower or (b) a breach of or noncompliance with
any term, condition or covenant contained herein or in any Financing Document or
any other document delivered pursuant hereto or thereto.

    2.16  Set Off.  In addition to any other rights any Beneficiary may have
          -------
under law or in equity, if any amount shall at any time be due and owing by any
Guarantor to any Beneficiary under this Guaranty, such Beneficiary is authorized
at any time or from time to time, without notice (any such notice being hereby
expressly waived), to set off and to appropriate and to apply any and all
deposits (general or special, including but not limited to indebtedness
evidenced by certificates of deposit, whether matured or unmatured) and any
other indebtedness of such Beneficiary owing to such Guarantor and any other
property of such Guarantor held by any Beneficiary to or for the credit or the
account of such Guarantor against and on account of the Guarantied Obligations
and liabilities of such Guarantor to any Beneficiary under this Guaranty.

    2.17  Discharge of Guaranty Upon Sale of Guarantor.  If all of the Stock (or
          --------------------------------------------
equivalent ownership interest) of any Guarantor or any of its successors in
interest under this Guaranty shall be sold or otherwise disposed of (including
by merger or consolidation) in a sale or disposition permitted by Section 8.7 of
the  Revolving Credit Agreement and Section 8.7 of the Term Loan Agreement or
otherwise consented to by Requisite Obligees, the Guaranty of such Guarantor or
such successor in interest, as the case may be, hereunder shall automatically be
discharged and released without any further action by any Beneficiary or any
other Person effective as of the time of such sale or disposition; provided that
                                                                   --------
(i) the Person acquiring the Stock (or equivalent ownership interest) of any
Guarantor or any of its successors or merging with or consolidating with such
Guarantor is not a Subsidiary of the Borrower and (ii) either (a) the net
proceeds from such sale are used by the Borrower contemporaneously with the
receipt thereof to prepay Term Loans and/or Revolving Credit Loans (and
permanently reduce the Revolving Credit Commitments in the amount of any such
prepayment of Revolving Credit Loans) to the extent required by the Term Loan
Agreement or the Revolving Credit Agreement or (b) at the time of and
immediately after such sale, disposition, or merger, no Default or Event of
Default shall have occurred and be continuing.

SECTION 3.  REPRESENTATIONS AND WARRANTIES

         In order to induce Beneficiaries to accept this Guaranty and to enter
into the Revolving Credit Agreement and the Term Loan Agreement, and to extend
credit thereunder, each

                                       13
<PAGE>

Guarantor hereby represents and warrants to Beneficiaries that the following
statements are true and correct:

    3.1  Existence.  Such Guarantor is duly organized, validly existing and in
         ---------
good standing under the laws of the state of its incorporation or formation, has
the corporate or other power to own its assets and to transact the business in
which it is now engaged and is duly qualified as a foreign corporation or entity
and in good standing under the laws of each jurisdiction where its ownership or
lease of property or the conduct of its business requires such qualification,
except in each case where such failure to be so qualified, authorized or
licensed, and, in the case of East End Dialysis Center, Inc., Elberton Dialysis
Facility, Inc., Carroll County Dialysis Facility, Inc. and RTC Texas
Acquisition, Inc., where such failure so to be in good standing under the laws
of the jurisdiction of its incorporation or formation (which such failure to be
in good standing shall be promptly remedied following the Effective Date), could
not reasonably be expected to have a Material Adverse Effect.

    3.2  Power; Authorization; Enforceable Obligations.  Such Guarantor has the
         ---------------------------------------------
corporate or other power, authority and legal right to execute, deliver and
perform this Guaranty and all obligations required hereunder and has taken all
necessary corporate or other action to authorize its Guaranty hereunder on the
terms and conditions hereof and its execution, delivery and performance of this
Guaranty and all obligations required hereunder.  No consent of any other Person
including, without limitation, stockholders (or equivalent owners) and creditors
of such Guarantor, and no license, permit, approval or authorization of,
exemption by, notice or report to, or registration, filing or declaration with,
any governmental authority is required by such Guarantor in connection with this
Guaranty or the execution, delivery, performance, validity or enforceability of
this Guaranty and all obligations required hereunder.  This Guaranty has been,
and each instrument or document required hereunder will be, executed and
delivered by a duly authorized officer of such Guarantor, and this Guaranty
constitutes, and each instrument or document required hereunder when executed
and delivered by such Guarantor hereunder will constitute, the legally valid and
binding obligation of such Guarantor, enforceable against such Guarantor in
accordance with its terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws or
equitable principles relating to or limiting creditors' rights generally.

    3.3  No Legal Bar to this Guaranty.  The execution, delivery and performance
         -----------------------------
of this Guaranty and the documents or instruments required hereunder, and the
use of the proceeds of the borrowings under the Financing Documents, will not
violate any provision of any existing law or regulation binding on such
Guarantor, or any order, judgment, award or decree of any court, arbitrator or
governmental authority binding on such Guarantor, or the certificate of
incorporation or bylaws or other organizational documents of such Guarantor or
any securities issued by such Guarantor, or any mortgage, indenture, lease,
contract or other agreement, instrument or undertaking to which such Guarantor
is a party or by which such Guarantor or any of its assets may be bound, the
violation of which would have a material adverse effect on the business,
operations, assets or financial condition of such Guarantor and will not result
in, or require, the creation or imposition of any Lien on any of its property,
assets or revenues pursuant to the provisions of any such mortgage, indenture,
lease, contract or other agreement, instrument or undertaking.

                                       14
<PAGE>

SECTION 4.  MISCELLANEOUS

    4.1  Survival of Warranties.  All agreements, representations and warranties
         ----------------------
made herein shall survive the execution and delivery of this Guaranty and the
other Financing Documents and any increase in the Commitments under the
Revolving Credit Agreement.

    4.2  Notices.  Any communications between Collateral Agent and any Guarantor
         -------
and any notices or requests provided herein to be given may be given by mailing
the same, postage prepaid, or by telex, facsimile transmission or cable to each
such party at its address set forth below (in the case of Collateral Agent) and
on the signature pages hereof (in the case of Guarantors) or to such other
addresses as each such party may in writing hereafter indicate.  Any notice,
request or demand to or upon Collateral Agent or any Guarantor shall not be
effective until received.

         The Bank of New York, as Collateral Agent
         One Wall Street
         Agency Function Administration
         18th Floor
         New York, New York 10286
         Attention:             Kalyani Bose
         Telephone:             (212) 635-4693
         Fax:                  (212) 635-6365 or 6366 or 6367

         with a copy to:

         The Bank of New York, as Collateral Agent
         10990 Wilshire Blvd., Suite 1125
         Los Angeles, California 90024
         Attention:             Rebecca K. Levine
                                Vice President
         Telephone:             (310) 996-8659
         Fax:                  (310) 996-8667

    4.3 Severability. In case any provision in or obligation under this Guaranty
        -------------
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.

    4.4  Amendments and Waivers.  No amendment, modification, termination or
         ----------------------
waiver of any provision of this Guaranty, and no consent to any departure by any
Guarantor therefrom, shall in any event be effective without the written
concurrence of Collateral Agent and, in the case of any such amendment or
modification, each Guarantor against whom enforcement of such amendment or
modification is sought.  Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given.

                                       15
<PAGE>

    4.5  Headings.  Section and subsection headings in this Guaranty are
         --------
included herein for convenience of reference only and shall not constitute a
part of this Guaranty for any other purpose or be given any substantive effect.


    4.6  Applicable Law.  THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF
         --------------
GUARANTORS AND BENEFICIARIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW
OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

    4.7  Successors and Assigns.  This Guaranty is a continuing guaranty and
         ----------------------
shall be binding upon each Guarantor and its respective successors and assigns.
This Guaranty shall inure to the benefit of Beneficiaries and their respective
successors and assigns.  No Guarantor shall assign this Guaranty or any of the
rights or obligations of such Guarantor hereunder without the prior written
consent of Requisite Obligees.  Any Beneficiary may, without notice or consent,
assign its interest in this Guaranty in whole or in part.  The terms and
provisions of this Guaranty shall inure to the benefit of any transferee or
assignee of any Loan or Letter of Credit Exposure, and in the event of such
transfer or assignment the rights and privileges herein conferred upon such
Beneficiary shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof.

    4.8  Consent to Jurisdiction and Service of Process.  ALL JUDICIAL
         ----------------------------------------------
PROCEEDINGS BROUGHT AGAINST ANY GUARANTOR ARISING OUT OF OR RELATING TO THIS
GUARANTY, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL
COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK.  BY
EXECUTING AND DELIVERING THIS GUARANTY, EACH GUARANTOR, FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, IRREVOCABLY

          (I)    ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
          JURISDICTION AND VENUE OF SUCH COURTS;

          (II)   WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;

          (III)  AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN
          ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN
          RECEIPT REQUESTED, TO SUCH GUARANTOR AT ITS ADDRESS PROVIDED IN
          ACCORDANCE WITH SUBSECTION 4.2;

          (IV)   AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
          SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH GUARANTOR IN ANY
          SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE
          AND BINDING SERVICE IN EVERY RESPECT;

                                       16
<PAGE>

          (V)    AGREES THAT BENEFICIARIES RETAIN THE RIGHT TO SERVE PROCESS IN
          ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST SUCH
          GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION; AND

          (VI)   AGREES THAT THE PROVISIONS OF THIS SUBSECTION 4.8 RELATING TO
          JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST
          EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-
          1402 OR OTHERWISE.

Each Guarantor further designates and appoints CT Corporation System, and such
other Persons as may hereafter be selected by such Guarantor irrevocably
agreeing in writing to so serve, as its agent to receive on its behalf service
of all process in any such proceedings in any such court, such service being
hereby acknowledged by each Guarantor to be effective and binding service in
every respect.

    4.9  Waiver of Trial by Jury.  EACH GUARANTOR AND, BY ITS ACCEPTANCE OF THE
         -----------------------
BENEFITS HEREOF, EACH BENEFICIARY EACH HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
GUARANTY.  The scope of this waiver is intended to be all encompassing of any
and all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including without limitation contract claims, tort
claims, breach of duty claims and all other common law and statutory claims.
Each Guarantor and, by its acceptance of the benefits hereof, each Beneficiary,
(i) acknowledges that this waiver is a material inducement for such Guarantor
and Beneficiaries to enter into a business relationship, that such Guarantor and
Beneficiaries have already relied on this waiver in entering into this Guaranty
or accepting the benefits hereof, as the case may be, and that each will
continue to rely on this waiver in their related future dealings and (ii)
further warrants and represents that each has reviewed this waiver with its
legal counsel, and that each knowingly and voluntarily waives its jury trial
rights following consultation with legal counsel.  THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A
MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION 4.9 AND EXECUTED
BY COLLATERAL AGENT AND EACH GUARANTOR), AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY.
In the event of litigation, this Guaranty may be filed as a written consent to a
trial by the court.

    4.10  No Other Writing.  This writing is intended by Guarantors and
          ----------------
Beneficiaries as the final expression of this Guaranty and is also intended as a
complete and exclusive statement of the terms of their agreement with respect to
the matters covered hereby.  No course of dealing, course of performance or
trade usage, and no parol evidence of any nature, shall be used to supplement or
modify any terms of this Guaranty.  There are no conditions to the full
effectiveness of this Guaranty.

                                       17
<PAGE>

    4.11  Further Assurances.  At any time or from time to time, upon the
          ------------------
request of Collateral Agent, Guarantors shall execute and deliver such further
documents and do such other acts and things as Collateral Agent may reasonably
request in order to effect fully the purposes of this Guaranty.

    4.12  Additional Guarantors.  The initial Guarantors hereunder shall be such
          ---------------------
of the Domestic Subsidiaries of Borrower as are signatories hereto on the date
hereof.  From time to time subsequent to the date hereof, additional Domestic
Subsidiaries of Borrower may become parties hereto, as additional Guarantors
(each an "Additional Guarantor"), by executing a counterpart of this Guaranty.
Upon delivery of any such counterpart to Collateral Agent, notice of which is
hereby waived by Guarantors, each such Additional Guarantor shall be a Guarantor
and shall be as fully a party hereto as if such Additional Guarantor were an
original signatory hereof.  Each Guarantor expressly agrees that its obligations
arising hereunder shall not be affected or diminished by the addition or release
of any other Guarantor hereunder, nor by any election of Collateral Agent not to
cause any Subsidiary of Borrower to become an Additional Guarantor hereunder.
This Guaranty shall be fully effective as to any Guarantor that is or becomes a
party hereto regardless of whether any other Person becomes or fails to become
or ceases to be a Guarantor hereunder.

    4.13  Counterparts; Effectiveness.  This Guaranty may be executed in any
          ---------------------------
number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original for all purposes; but all such counterparts together shall
constitute but one and the same instrument.  This Guaranty shall become
effective as to each Guarantor upon the execution of a counterpart hereof by
such Guarantor (whether or not a counterpart hereof shall have been executed by
any other Guarantor) and receipt by Collateral Agent of written or telephonic
notification of such execution and authorization of delivery thereof.

    4.14  Collateral Agent as Agent.
          -------------------------

         (a)  Collateral Agent has been appointed to act as Collateral Agent
hereunder pursuant to the Intercreditor Agreement by the Revolving Agent on
behalf of the Revolving Lenders, the Term Agent on behalf of the Term Lenders,
and each Interest Rate Exchanger signing an acknowledgement to the Intercreditor
Agreement.  Collateral Agent shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action, solely in
accordance with this Guaranty and the Intercreditor Agreement.

         (b)  The Collateral Agent may resign or be removed and a successor
Collateral Agent may be appointed in the manner provided in the Intercreditor
Agreement.  Resignation by the Collateral Agent pursuant to subsection 6(g) of
the Intercreditor Agreement shall also constitute notice of resignation as
Collateral Agent under this Agreement; removal of the Collateral Agent pursuant
to subsection 6(g) of the Intercreditor Agreement shall also constitute removal
as Collateral Agent under this Agreement; and appointment of a successor
Collateral Agent pursuant to subsection 6(g) of the Intercreditor Agreement
shall also constitute appointment of a successor Collateral Agent under this
Agreement.  Upon the acceptance of any appointment as Collateral Agent under
subsection 6(g) of the Intercreditor Agreement by a successor Collateral Agent,
that successor Collateral Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring or removed
Collateral Agent under this Agreement.

                                       18
<PAGE>

    4.15  Designation as Designated Senior Indebtedness; Incorporation of
          ---------------------------------------------------------------
          Defaults
          --------

          This Guaranty, the Financing Documents, and all monetary obligations
hereunder and thereunder, are hereby expressly designated as `Designated Senior
Indebtedness', as that term is defined in the RTC Convertible Subordinated
Indenture. The occurrence of any Default or Event of Default constitutes a
default under this Guaranty.

                                       19
<PAGE>

          IN WITNESS WHEREOF, each of the undersigned Guarantors has caused this
Guaranty to be duly executed and delivered by its officer thereunto duly
authorized as of the date first written above.




                               By:
                                   ------------------------------------
                                   Marshal Salomon
                                   Vice President
                                    on behalf of each of the entities listed on
                                    Appendix A annexed hereto
                                    ----------


                               TOTAL RENAL CARE, INC.
                                   on behalf of each of the entities listed on
                                   Appendix B annexed hereto
                                   ----------


                               By:
                                   -------------------------------------
                                   Marshal Salomon
                                   Vice President


                              Notice Address for each of the Subsidiary
                              Guarantors set forth on Appendix A and Appendix B
                                                      ----------     ----------
                              annexed hereto:

                              Total Renal Care Holdings, Inc.
                              21250 Hawthorne Boulevard
                              Suite 800
                              Torrance, California 90503
                              Attention: Marshal Salomon
                              Telephone:  (310) 750-2135
                              Fax:        (310) 792-9281

                              TRC WEST, INC.,

                              By:
                                 ---------------------------------------

                                   Name:
                                        --------------------------------
                                    Title:
                                          ------------------------------

                                      S-1
<PAGE>

                               Notice Address:
                               21250 Hawthorne Blvd., Suite 800,
                               Torrance, CA  90503
                               Attention:  Richard Whitney
                               Telephone: (310) 750-2135
                               Fax:       (310) 792-9281

                                      S-2
<PAGE>

IN WITNESS WHEREOF, the undersigned Additional Guarantor has caused this
Guaranty to be duly executed and delivered by its officer thereunto duly
authorized as of ______________, 200_.

                        ________________________________________
                             (Name of Additional Guarantor)

                        By _____________________________________
                        Title __________________________________


                                      S-3
<PAGE>

                                 APPENDIX A


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 Diagnostic Laboratories, Inc.

Renal Treatment Centers, Inc.

Renal Treatment Centers - California, Inc.

Renal Treatment Centers - Hawaii, Inc.

Renal Treatment Centers - Illinois, Inc.

Renal Treatment Centers - Management Acquisition, 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 Supply, Inc.

RTC - Texas Acquisition, Inc.

RTC TN, Inc.

                                      S-4
<PAGE>

Total Acute Kidney Care, Inc.

Total Renal Care Acquisition Corp.

Total Renal Care, Inc.

Total Renal Care of Colorado, Inc.

Total Renal Care International, Ltd.

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.


                                      S-5
<PAGE>

                                   APPENDIX B



Beverly Hills Dialysis Partnership

Crescent City Dialysis Partnership

Houston Kidney Center/Total Renal Care Integrated
Service Network Limited Partnership

Kenner Regional Dialysis 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

                                      S-6
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12.1
<SEQUENCE>7
<FILENAME>0007.txt
<DESCRIPTION>RATIO OF EARNINGS TO FIXED CHARGES
<TEXT>

<PAGE>

                                                                   EXHIBIT 12.1

                        TOTAL RENAL CARE HOLDINGS, INC.

                      RATIO OF EARNINGS TO FIXED CHARGES

   The ratio of earnings to fixed charges is computed by dividing fixed
charges into earnings. Earnings is defined as pretax income from continuing
operations adjusted by adding fixed charges and excluding interest capitalized
during the period. Fixed charges means the total of interest expense and
amortization of financing costs, and the estimated interest component of
rental expense on operating leases.

<TABLE>
<CAPTION>
                            Six
                          months
                           ended
                           June              Year ended December 31,
                            30,    --------------------------------------------
                           2000      1999       1998     1997    1996    1995
                          -------  ---------  -------- -------- ------- -------
                                 (in thousands, except for ratio data)
<S>                       <C>      <C>        <C>      <C>      <C>     <C>
Income (loss) before
 income taxes,
 extraordinary items and
 cumulative effect of a
 change in accounting
 principle............... $(7,097) $(181,826) $ 48,641 $ 81,178 $54,563 $37,141
                          -------  ---------  -------- -------- ------- -------
Fixed charges:
  Interest expense and
   amortization of debt
   issuance costs and
   discounts on all
   indebtedness..........  67,647    110,797    84,003   29,082  13,670  12,921
  Interest portion of
   rental expense........   9,113     17,501    12,992    8,196   5,301   3,346
                          -------  ---------  -------- -------- ------- -------
    Total fixed charges..  76,760    128,298    96,995   37,278  18,971  16,267
                          -------  ---------  -------- -------- ------- -------
Earnings (loss) before
 income taxes,
 extraordinary items,
 cumulative effect of a
 change in accounting
 principle and fixed
 charges................. $69,663  $ (53,528) $145,636 $118,456 $73,534 $53,408
                          -------  ---------  -------- -------- ------- -------
Ratio of earnings to
 fixed charges...........    (a)        (b)       1.50     3.18    3.88    3.28
                          =======  =========  ======== ======== ======= =======
</TABLE>
- --------
(a) Due to the Company's loss in the six months ended June 30, 2000, the ratio
    coverage was less than 1:1. The Company would have had to generate
    additional earnings of $7 million to achieve a coverage of 1:1.

(b) Due to the Company's loss in 1999, the ratio coverage was less than 1:1.
    The Company would have had to generate additional earnings of $182 million
    to achieve a coverage of 1:1.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-27.1
<SEQUENCE>8
<FILENAME>0008.txt
<DESCRIPTION>FINANCIAL DATA SCHEDULE
<TEXT>

<TABLE> <S> <C>

<PAGE>

<ARTICLE> 5

<S>                             <C>                     <C>                     <C>                     <C>
<PERIOD-TYPE>                   6-MOS                   3-MOS                   6-MOS                   3-MOS
<FISCAL-YEAR-END>                          DEC-31-2000             DEC-31-2000             DEC-31-1999             DEC-31-1999
<PERIOD-START>                             JAN-01-2000             APR-01-2000             JAN-01-1999             APR-01-1999
<PERIOD-END>                               JUN-30-2000             JUN-30-2000             JUN-30-1999             JUN-30-1999
<CASH>                                     190,672,000                       0                       0                       0
<SECURITIES>                                         0                       0                       0                       0
<RECEIVABLES>                              366,183,000                       0                       0                       0
<ALLOWANCES>                                62,828,000                       0                       0                       0
<INVENTORY>                                 19,865,000                       0                       0                       0
<CURRENT-ASSETS>                           606,309,000                       0                       0                       0
<PP&E>                                     396,341,000                       0                       0                       0
<DEPRECIATION>                             148,308,000                       0                       0                       0
<TOTAL-ASSETS>                           1,855,149,000                       0                       0                       0
<CURRENT-LIABILITIES>                      325,649,000                       0                       0                       0
<BONDS>                                    470,000,000                       0                       0                       0
<PREFERRED-MANDATORY>                                0                       0                       0                       0
<PREFERRED>                                          0                       0                       0                       0
<COMMON>                                        82,000                       0                       0                       0
<OTHER-SE>                                 319,968,000                       0                       0                       0
<TOTAL-LIABILITY-AND-EQUITY>             1,855,149,000                       0                       0                       0
<SALES>                                              0                       0                       0                       0
<TOTAL-REVENUES>                           751,021,000             378,908,000             705,063,000             352,819,000
<CGS>                                                0                       0                       0                       0
<TOTAL-COSTS>                              677,861,000             346,065,000             649,288,000              359,172,00
<OTHER-EXPENSES>                            10,589,000              11,984,000             (3,264,000)             (1,934,000)
<LOSS-PROVISION>                            25,507,000              12,648,000              46,185,000              35,707,000
<INTEREST-EXPENSE>                          67,647,000              34,482,000              48,208,000              24,905,000
<INCOME-PRETAX>                            (7,097,000)            (14,646,000)               5,992,000            (31,845,000)
<INCOME-TAX>                                 4,411,000                 709,000               4,844,000             (9,786,000)
<INCOME-CONTINUING>                       (11,508,000)            (15,355,000)               1,148,000            (22,059,000)
<DISCONTINUED>                                       0                       0                       0                       0
<EXTRAORDINARY>                                      0                       0                       0                       0
<CHANGES>                                            0                       0                       0                       0
<NET-INCOME>                              (11,508,000)            (15,355,000)               1,148,000            (22,059,000)
<EPS-BASIC>                                     (0.14)                  (0.19)                    0.01                  (0.27)
<EPS-DILUTED>                                   (0.14)                  (0.19)                    0.01                  (0.27)


</TABLE>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
